Miguel Santana: Measure A's Sales Tax Designed to Generate a Dedicated (Evergreen) Revenue Stream for Producing Affordable Housing in LA County

Miguel, we do this interview re LA County’s Measure A, weeks before the November 5 election. Share what inspired this initiative; what its important provisions are; and, what it is intended to fund.

Well, if there were to be a theme for this year's election locally, it would be reform. There are a number of reform measures before LA County voters, and this, I think, is a very significant one because at the center of Measure A—which is a half-cent sales tax to provide funding for services as well as to build affordable housing to make housing affordable throughout the county—is reform and accountability. It's based on the lessons learned from past interventions. I’ve done this interview with The Planning Report many times in my career, where I've spoken to some of the other interventions or initiatives that LA County voters had an opportunity to respond to. And several years later, after Proposition HHH, after Measure H at the county, we've learned some important lessons, and so we applied these lessons in the development of Measure A.

The second thing is that Measure A is unlike those other measures in that it comes from the community. Those measures were placed before the voters by the County Board of Supervisors and by the City of Los Angeles. In this case, 400,000 Angelenos—neighbors, friends, and family members here in LA County—signed a petition to place Measure A on the ballot, and so that makes a significant difference in the type of reform that we are implementing through this measure and the kind of outcomes that we hope to see.

The third thing is the outcomes themselves. This measure articulates and mandates that goals be set that will determine how many people will go from the street into housing. Goals will be set on the building of affordable housing throughout LA County and how services will be expanded to Angelenos. I don't know of any other revenue stream that Angelenos have approved that requires that goals be set, and as important; once these initiatives are implemented and are in alignment with those goals, there be an independent audit to evaluate whether those goals are being achieved, and if they're not being achieved, why.

The other important piece here is that Measure A creates a governance structure that answers the question, “Who's in charge?” Measure A codifies an intergovernmental entity made up of the Board of Supervisors, the mayor, and representatives of the County’s 88 cities that will be responsible for adopting goals, implementing the program, and distributing these dollars. That's important because one of the lessons we learned from Measure H, and some of the concerns that have been raised by other cities, is that cities don't always have a say in how these dollars are being distributed. This measure gives a seat at the table for all the cities and also provides cities with local returns. So, every city will get its slice of Measure A dollars to implement homeless outreach and services in a way that is consistent with the goals that individual cities have.

For the City of LA, that represents $65 million annually that the city will be able to use to further advance this—the success that Mayor Bass has already achieved in her first year by reducing street homelessness by 17%. So, it is a very different kind of revenue stream because it intentionally strengthens accountability, tracks progress, and seeks to build institutionalized coordination among the cities and the county, regardless of who the mayor is and who serves on the Board of Supervisors.

Thank you for a comprehensive and informed answer. Drilling down, you emphasize Measure A is a citizen-generated measure; who was & was not included in drafting the measure?

Well, 400,000 Angelenos signed the measure. So, people were asked, "Do you support this ballot measure?" and they agreed to move it forward. I start there. There's a coalition made up of businesses, labor, service providers, experts, professionals, and philanthropy who were part of drafting this measure and who supported it. Earlier this week, I joined Mayor Bass and Sheriff Luna in announcing the endorsement of The Los Angeles Business Council, the Central City Association, the Black Chamber of Commerce, and the Los Angeles County Hospital Association. These are groups who have read Measure A and who say they support it and, more importantly, want to be part of the implementation. Beyond the drafting of the initiative—which is the first step—Measure A is the beginning of a process to change      the system that serves the unhoused and builds affordable housing. We were intentional in creating tables that encourage the community to be part of that process     .

I mentioned the executive table of elected officials that represents the cities and the county around Measure A—around implementation and goal-setting of this initiative. Advising the table of elected officials is a leadership table that's made up of philanthropy, business, labor, providers, and people with lived experience, who are the ones who are setting the goals and recommending them to that table. We were intentional in creating places that require oversight, input, and ongoing conversation with members of the community, which other revenue streams never required.

On the building of affordable housing, we intentionally support LACAHSA, a new joint powers authority similar to Metro, responsible for distributing the housing dollars from Measure A—nearly half a billion dollars a year to build affordable housing throughout Los Angeles County. It's a form of government created by the state, and I serve as Vice Chair of it as an appointee of Mayor Bass. That body includes all five members of the Board of Supervisors and representatives of the cities through their councils of government.

