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 usually hope to make, which is appreciable.
As well as, this similar 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. Easy methods to clear up the issue?
First, begin by making the “mansion tax” actually a tax on mansions. Have it apply solely to single-family residential housing gross sales slightly than gross sales of business property. This can give multifamily and industrial development a preventing probability.
Second, eradicate prevailing-wage necessities on the subject of constructing reasonably priced 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 slightly than handicapping them at a time when, frankly, we want them essentially the most.
David Botfeld, Santa Monica
