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Opinion

Opinion: Wealthy speculators drive up home prices in L.A. A new tax on them could make housing affordable.

LOS ANGELES-CA-AUGUST 3, 2016: A building at the corner of 12th and Grand is under construction in d
A building at the corner of 12th and Grand is under construction in downtown Los Angeles on August 3, 2016.
(Christina House / For The Times)

To the editor: You’re right that the free market can’t solve L.A.’s affordable housing problem, and public funds, via taxing developers, are an important part of a larger plan. (“Yes, we need a fee on developers to help pay for affordable housing,” editorial, June 17)

The city could also levy a tax targeted at speculative investment by national and global statutory trusts, real estate investment trusts and private equity funds. These pooled-investor firms drive up housing costs, walk away with the profits and provide no benefit to the city.

A 2014 report from Right to the City found that the Blackstone Group, one of the world’s largest private equity firms, bought thousands of foreclosed homes in the L.A. area at a discount and began renting them at unreasonable levels.

With funds raised from Mayor Eric Garcetti’s linkage fee, this speculation tax and other sources, we should invest in bringing nonspeculative housing such as community land trusts and limited-equity co-ops up to scale. A large sector of housing free from market speculation is the keystone to ensuring all are housed.

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Peter Sabonis, New York

The writer is director of legal strategies for the National Economic and Social Rights Initiative.

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To the editor: Your editorial supporting imposition of the “linkage fee,” which is a substantial tax on new development, is an example of the kind of thinking that makes a problem worse rather than helping to solve it.

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Anyone who has actually built housing in Los Angeles can see the folly of trying to produce more housing by taxing it more heavily. Nor will tightening rent control laws produce more rental housing.

Local politicians regularly pay lip service to simplifying political, legal and financial obstacles to development, but in practice they succumb to the constituencies that profit from higher taxes and more rigid regulations and more review bodies. So The Times is in good company.

The fact that San Francisco and Santa Monica have opted for a deadening mix of taxes and regulations to no avail should give pause to those who support more taxes and regulations. You also seem blind to the fact that the expected “700 to 1,000” new units a year will barely dent the apparent need.

Thomas Weiss, Woodland Hills

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