Los Angeles Wants to Trample Property Rights Yet Again

February 26, 2020
By Trevor Bratton

History tends to repeat itself, and Los Angeles has a history of using coercive housing regulations to get what it wants. Back in the 1950s, city officials used eminent domain to seize the land that ultimately became home to Dodger Stadium. Today, the Los Angeles City Council wants to leverage eminent domain yet again—and not only is this constitutionally questionable, but it’s terribly illogical.

This time, the city is looking to confiscate a private apartment complex—Hillside Villa—and turn it into affordable rental units, saying that this is needed to help answer the problem of rapidly decreasing affordable housing stock. Nearly two-thirds of city land is zoned for residential housing, but 75% of it is for single-family residence only. Single-family zoning may seem harmless, but its indirect effects still weigh on minority communities, creating homogeneous neighborhoods of abundant wealth and locking out lower-income minority families from the opportunities these neighborhoods provide.

Why is the city focusing on Hillside Villa? In 1988, a 30-year contract (which expired in August 2018) between the apartment’s landlord and Los Angeles established a deal to provide housing below market rates in exchange for government funding. After some deliberation between the current landlord and government officials, late last month a city councilman took the next step by filing a motion to use eminent domain to seize the complex – literally taking the complex out of the hands of a private owner.   

Of course, there are terrible, unfortunate ramifications to rapid rent hikes, bringing certain displacement for several of Hillside Villa’s loyal residents. But the vitriol that has landed on landlords’ shoulders is largely misplaced. The city has been in possession of this contract for 30 years and has just now decided to take a stand in support of tenants. Why should the landlord’s property be confiscated after abiding by a contract the government permitted?

The city argues that seizing the property is necessary to provide affordable housing supply. But if that’s truly its concern, why did the Los Angeles City Council oppose SB 50—a bill that could have drastically increased housing supply and reduced single-family residence zoning? Median housing prices in Los Angeles sit near $1 million, while median monthly rent for a one-bedroom apartment is about $2,360. These sky-high rates, due to a market where demand far exceeds supply, is literally the definition of a sellers’ market. Did landlords and realtors cause this problem? No—government did by creating webs of red tape and restrictive zoning. Hillside Villa isn’t alone; there are many more private properties in Los Angeles that await a similar fate.

Los Angeles has a good example for how to protect property rights immediately to the east. In 2006, Arizona voters enacted a Goldwater Institute reform, the Property Ownership Fairness Act, to prevent unjust seizure of land by ensuring government can only take private property for purely public use and requiring government to compensate property owners when government regulations cause a decrease in their property value. Requiring government to weigh the costs and benefits of the regulatory burdens they impose helps discourage excessive regulation and abuse.

When government does regulate to provide a “public good,” the costs should be borne by the public at large, rather than falling on a single person or a small group. In its decade-plus existence, Arizona’s law has achieved enormous success in achieving these goals. By enacting the same law, Californians can protect themselves from instances like Hillside Villa happening again.

Trevor Bratton is a Policy Analyst Fellow at the Goldwater Institute.