Wednesday, October 28, 2020

Proposition 19 and Wildfire Danger

Proposition 19 is such a dangerous scam.  Why are realtors so eager to pass this convoluted proposition that they spent over $63 Million (as of 10/28/2020) to pass it?  Because they will make a lot of money.

Proposition 13 has been amended over the years to give ever bigger loopholes to exploit.  First was the inheritance tax break for heirs

One effect of Proposition 13 and the inheritance tax break has been to create generational inequities between those who have owned homes and those who haven’t. The laws place no limits on how many descendants can take advantage of the benefit, so future generations of Californians whose ancestors purchased houses decades ago will continue to pay property taxes based on values established in the 1970s.
Then came the portability for seniors to make a one-time move within the same county to homes of equal or lesser value.  This was supposed to help people prepare for aging at home.  E.g. help seniors move to a home without stairs or in a less auto-dependent location when they stop driving.  

Some counties extended portability between reciprocating counties, ostensibly so that seniors could move closer to family for help with care.
Propositions 60/90 amended section 2 of Article XIIIA of the California Constitution to allow a person who is over age 55 to sell his or her principal place of residence and transfer its base year value to a replacement dwelling of equal or lesser value that is purchased or newly constructed within two years of the sale. These propositions are implemented by Revenue and Taxation Code section 69.5. 
Proposition 60 allows for the transfers of a base year value within the same county (intracounty). Proposition 90 allows for the transfers of a base year value from one county to another county in California (intercounty) if the county has authorized such a transfer by an ordinance. 
As of November 7, 2018, the following ten counties in California have an ordinance enabling the intercounty base year value transfer:
Alameda, Los Angeles, Orange, Riverside, San Bernardino, San Diego, San Mateo, Santa Clara, Tuolomne, Ventura are among the 9 most urbanized counties in California and are home to 75% of Californians.  75% of Californian seniors already have one-time Proposition 13 intercounty portability and all have one-time intracounty portability.

Proposition 13 property tax assessments are already transferable between 10 counties including 9 of the most urbanized ones. 75% of CA's population already have one-time Prop 13 portability at age 55.

Once, there was momentum and counties were willing to extend intercounty portability.  But, counties discovered that this bled their coffers.  Seniors use a lot of public services, especially when their health fails or when they lose driving privileges.  Accepting people who will consume ever larger portions of scarce public dollars while paying lower taxes is a suckers game.  Prop 13 portability stalled.

Existing law allows tax assessment portability only to homes of lesser or equal value. This was marketed as a way for house-rich, cash-poor empty nesters to free up some of their equity for living expenses.  It's bad policy to give things away to all seniors, instead of just targeting low-income people specifically, but this is existing policy.

It's a misnomer to call it a giveaway to all seniors.  About 6 million seniors live in California.  Over 1 million are renters.  Senior renters are the ones most in need.  About half have trouble paying for basic necessities.

Giving money to seniors who were lucky/white enough to purchase homes in the 1970s or earlier is not going to help the seniors in most financial distress.  It's going to take money away from governments, that they could have used to help the real seniors in need.

Prop 19 would allow portability of low Prop 13 assessments to more expensive homes.  If seniors are able to purchase a more expensive home, do they need the subsidy from everyone else?

Business interests have exploited the CA initiative process to do an end run around government and elected officials when they can't get what they want.  They spend a lot of time and money crafting initiatives that sound good, while having stealth effects that they obfuscate with convoluted language.

Proposition 19 is marketed as a way to close the inheritance loophole, which will raise tens of millions per year, but it will create liabilities many times larger.

For instance, the inheritance loophole will still be valid as long as the heirs live in the home as a primary residence at the time of the transfer.  Be prepared for people to move into mom and pop's place for just long enough to get the lower tax assessment, and then transfer the low tax assessment to another home later.

Existing law, Prop 60/90, allows one-time property tax assessment transfers.  Proposition 19 expands that to THREE transfers.  Why settle for one real estate commission when you can get three?  Seniors are going to need it if they move to a rural area and then find themselves unable to drive dark rural roads.  They will need to move back to an urban area that is more friendly to those that can't drive.

[A UC Berkeley geography professor found that seniors who move to rural areas create many low-wage jobs, first in food-retail, then in home healthcare aides. Providing for seniors and the low-wage workers they depend upon is bankrupting rural counties.  That's why counties now refuse to opt-in to Prop 13 portability.]

So why does Prop 19 have these Rube Goldberg rules that tighten the inheritance loophole and redirect the money to fire fighting?  Because the 48 CA counties not participating in Prop 13 portability are mostly rural firetraps.

On the map below, the 10 counties with existing Prop 13 portability are aqua.  The 48 counties that Prop 19 would extend portability to are yellow.

Historical fire data for 1878-2019 is shown in brown.

Fire perimeters for the 2020 fire season is shown in pink.

Although there are many fires in the Southern California aqua counties, they are mostly contained in the rural, mountainous parts of the county.  Urban dwellers in the denser parts of those counties subsidize the few that live in harms way.  That is not true in most of the yellow counties.

Realtors know that Prop 19 would incentivize seniors to move to Paradise and other fire traps.  That's why they added the sop to fire fighters.  But, it would raise only tens of millions per year in fire fighting funds.  California spends a half to a full BILLION on fire suppression annually. That's not counting money spent by the Feds for fire suppression on Federal lands. 

[The Feds own 47.7% of California's land, including 57% of California's forest lands.]

People (and their cars) start fires.  Put more people out in fire country, and they will start more fires.  

Most importantly, prescribed burns to reduce fuels are difficult to do in areas that already have homes and people living and driving in them.  Ironically, prescribed fires aren't permitted if the PM2.5 particulate air pollution is already high and people live in the area.  

People driving cars shed PM2.5 (yes, even electric cars) so they add to the PM2.5 load while simultaneously reducing the allowable load.  It's so circular.  But, once people live in a fire-prone area, it gets harder to do the things you need to keep them safe.

The housing estates will further fragment wildlife habitat. 

Seniors will be socially isolated--especially when they stop driving.

Proposition 19 is just insane social, fiscal, ecological and fire policy.

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