City Hall's Welfare For The Rich: A Case Study
Next, let's say I come to you, in my capacity as a real estate broker, with a proposed deal. My client wants to buy your land on the following terms. You deed the 217 lots to my client, plus you hand him another $52 million cash, and he signs a loan to repay you $58 million at below-interest rates.
Did you get that? He gets your land and $52 million of your money. You receive your money back, at some point, with a little interest, plus an additional $6 million for your 217 lots.
Do you know what that works out to as the price for each of the residential-sized lots downtown? Just $27,649! (Six million divided by 217 = $27,649.) A person could spend more to buy a car in this town -- a domestic car, even!
Now, if I came to you with that deal in the real world, how many seconds would it take you to call Security and have me thrown out of your office? Not many.
But, as reported deep within an L.A. Times story Sunday, that is the deal that a billionaire developer got from L.A.'s City Hall for the land underlying the Staples Center. According to the story, "Anschutz took control of 30 nearby acres," and "paid more than $18 million for the land," but he "obtained $58 million from city bonds — to be repaid with interest — and $12 million in redevelopment grants."
So if you do the math, he puts in $18 million, but immediately gets back $12 million plus $58 million, so he's netting $52 million right off the bat, and then promises to repay the $58 million. So his net payment to City Hall is just $6 million, plus some below-market interest. A sweet deal for 30 acres of downtown land, don't you think?
And remember: that land, my friend, DID, in fact, belong to you. It belonged to you, to me, and to the rest of us taxpaying citizens. But your friends at City Hall sold it for the equivalent of around $27,649 for every 6000 square feet.
It gets worse. He came back for more: now he's building a hotel across the street, and "last year . . . the Los Angeles City Council approved up to $290 million in rebates of hotel taxes during the next 25 years." In other words, they just handed him another $290 million of your money. Your trash tax isn't going to pay for police; it's going to pick up the tab for this guy's hotel.
Do you still think that "affordable housing" and the other developer subsidy programs are supposed to help the poor?