I know that sounds like a long-winded answer to your question, but the point is that drafting the initiative involved more than one set of individuals and a broad array of interests that helped put Measure A together. But more importantly, embedded in the implementation of the measure, there are several different places where the community has a role in ensuring that the goals that are going to be set are actually achieved. If they're not achieved, we will have an opportunity to understand why, and then implement changes including defunding underperforming programs.

As your response reflects, if there’s an expert in Southern California on good public management, it’s you, Miguel. But some critics have argued that this Sales Tax Measure was drafted by the leadership of the "Affordable Housing Industrial Complex"—the same set of special interests that for 26 years have been supporting and benefiting from current affordable and homeless public housing formulas and programs; and, that their solutions, which many believe explain the Skid Row Development Corporation’s recent bankruptcy, are a “failed” strategy. How did the drafters of Measure A differentiate between what hasn’t worked and what’s now before LA County voters November 5?

Keep in mind that I recommended Proposition HHH when I was CAO of Los Angeles, and later served as chair of the Citizens Oversight Committee. As chair, I raised concerns about rising costs per unit—starting at $300,000 and now closer to $700,000 per unit—and the time it was taking to build these units. The good news is that HHH is delivering on its promise to build 10,000 units of permanent supportive housing in Los Angeles within 10 years. What we’ve learned from this is that there are ways to reduce costs per unit and fast-track timelines by avoiding a complicated revenue structure for housing.

By the time HHH was underway, the nonprofit-led affordable housing model was dominant. We carved out 10% to challenge the sector on cost and time, and we were successful. These lessons from HHH are guiding the financing of Measure A housing. We’re not requiring tax credits and inefficient revenue streams, nor limiting the funding to only permanent supportive housing, which is more costly and time-consuming. We’re also prioritizing communities prepared to expedite housing development, as delays are a major cost driver.

This coalition behind Measure A isn’t limited to nonprofit developers; it includes the LA Business Council, the hospital association, and others in philanthropy, business, and labor, as well as individuals with lived homelessness experience who bring urgency to the issue. For us, it’s vital to stay outcome-focused, and I personally worked hard on the outcomes section with my colleagues,      to ensure that. So, while I understand the criticism, as someone vocal about shortcomings, I can confidently say that this is a fresh approach.

Essentially, we’re building a system here—one that includes a dedicated revenue stream, strong governance, and coordinated buy-in from cities and the county. This ecosystem is projected to generate $3.1 billion for the local economy, create 25,000 jobs, and yield a 2.5x economic output for every dollar invested. In other words, we’re establishing a resilient, locally-driven production system for affordable housing that doesn’t rely on federal or state conditions and will deliver impact, regardless of the national landscape.

One of the advantages of interviewing you, Miguel, with your depth of experience in public sector governance, is that you offer voters policy and funding context. So, when you say you're creating a new system, are you saying Measure A will effectively be replacing now outlawed Community Redevelopment Agencies? As you well know, LA’s CRAs both funded (a billion dollars annually) and managed neighborhood affordable housing development utilizing & leveraging the private sector. You now assert Measure A will create a new housing development model; but weren’t the CRAs an effective and efficient affordable housing and economic development model?

The CRAs, as you’re referring to, had their pluses and minuses. One—you know, we wouldn’t have the LA skyline without them, as an example. We also wouldn’t have the affordable housing stock that we have today. The challenge of that structure is that they had limitations informed by boundaries. You know, you had to determine that there was blight. There had to be studies that said there was going to be blight, and the revenue that was generated would be reinvested back into those same communities.

It wasn’t a system. It was pockets of intervention throughout the region, some incredibly successful, some not. There were no goals that were established, and no expectation that housing affordability was going to get to a certain level or that there were going to be so many units created on a regional basis – and accountability was quite diffused.

