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Proposition 13's Hidden Effects On the Built Environment

Posted every Monday, the Laws That Shaped L.A. spotlights regulations that have played a significant role in the development of contemporary Los Angeles. These laws - as nominated and explained each week by a locally-based expert - may be civil or criminal, and they may have been put into practice by city, county, state, federal or even international authority

This Week's Law That Shaped L.A.

Law: Proposition 13 (Article XIII-A, California Constitution)
Year: 1978
Jurisdiction: California
Nominated by: Orhan Ayyüce
Previously Nominated by: Dawn Nakagawa (See the previous Prop 13 column)

It's no surprise that when a group of expert Angelinos are asked to nominated a "Law That Shaped L.A.," Proposition 13 is a particularly popular reply.

Two weeks ago, this column featured Nicolas Berggruen Institute executive director Dawn Nakagawa's** take on the famous - or infamous - 1978 insertion into the California Constitution.

"There is a richness to the community that you get," Nakagawa said of the three-decades-plus aftermath of Prop 13. "But you also see failing infrastructures. You see schools that are in real trouble. You see health care being cut. All of these things are happening that impact Los Angeles in important ways."

This time around, the focus shifts slightly to the effects that this groundbreaking property tax freeze and de-emphasis had on the city's built environment.

Orhan Ayyüce is an architect, senior editor at Archinect.com and studio instructor at CalPoly Pomona and Woodbury University. Ayyüce nominates Prop 13 as a Law That Shaped L.A. for many of the same reasons Nakagawa did -- but others as well that befit his specialties.

"Prop 13 is probably the grandfather, the grandmother -- the grandparent -- of all the laws that had an immediate impact," Ayyüce says. "That impact was felt not only in Los Angeles, but all over California and as an influence on other cities and states."

Ayyüce is eager to discuss how Prop 13 led to changes in the city's look, feel and use.

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"I was here in 1978 when it passed," Ayyüce says. "It immediately put the state in dire straits about having an income. There goes all the social services, there goes all the things that people expected from the state including things that impacted the built environment."

A classic case of "follow-the-money" then played out. Homeowners' influence waned as property tax's share of total tax receipts fell. Corporate influences, on the other hand, waxed.

"It all caved in," Ayyüce says. "If the state had money, perhaps they would be more robust about actually coming with things that really concern the public. That stopped."

With local governments drained of previously anticipated property tax dollars, Ayyüce points to localities subsequently wooing and catering to corporations. Adding business tax and sales tax receipts to local rolls became a logical post-Prop 13 government income strategy.

This, then, led to the rise of big box retailing, Ayyüce says, with the well-documented land use issues that followed as well as economic and neighborhood repercussions on mom-and-pop shops.

Ayyüce also says that with governments such as Los Angeles now less financially able to maintain parks and other such amenities, big business set about increasingly co-opting -- or, picking up the slack for -- the creation and safeguarding of a bastardized brand of community commons.

"You go to The Americana, you go to The Grove, you got to the Santa Monica [Third Street Promenade], these are places that thousands of people visit," Ayyüce says. "But this is not really public space."

The architecture and land use impacts of the 1978 constitution insert don't stop there, according to Ayyüce. He says the built environment would be "much more vibrant and dynamic" sans Prop 13. Incentives to stay put in minimal property tax properties translate perhaps into less extraordinary opportunities for architects to build from scratch.

Affordable housing has suffered as well, Ayyüce says. "But Prop 13's worst impact is that it really fueled property price increases," he says. And how did that happen?

"It really benefited the people who already owned the property pre-1975, and who the rest of the people had to subsidize," Ayyüce says. "As soon as you sold your property, a new assessment was taken into consideration. So everybody started to add an additional amount [into the home's sale price] for the taxes they are going to pay."

A line can even by drawn, Ayyüce says, linking Prop 13 to the recent California-centric -- though hardly exclusive -- housing bust and Great Recession.

Ayyüce also makes the case that Prop 13 had a deleterious effect on health services, education and other aspects more humane than, say, an architect designing in a vacuum

"The built environment is the environment we live in. It doesn't have to be measured only in buildings. The soft side of the built environment is the people."

Top Photo: Small business abound in this 1939 archival photo of Avalon Boulevard in Wilmington. Photo courtesy The Los Angeles Public Library.

**Jeremy Rosenberg worked on a project for the Pacific Council on International Policy when Dawn Nakagawa was an Executive Vice President there.

To suggest a "Law That Shaped L.A." or otherwise contact the columnist via: arrivalstory [at] gmail [dot] com, or leave a comment at the bottom of this page.

About the Author

Jeremy Rosenberg is a Los Angeles-based writer, editor, and consultant whose work has appeared in various books, magazines, newspapers, and online.
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Interesting commentary! Even the most pro-Prop 13 forces accepted that residential sprawl was an unintended consequence during the campaigns for Props 60 and 90 (allowing people over 55 to transfer their low assessment bases). Keeping older people in their (large family) homes, longer than even they wanted, inflated housing prices and encouraged unnecessary new construction, pushing out urban boundaries.

The concomitant commercial effects are generally shushed up. However, looking at the commercial real estate rolls and actual properties around my town, I can see Prop 58 (which extended Prop 13 benefits to heirs of commercial property) has created many 'accidental' landlords who neither sell nor invest in their property.

With unnaturally low operating costs (their dynamic neighbors are the ones paying for local police, fire, roads, civic improvements, etc.), these heritage landlords can afford to leave their properties vacant until an ideal tenant comes along and makes any improvement for them.

Unable to buy these properties -- and unwilling to invest capital in improving someone else's property -- dynamic businesses settle either on the outskirts (sprawl) or move to other states (economic decay).

It will be interesting to see the business community eventually revolt against the entrenched real-estate investors who currently stifle any discussion. Will it happen in time, or will California become an economic backwater?

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Prop 13 did indeed shift fiscal support for services to the commercial sector. Sales taxes in particular became more important, hence the added appeal of retailing at the scale of the mall, whether outdoor Caruso enterprises or the malls of the 1970s and 1980s. But there was an added appeal in Prop 13 too: commercial property valuations were also frozen - a huge boon to the commercial sector that scaled with, well, scale. In retail, 1-story 'taxpayer' strips (1-story blocks that characterize so much of our boulevards) were left to wither.
If the residential property market did reflect higher land values, it was because supply was artificially constrained. Over time, grandfathered owners couldn't afford to sell (and bear higher taxes elsewhere in CA) so they stayed put, or pulled up stakes for elsewhere. I'm not sure how factored-in higher taxes would increase my valuation of the my place. If anything, wouldn't I, as a buyer, discount the price because I'll be paying higher taxes to support my fixture of a neighbor's lower bill?