This is the most grounded case I’ve seen for shifting the Prop 13 debate away from fairness rhetoric and toward supply logic. The idea of treating tax reform as land-use policy makes sense, especially when underutilized parcels near transit stay frozen in time.
But one thing I’m wondering: How do you convince mid-sized investors and legacy landlords to actually release land when many of them still see long-term appreciation as their hedge against volatile yields? Would the capital gains exemptions truly be enough to unstick that?
And you are 100% right that there is no true silver bullet. Freeing up more development sites that require a CEQA review or are otherwise blocked by local planning commissions wouldn't do much, so absent reform on that front a new property tax regime would likely free up smaller sites or others that would be CEQA exempt. So much more work is needed for sure!
and I get that CEQA and local commissions add another layer of gridlock. But even if your framework nudges some small parcels loose, I keep wondering what happens in neighborhoods where the land is tied up in trusts or old family LLCs. Political will aside, there’s still the issue of valuation psychology. If owners believe their asset is their pension, how do you shift that mindset without spooking the whole middle class? Maybe the answer isn't just tax breaks but also offering soft land-value capture models or structured exit tools? Curious if you've seen anything work abroad.
Its true that tax policy alone won't shake every parcel loose but that's OK - because if its too heavy handed you do drift into a place where taxes are "forcing" people to sell. And if people have owned property in Coastal California for the last 40 or 50 years, appreciation alone will pull them out of the middle class. 1031 exchanges are a pretty good structured exit, you keep the equity and defer the taxes indefinitely. But this gets complicated when heirs are involved, so a clean sale with minimal tax consequences is the cleanest exit.
Yeah, I’ve seen the 1031 route work pretty well in clean single-owner cases, but once it gets wrapped up in multi-heir structures or old LLCs, the decision gridlocks hard. No one wants to trigger a tax event, and no one wants to buy the others out.
One thing I’ve been thinking about is whether localities could experiment with opt-in trusts or pooled land exits. Not top-down land banks, but something closer to an income-generating REIT model, where families cash out a portion but still hold a stake. Might help with liquidity and still keep intergenerational ties intact.
Don’t know if it fits into your “housing-first” logic cleanly, but I’d be curious if any cities have tested versions of that.
I briefly dive into that here. I believe the main issue is CEQA, but in an upcoming article I plan to delve into the idea of Prop 13 as well.
https://spuggywritings.substack.com/p/why-california-cant-build-anymore?r=1si1y
CEQA ia absolutely a big deal, but Prop 13 still is a huge structural impediment
This is the most grounded case I’ve seen for shifting the Prop 13 debate away from fairness rhetoric and toward supply logic. The idea of treating tax reform as land-use policy makes sense, especially when underutilized parcels near transit stay frozen in time.
But one thing I’m wondering: How do you convince mid-sized investors and legacy landlords to actually release land when many of them still see long-term appreciation as their hedge against volatile yields? Would the capital gains exemptions truly be enough to unstick that?
Appreciate the kind words -
And you are 100% right that there is no true silver bullet. Freeing up more development sites that require a CEQA review or are otherwise blocked by local planning commissions wouldn't do much, so absent reform on that front a new property tax regime would likely free up smaller sites or others that would be CEQA exempt. So much more work is needed for sure!
and I get that CEQA and local commissions add another layer of gridlock. But even if your framework nudges some small parcels loose, I keep wondering what happens in neighborhoods where the land is tied up in trusts or old family LLCs. Political will aside, there’s still the issue of valuation psychology. If owners believe their asset is their pension, how do you shift that mindset without spooking the whole middle class? Maybe the answer isn't just tax breaks but also offering soft land-value capture models or structured exit tools? Curious if you've seen anything work abroad.
Its true that tax policy alone won't shake every parcel loose but that's OK - because if its too heavy handed you do drift into a place where taxes are "forcing" people to sell. And if people have owned property in Coastal California for the last 40 or 50 years, appreciation alone will pull them out of the middle class. 1031 exchanges are a pretty good structured exit, you keep the equity and defer the taxes indefinitely. But this gets complicated when heirs are involved, so a clean sale with minimal tax consequences is the cleanest exit.
Yeah, I’ve seen the 1031 route work pretty well in clean single-owner cases, but once it gets wrapped up in multi-heir structures or old LLCs, the decision gridlocks hard. No one wants to trigger a tax event, and no one wants to buy the others out.
One thing I’ve been thinking about is whether localities could experiment with opt-in trusts or pooled land exits. Not top-down land banks, but something closer to an income-generating REIT model, where families cash out a portion but still hold a stake. Might help with liquidity and still keep intergenerational ties intact.
Don’t know if it fits into your “housing-first” logic cleanly, but I’d be curious if any cities have tested versions of that.