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In May, our campaign released a policy for rent forgiveness in LA. On Tuesday, my opponent released one too.
Our economic situation is rapidly evolving, and I want to dig into these policies so LA can move to help tenants quickly.
This thread might get wonky but stay with it!
Our economic situation is rapidly evolving, and I want to dig into these policies so LA can move to help tenants quickly.
This thread might get wonky but stay with it!
In the rent forgiveness motion my opponent, David Ryu, released Tuesday, relief payments are funded by government loans from the Fed's "Municipal Lending Facility."
I see the appeal! I suggested using these loans to fund rent forgiveness back in April. https://twitter.com/nithyavraman/status/1250457392904409089?s=20
I see the appeal! I suggested using these loans to fund rent forgiveness back in April. https://twitter.com/nithyavraman/status/1250457392904409089?s=20
But after we talked about using Municipal Lending Facility loans to help fund rent forgiveness, we learned more details about the terms of those loans.
Without major changes, these terms are not good for LA. They’re likely worse than what we could get on the private market.
Without major changes, these terms are not good for LA. They’re likely worse than what we could get on the private market.
Simply put, loans from the Fed’s Municipal Lending Facility currently come with high penalties and requirements that make them a bad deal for LA — and almost all other cities and states.
They’re also short-term loans. They have to be paid back in full within three years.
They’re also short-term loans. They have to be paid back in full within three years.
In June, the Center for Popular Democracy found that the Fed’s municipal loans would only be good for cities and states with very low credit ratings.
In fact, they found that only three of the 83 eligible cities would benefit. LA is not one of the three. https://populardemocracy.org/sites/default/files/Aiming%20to%20Underachieve%20-%20Fed%20Up%20White%20Paper%20June%202020.pdf
In fact, they found that only three of the 83 eligible cities would benefit. LA is not one of the three. https://populardemocracy.org/sites/default/files/Aiming%20to%20Underachieve%20-%20Fed%20Up%20White%20Paper%20June%202020.pdf
Congressmember @AyannaPressley and @DavidpStein at UCLA wrote about the failures of the Fed’s Municipal Lending Facility a month ago, calling out the MLF’s high penalty rates that would disproportionately harm Black city and state employees. https://www.cnbc.com/2020/07/21/op-ed-fed-policies-have-contributed-to-black-unemployment.html
Some evidence supporting the idea that only government entities with bad credit ratings would benefit from the Municipal Lending Facility: of all cities/states, only Illinois has taken an MLF loan.
Illinois has the worst credit rating of any state by far. https://www.reuters.com/article/us-usa-illinois-fed/illinois-to-sell-debt-in-first-deal-with-feds-muni-liquidity-facility-idUSKBN239328
Illinois has the worst credit rating of any state by far. https://www.reuters.com/article/us-usa-illinois-fed/illinois-to-sell-debt-in-first-deal-with-feds-muni-liquidity-facility-idUSKBN239328
Meanwhile, the state of Washington -- which has a similar credit rating to LA -- called MLF loans a "non-starter" because interest rates would be “between 2.3 and 2.8 times higher” than a comparable loan from the traditional bond market. https://tre.wa.gov/mlf-not-in-best-interest/
Elizabeth Warren, two other senators, and 53 Congressmembers have written the Fed asking that they make their municipal loans more accessible.
But while adjustments were made last week, they aren't close to enough to make these loans a good deal for LA. https://www.nrdc.org/experts/douglass-sims/fed-must-throw-lifeline-state-and-local-governments
But while adjustments were made last week, they aren't close to enough to make these loans a good deal for LA. https://www.nrdc.org/experts/douglass-sims/fed-must-throw-lifeline-state-and-local-governments
The need for rent forgiveness in LA is massive, and we should definitely investigate all options for funding it locally.
Our plan explores using transferable city tax credits, and creating a rental housing registry to help add long-term transparency. https://www.nithyaforthecity.com/platform/rent-forgiveness
Our plan explores using transferable city tax credits, and creating a rental housing registry to help add long-term transparency. https://www.nithyaforthecity.com/platform/rent-forgiveness
Since we released our rent forgiveness plan, we’ve looked into other possible funding streams to pay for it.
One idea: reforming our real estate transfer tax to be more like SF’s and Washington’s. This would add almost $1 billion to LA’s city budget. https://www.lewis.ucla.edu/research/transfer-tax-reform/
One idea: reforming our real estate transfer tax to be more like SF’s and Washington’s. This would add almost $1 billion to LA’s city budget. https://www.lewis.ucla.edu/research/transfer-tax-reform/
Here’s the thing: I’m thrilled that rent forgiveness is finally being discussed at City Hall.
Now let’s do everything in our power to make it work. Let’s consult every tenant, organizer and expert we can. Let’s *move.*
Once the eviction tidal wave begins, it will be too late.
Now let’s do everything in our power to make it work. Let’s consult every tenant, organizer and expert we can. Let’s *move.*
Once the eviction tidal wave begins, it will be too late.
For further reading: Destin Jenkins ( @DestinKJenkins) has also written brilliantly about the fraught history of cities attempting to use bond markets to invest in vulnerable communities, and the need for Black organizers to have a seat at the table. https://www.thenation.com/article/society/invest-divest-police/
