California Plan To Prevent Some Homelessness -- May 14, 2020

$80 billion. Hold that thought.

$80 billion -- that's the current estimate to complete the California bullet train, and the state has not given up on this idea. Actually, this is pretty funny. The powers that be seem to be orchestrating a classic head fake. There is now talk that to control costs, it might be better to stick with diesel locos rather than electric. Are you kidding me? LOL. They say the "transfer" time between buses from the bullet train and the bus time itself to start/end one's journey takes so much time, there's no sense in pushing for max speed through electrification. So many story lines, but I digress and that was not the purpose of this post.

The head fake: I doubt that "electrification" is the long pole in the tent when it comes to costs for the bullet train. It was my understanding that laying the track was 90% of the cost. I don't know; I just pulled that number out of thin air. But whatever the percent, the cost of laying track is the real problem; electrification vs diesel is a red herring. And a head fake.

I track California's bullet train story here.

So, hold that thought.

Coming out of Sacramento, there is now discussion of "sweeping relief" for homeowners and renters.

Links everywhere, but here is one.

Under one plan: homeowners could delay mortgage payments for a year.

But that was an add-on.

The story that first caught my attention a couple of days ago: tenants -- those folks that pay rent -- would have ten years in which to make up missed payments, starting in 2024, and these make-up payments would be interest free.

My initial reaction was: this is crazy. Absolutely crazy.

But after a bit of thought, this is truly brilliant.

But one needs to put it in perspective: compare the "advertised" cost to the state for rental relieve vs the cost of the Bullet Train.

One also has to add this caveat: the "advertised" cost to the state (taxpayers) will be a whole lot less than what it will likely end up being, but that's another story for another time.

So, to paraphrase Pocahontas, here's the deal:

A plan put forward by Sen. Toni Atkins, Democrat from San Diego and leader of the state Senate, would grant qualifying renters 10 years to repay missed payments directly to the state, which would in turn compensate landlords for the missed rent with tax credits that could be sold to pay mortgages and other bills.... the tax credits would equal the lost rent, and would be transferable. 

Apparently this would start in 2024 in California -- I'm not sure why it should not start immediately -- now  is when renters need relief -- and would stay in effect for ten years. Maybe the rent relief starts immediately and the other components kick in in 2024. I don't know.

This is what it is all about: homelessness. There will be much more to say, but at the end of the day, this is all about homelessness in California.

There is a certain segment of the population that will always be homeless, but the folks I'm worried about -- and the folks this bill apparently targets -- is those folks on the margin, those folks that under "better" times would be able to make their monthly payments. This is for those families whose breadwinner is out of job for ten months and savings have run out.

So, stop right there, it's an incredibly brilliant idea.

But, the cost? Not affordable? Upwards of $500 million per year, or at ten years, or $5 billion. I think the math is correct. A billion a year for ten years would be $10 billion, so at half-a-billion/year, it would be $5 billion over ten years.

Now back to that thought you were holding: ff the state can find $80 billion to fund a short diesel train to nowhere, certainly it can come up with $5 billion over ten years to save a few families who would otherwise go homeless.

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Other Thoughts

The most important thing about this bill: it attempts to address part of the homelessness problem in California. That's enough right there to defend this proposal.

But think of the economic stimulus. A family that cannot afford monthly rent will not become homeless, with additional costs to the state.

They can use the money that would otherwise be spent on rent for transportation, food, education.

I don't like the idea of tax credits. I would prefer that the state simply pay the missed rent money directly to the landlords. If the state sponsor is being truthful that tax credits would equal missed rent payments, then it would be a wash for the state, and the landlord would not have to wait until the end of year to "break even" on the missed rent payments.