To the editor: I’ve been a builder of business properties in Southern California for over 30 years. Sadly, “the mansion tax” has resulted within the sensible finish of most new industrial development within the metropolis of Los Angeles (“Letters to the Editor: Eliminating the so-called mansion tax would reduce resources to build affordable housing in L.A.,” April 9).
How so? A developer hopes to make 20 cents to 25 cents on each greenback invested in land and development. Taking 5 cents off the highest doesn’t sound like a lot, but it surely’s 20% to 25% of the revenue {that a} developer would typically hope to make, which is appreciable.
As well as, this identical 5% payment would apply additionally to all future gross sales of that property, which we estimate depresses the worth a further 5% to 10%. If the selection was to develop in L.A. or wherever else, you’ll selected wherever else. This doesn’t negate the truth that Los Angeles has an infinite scarcity of housing. The way to resolve the issue?
First, begin by making the “mansion tax” really a tax on mansions. Have it apply solely to single-family residential housing gross sales moderately than gross sales of business property. This may give multifamily and industrial development a combating likelihood.
Second, remove prevailing-wage necessities in terms of constructing inexpensive housing. Prevailing-wage necessities add 30% to 50% to the price of development. If we’re severe about fixing the housing disaster that impacts us all, we should look to helping builders moderately than handicapping them at a time when, frankly, we want them essentially the most.
David Botfeld, Santa Monica
