The unintended harm of urban (and rural) California land trusts

Come along on a walking tour exploring the intersection of real estate and social issues.

This week the focus will be on the unintended harm occasioned by land trusts in California.

Of course, for those who live on land trust property they experience over time a considerable insulation from the rising cost of real estate, and this ensures their protection from market and speculative forces; however, this is at the expense of society.

Land trusts in California lock in Proposition 13's deep chill of socially-generated land value. Precisely as Prop 13 deprives society of the market valuation (and commensurate revenue) of the location values of commercial and conventional residential properties, land trusts guarantee that their land value will also not be subject to market valuation.

So, just as Prop 13 has resulted in commercial land holdings not paying their market fair share of property taxes (resulting in higher sales and income tax to make up the difference), so land trusts help a privileged bunch by foisting the funding of community goods and services onto those who pay sales and income tax.

Indeed, were land trusts to become ubiquitous, they would make necessary the iniquitous proliferation of taxes on productive activity. Land trusts are more permanent holdings than commercial real estate endeavors, meaning specific land trusts will outlive almost all specific commercial real estate holdings. If California were to convert all holdings to land trusts, Prop 13 would freeze property taxes forever!

On this walk we'll explore the antidote to land speculation, whether its private investment or land trust investment at play. Making real estate affordable is as easy as socializing land values.