This is a countywide initiative. Every part, all 88 cities, will have access to a portion of these dollars. All 88 cities need affordable housing. Even the wealthiest cities here in Los Angeles are required to build affordable housing. All 88 cities are confronted with the issue of the unhoused. The city of LA has the largest number of close to 45,000 unhoused individuals, but there are close to 80,000 countywide. What this does is sort of break one of the outcomes from the past, where the solution was just “take care of my community, and if I push people to another community, then that’s their problem.” This does a very contrary perspective because it establishes a countywide expectation that everyone must do their part. Every city and community has the ability, and now the revenue, to implement solutions that are responsive to their unique needs, and it establishes countywide goals and expectations and puts those communities at the table to implement them.

So, think about how Metro is a system that serves the entire region, with goals of building a rail system but also managing a system. You could argue whether it’s the best system in the world or if it has challenges, but no one argues that there isn’t a system. There is a system. No one asks, “Who’s in charge of transportation in this county?” You know who’s in charge. You could go to their meetings, their public meetings, and you know what the plan is. You could go on the Metro website and see the plan. There’s none of that when it comes to homeless and housing, and the CRAs didn’t have that either.

What this does is it creates an opportunity to build a transparent system. Frankly, this is how the government does everything else it does. In transportation, as I just said, and also in education. There’s accountability, there’s a structure for it, there’s an expectation. It does it for air quality—that’s a regional issue. The issue of housing and homelessness is the only issue that we treat where every city is on its own. They’re left to figure it out, and if you’re lucky, you’ll get some cooperation from the County of Los Angeles.

You’re an eloquent spokesman for this initiative—which again explains why there’s no opposition—but our readers might not hold Metro and LAUSD as good examples of the value of system solutions.

Pivoting; Why is California & Los Angeles, moving away from relying on inclusionary zoning strategies to achieve more affordable housing? The former has proven to be both effective and without cost to taxpayers—the money coming from the residual cost of land rather than taxes.

Measure A was intentionally designed not to set policy because a policy is the scope of those in governance today. Measure A is a revenue stream that mandates setting up goals and mandates coordination. From that, policy can be established to say that, together, we should have a county that fully adopts inclusionary housing or that we should advocate for more vouchers from the federal government, but it was intentional not to take away the power and authority that cities and the County currently have in their own jurisdiction. It has no land use authority, and it’s not going to impose affordable housing in communities and say, “We’re going to build it whether you like it or not.” It’s doing so in partnership with the communities themselves.

I’m Vice Chair of LACAHSA, and I sit with representatives from the cities of Bellflower, Monrovia, and out in the Antelope Valley. They are all interested in finding solutions to this issue and building affordable housing for their own communities. Each one may have a different approach, and they’re saying, “What we need is the capital to do it.” This revenue stream provides that capital. But it’s not our job to tell communities how to do it; it’s our job to provide funding, set goals and objectives, and mandate coordination. That’s what we’ve done. 

TPR can affirm that the communities we’ve talked to are very anxious to have access to Measure A dollars, so you’re right. But let’s return to the void created by the loss of CRAs, which had a mission that included not just building housing—the mandate was to fund and build economically vibrant communities along with housing. Measure A appears more narrowly focused on just funding housing. Is there any downside to being narrowly focused on just housing and neglecting all the other things that impact affordability, livability, and neighborhood and community?

Well, I’m going to push back, David—I think that’s only fair. The number one issue facing our economy is the lack of affordable housing, and we should not be proud that we’re the first generation of Angelenos to see a population decline. That’s one of the canaries in the coal mine we should be worried about if we want Los Angeles to have a better future than it did in the past. If we’re going to attract the workforce that is the lifeblood of this economy and ensure that our own children have a place to live, we need affordable housing. It is the biggest barrier to our economic growth today. People aren’t leaving LA for reasons discussed at the national level; they’re leaving because they can’t afford to live here. When the majority of Angelenos spend more than half of their income just to have a place to live, that is a problem.

The reason I’m pushing back is because I see this very much as an economic development strategy. When you’re putting $3.1 billion into the local economy and building an ecosystem that’s self-contained and protected from recessions, you’re strengthening the community's economic resilience. When I was CAO at the height of the recession, as you remember, revenues went down, plateaued, and unemployment skyrocketed. What saved us as a region was the fact that a few years earlier, the school district passed a school bond, the community college passed a bond, and taxpayers approved funding to build out the transportation system. Investments began at the airport and the port. Those public investments saved the LA economy during the height of the last recession. It was like our own WPA program here.

