There is a proposition on the ballot this election that affects our family personally. As the Los Angeles Times reports, Prop. 22 will make it no longer possible for the governor or the California Legislature from holding back / borrowing from or otherwise spending money meant for local public services, local transit agencies and redevelopment projects as they try to balance the California state budget and as they did this year. The issue affects us personally as one of our tenants in a rental unit we own has been employed as a dispatcher with the Los Angeles County Metropolitan Transportation Authority and as a result of the state taking money from the transit budget, she has been laid off and is unable to pay her rent, which is a big problem for our family.
The article says the measure has strong support from the League of California Cities, an official organization of cities around the state, which lost a huge amount of money when Sacramento (the capital of the state) borrowed $1.9 billion from local property taxes, $1.7 billion from redevelopment projects and $1 billion from local transit agencies to help balance the 2009-2010 state budget. When the state borrows this money, local agencies are left without money they need to fund salaries and other basic services. Prop 22, as the article details, would put a stop to this practice.
Unfortunately the issue affects us personally as one of our tenants in a rental unit we own has been employed as a dispatcher with the Los Angeles County Metropolitan Transportation Authority. Like a air traffic controller, she works in a room filled with computer screens where she directs buses around Los Angeles, making sure they avoid traffic, accidents, street closures, as well as sending replacements or service vehicles when they break down. She and other dispatchers work as a team along with the drivers, maintenance personnel and other staff to make the vast, complex system work smoothly and safely for the citizens of Los Angeles. When the state took money from the Los Angeles county transit budget to close a gap in the state budget, her department was slashed in half, and she was laid off. She has come to us because like millions of Americans she was living month to month, and now will not be able to pay her rent next month. First the state had a problem, then she had a problem, now we have a problem.
We are not real estate moguls with millions of dollars in the bank. We have saved as a family and we own several small rental units in Los Angeles. Over the years, we have carefully saved and bought mainly duplexes, triplexes and four-plexes, these are small 2,3 or 4 unit buildings, mainly single or one bedroom units. We have mortgages on all the buildings and as a family we all chipped in to cover the 20% down payment. Our monthly mortgage on all the properties is about $20,000 a month, and the rental income is about $18500., but in these difficult times we are happy to be able to maintain a positive cash flow, pay the mortgage on time each month and hopefully create some assets we can one day pass on to our children.
Now with this tenant unable to pay her rent, which is $1500.a month, we have just eliminated our profit, until she gets a new job or we get a new tenant. You can see how thin the margins are in this difficult real estate market. If three or four of our tenants called us with financial problems, it could be a disaster for us.
Now we are faced with a dilemma. This woman is a good tenant, always pays her rent on time, quiet, respectful neighbor, everything a landlord looks for. She has a college degree and a lot of experience in her field. But how long do we wait for her to get a new job? We have a mortgage to pay and need her or someones rent to pay that mortgage. Do we wait? Do we move to evict her? In California and here in Los Angeles, even a tenant who doesn’t pay their rent, can file paperwork after an eviction notice, that can delay the process for up to six months, during which time they can still not pay rent. But during this time, we still need to make our mortgage payments.
So its a classic example of the trickle down theory. Our tenant was laid off and can’t pay her rent. We will need to cover her rent for a month or two and thus we will need to cut back on our spending, so business that were depending or expecting that money will not get it, and so on. The article does point out that many Californians are worried about the proposition after recent local government scandals involving corruption and mismanagement of funds as have been reported in cities like Bell.
Jack Dolan “Prop. 22 asks voters to mediate dispute between local, state politicians” Los Angeles Times via latimes.com
California Secretary Of State Official Voter Guide via www.sos.ca.gov website