LA Political Elite Tries To Seize Apartments Where Owner Might Raise Rent

P. Gardner Goldsmith | February 7, 2020
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Many Americans recognize California as the “incubator” for collectivist proposals that soon spread like a virus across the nation, even while its economic problems mount as a direct result of these leftist statutes and tax thievery. So it comes as no surprise that one of the loci of CA collectivism should offer us another warning of possible “Things to Come” across the US, this time, with the attempt to use so-called “eminent domain”, otherwise known as legalized robbery, to seize a 124 unit apartment building.

As Christian Britschgi reports for Reason:

On Friday, City Councilmember Gil Cedillo introduced a motion that asks city staff to draft plans for using eminent domain to seize Hillside Villa Apartments, a 124-unit, privately-owned development in the city's Chinatown neighborhood to avoid rent increases at the property.

And, hold onto your hat. Cedillo has been a Democrat for years.

Britschgi continues:

The property is currently under an affordability covenant that requires its owner to rent out a number of its units at below-market rates. That covenant is set to expire soon, meaning rents on some 59 units will increase to market rates—which means rent hikes of up to $1,000 per unit.

And, of course, Britschgi, whose reports for Reason invariably reflect an actual understanding of market forces, was sure to note the term “market rates” in his report – something that seems woefully lost on most politicians.

As I have noted when writing about the lack of affordable housing in San Francisco, supply and demand use a simple, non-physical, machine to impart important information to suppliers and consumers. It’s called the price mechanism. Prices are key data that allow suppliers and consumers to adjust their behavior. Higher prices indicate increased demand, and signal to suppliers and potential suppliers that there is a higher profit to be derived by supplying more of the thing in demand. Thus, more resources are shifted to fill that demand, and, viola, prices begin to moderate! Continued competition and its attendant productivity increases lead to lower prices and even more affordability.



But there’s one thing that stands in the way of the price mechanism and hampers proper resource allocation:

The state -- i.e. government, i.e. politicians – a gang of folks who prefer to threaten others with government-fueled punishment if those others don’t do as they order. And these orders come in the form of zoning restrictions, taxes, licenses, occupancy regulations, and many other artificial commands-via-statute.

So it’s ironic, though not unexpected, to see Britschgi report this about the situation in Los Angeles:

'We think it is important enough that we need to take action to preserve those units. We don't want to generate more homeless people,' Conrado Terrazas Cross, Cedillo's communications director, tells Reason, saying that many tenants would not be able to afford the coming rent increases.

But it’s precisely the fact that government meddling restricts the creation of new apartments that there aren’t enough to fill demand. Cedillo’s proposal is a new kind of “rent control”, also known as a “price control”, which, economists and non-economists know, leads to a shortage of whatever is price-capped. If prices aren’t allowed to rise, that signal to suppliers disappears, and people have no incentive to create more housing. Society sees MORE homelessness, NOT LESS, when politicians tell landlords they can’t increase their prices to fit demand.

And that’s the practical outcome of this tyrannical lunacy. On the more fundamental level of simple ethics, price controls are a no-no, because they’re threats by politicians against peaceful people. And now, Cedillo wants to make things even more reprehensible by literally TAKING property he can’t indirectly control.

'I think it's a brilliant idea but I need to know: Are we in Cuba or Venezuela?' says Tom Botz, the L.A.-area developer who owns the building, about the proposal to seize his property.

Now, it should be noted, as Britschgi does, that Botz bought the dwellings twenty years ago, ten years after the original builder created them with the assistance of a government loan (a bad idea, manipulating the market in another direction) that stipulated the units be rented at below market rates for three decades. But the “affordable housing” requirement expired in June of last year.

Botz and the city government have engaged in legal wrangling since, and now, Cedillo has stumbled upon the brilliant plan to have LA seize the property, for the sake of “the community”.

Where on earth could he have gotten that idea?

Perhaps from one of the most stunning attacks on private property in US history to come at the hands of judicial leftists, including a Republican-appointed judge, former Supreme Court Justice David Souter.

After being appointed to the court in 1990 by George H. W. Bush, Souter cast the “deciding” vote in the 2005 “Kelo v. City of New London” case, which transmuted the concept of “eminent domain” used to seize property for a “public use” and turned it into an “okay” for government to seize property for what politicians might describe as a “public good”. In the case of Kelo, the government of New London, CT, targeted a group of local homes for seizure in order to hand that property over to a big corporation, arguing that the bigger corporate tax base would be a “benefit” to all.

Susette Kelo would not bow. She owned a pretty pink house. She fought. Tax-paid David Souter cast the deciding vote that her house was not hers to own, but it would be stolen by the government and they’d throw some cash to her as they saw fit. The 2017 docu-drama “Little Pink House” explains, should you want to see it and know more.

Singling out Souter does not absolve any other black-robed oligarchs on the bench who voted away Ms. Kelo’s property rights. It merely shows us that proponents of freedom would be wise to be wary of all politicians and their political appointees, that they would be wise to be wary of any system of government that allows for zoning, licensing, occupancy regulations, and, yes, eminent domain, at all.

Busybodies come in all forms, be they the political creatures in Los Angeles hungry to seize an apartment complex, or the “historically minded” in Denver, Colorado who recently tried to stop a restaurateur from selling his long-held property to a person who wanted to build living spaces there.

It’s up to the American civilians to remember the prime principles of peace and keeping one’s hands off his neighbors’ property, to teach those principles to kids, and to avoid being temped by the machine of government to trample the right to private property.

Only through retention of those principles can we act as ethical people, and only though those principles can the market function to provide more of what people want.