Now, imagine what we’re doing—creating an ongoing revenue stream by building housing and serving our most vulnerable, which strengthens the economy. Both create jobs that continue regardless of national events. The production of housing will continue, strengthening our economy and making it more affordable to live here.

The question, of course, could be reframed and asked: How is it that Los Angeles is both losing population and building more housing, yet housing prices keep rising?

That’s because you have single people living in single-family homes – that’s why. 

Another explanation could be that policymakers are not addressing the rising cost of land. When the State mandates upzoning, the main beneficiary is the landowner, whose property increases in value without the public sector taking any residual off the land price. Instead, Measure A relies on a sales tax—a regressive tax—to generate new funds for affordable housing production. (Excuse, excuse this argumentative reply… TPR merely means to afford one of the most knowledgeable civic leaders in California an opportunity to fully explain Measure A’s logic).

Well, you know, we explored all potential revenue streams. With the recent passage of ULA in the city, the transfer tax and the resulting pushback, which has nearly halted multifamily housing in Los Angeles, were clearly not avenues to pursue countywide. A parcel tax? People are protective of their property, and support for that is simply not there. A sales tax is already in place; we’re repealing and replacing it. What this means is just a quarter of a cent—take a penny, divide it, and a quarter of that will be the additional amount for most Angelenos, which is less than the cost of a Starbucks coffee.

Yes, inflation is impacting people, but in Los Angeles, the biggest crunch is housing costs. In Economics 101, supply and demand determine pricing. By expanding affordable housing and making it more available, the expectation is that housing prices will level off.

An entire school of thought in economics asserts that supply and demand doesn’t explain the housing market; it misses land value. But setting that economic argument aside, explain for our readers how:  despite LA permanently now housing about 42,000 people and sheltering another 81,000 in interim housing, the number of people experiencing homelessness across LA County has risen 37% since Measure H passed.

So query, ought the lack of funding be the main issue for voters and policy-makers?

The core issue is the lack of affordable housing. The number one reason people become unhoused is due to affordability. We know this because the fastest-growing groups experiencing homelessness are senior citizens—who have lived in their communities for decades and suddenly find themselves unable to afford to stay—working families with both parents employed, who still find that even a converted garage in South LA is unaffordable, and young people just starting out whose incomes don’t match the cost of living here.

Yes, we’ve housed an unprecedented number of people, more than any other jurisdiction nationwide, but the affordable housing shortage continues to push people into homelessness. And once someone becomes unhoused, other issues emerge—challenges to physical and mental well-being, which often spiral into additional problems like addiction. It’s a compounding challenge, but at the center of it all is housing affordability.

You earlier shared that homelessness is also an economic challenge. Some have noted that if one is not earning $42 an hour, a prospective homeowner (or renter)  is not able to equitably participate in the Southern California real estate market. Presently, the focus of public policy makers is to fight for $18, $19, $20 an hour. What explains the lack of pubic investment in economic development—in raising the average wage in Los Angeles to $42 an hour?

Actually, Measure A addresses this head-on. It requires prevailing wages for units built with funding from the measure for projects over 40 units. We were intentional about this because it would be hypocritical to expand affordable housing while simultaneously perpetuating poverty. My father worked in construction for 40 years, and I’ve seen both the good and the bad years. One of the challenges in construction is the constant boom and bust cycle of the economy. With a permanent revenue stream for building housing, working in the trades can become a real career path, allowing for living wages so people can afford to live here. We need skilled workers to build housing; it requires real human talent today. You know, this is why I really see this as not only a solution to the biggest crisis facing us but also as an economic development program that helps move people into a middle-class life. 

Before concluding, is it fair to conclude that Measure A aims to increase the cost of labor and also take advantage of recent State upzoning legislation, which increases the value of land? Do you believe going forward new housing will be built and priced under $700,000 per door?

We are not upzoning property. That’s not what we’re doing. We are creating a capital stream that allows entitled projects for affordable housing to actually be built. There are thousands of parcels in the county already entitled to residential, and multifamily development due to some statewide incentives and the mayor's executive directive. The issue is their inability to access capital, which is preventing these projects from moving forward.

Thank you, Miguel. Our readers are well served by your many civic life contributions. Hopefully, this interview offers our readers a chance to better understand how to vote on November 5.