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What Giant Skeletons and Puppy Shortages Told Us About the 2020 Economy

America has Zoom towns.Many middle-class millennials who lingered on the housing market’s sidelines for years reported that the pandemic had hastened their buying plans. They have been lured by the Fed’s pandemic-tied interest rate cuts, which have made mortgages cheap, and by the prospect of more space.Business & EconomyUpdated Dec. 23, 2020, 8:59 a.m. ETSome millennials, freed from office buildings by remote work arrangements, seem to be aiming for cities where single-family homes are relatively affordable — what some writers have labeled “Zoom” towns. People roughly ages 21 to 40 have accounted for a huge share of home purchase loans in places …

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New York’s Real Climate Challenge: Fixing Its Aging Buildings

A plan to upgrade a cluster of nine unremarkable apartment buildings in Brooklyn typically would not merit a second look. But this isn’t a quick fix; the project, called Casa Pasiva, aims to be a new model for the sustainable transformation of the city’s housing stock.Sleek new skyscrapers that incorporate the latest energy-efficient building materials like mass timber may look impressive, but when it comes to solving the climate crisis in New York, the real challenge lies in the city’s decades-old structures.More than 90 percent of the buildings in New York today will still be standing …

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Trump Signs Pandemic Relief Bill After Unemployment Aid Lapses

House Democrats plan on Monday to vote on legislation that would provide for $2,000 direct payments, with Speaker Nancy Pelosi saying Mr. Trump should “immediately call on congressional Republicans to end their obstruction” and support the measure. Senator Chuck Schumer of New York, the minority leader, said he would move to pass the bill in the Senate, but such a maneuver would require Republican support.But during the negotiations, Senate Republicans have resisted increasing the payments, citing concerns about the deficit. In a statement applauding the president’s signature, Senator Mitch McConnell of Kentucky, the majority leader, made no mention of …

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Falling Behind on Weekly Rent and Afraid of Being Evicted

Before the new Nevada moratorium was imposed, one weekly rental company — the Siegel Group — was especially prolific, filing 328 eviction actions in both Nevada and Arizona since the C.D.C. moratorium took effect, according to the Private Equity Stakeholder Project, a consumer advocacy group. The Siegel Group, a, privately held company that operates weekly rentals and “flexible stay apartments” under the Siegel Select and Siegel Suites name, has about 12,000 such units in nine states in the south and southwest.On its website, Siegel Suites boasts that it is a leader in offering “short-term, long-term or forever” apartments and says that “ …

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Use It or Lose It: Tenant Aid Effort Nears a Federal Cutoff

Looking to expand aid, Mayor Jim Kenney announced in early March that the city would budget $50 million for a five-year program to assist low-income households. It would also run an experiment, giving one group of households rental vouchers while another group of families got unrestricted cash assistance.The coronavirus ended that by blowing a hole in the city’s budget. But the CARES Act added some $60 million in new funds, some through the state and some in direct federal support to cities. The catch was that it had to be spent quickly. And that’s where Mr. Heller’s group …

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Divvy Homes Says Rent-to-Own Deals Work. Next Year Will Be a Test.

With high eviction rates, substandard properties and shady legal practices, rent-to-own home businesses are one of the darkest corners of the real-estate world. Financially vulnerable people seeking a piece of the American dream often end up swindled for money and property improvements, then booted on to the street.Divvy Homes, founded three years ago and backed by highflying Silicon Valley investors, has said it aims to change all that.Instead of offering clients a meager selection of rundown homes to pick from, Divvy allows them to select a property on the open market. The sale price is locked in at …

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Despite Challenges, Opportunity Zones Provide Much-Needed Capital

Following a slow rollout of rules governing opportunity zones, a program Congress approved three years ago to encourage investment in low-income neighborhoods, developers have pumped billions of dollars into the zones nationwide, even in the midst of the pandemic.The program has drawn myriad detractors, including critics who charge investors are using it simply to avoid paying taxes. Others point to a lack of transparency that makes it tough to gauge whether the investments are making a real impact on communities.The Trump administration has resisted providing much federal reporting or oversight, but some states and cities are using the …

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The Capital of Sprawl Gets a Radically Car-Free Neighborhood

Phoenix, that featureless and ever-spreading tundra of concrete, has been called “the world’s least sustainable city.” It has been characterized as a “sprawling, suburbanite wasteland” and “a monument to man’s arrogance.” The Onion has darkly predicted that by 2050, “most of Earth’s landmass” will be swallowed by the encroaching Phoenix exurbs. The Walk Score index ranks the place as the second-worst big city in America for pedestrians, and traversing it has been described as “a slog through a desert, plus the occasional McDonald’s.”

The Phoenix metropolitan area is, in other words, the last place you would expect a real estate developer to spend $170 million creating what it calls the first-ever car-free neighborhood built from scratch in the United States.

The development, Culdesac Tempe, is a 17-acre lot just across the Salt River from Phoenix. Currently a mess of dust and heavy equipment, the site will eventually feature 761 apartments, 16,000 square feet of retail, 1,000 residents — and exactly zero places for them to park. The people who live there will be contractually forbidden to park a car on site or on nearby streets, part of a deal the development company struck with the government to assuage fears of clogged parking in surrounding neighborhoods.

Culdesac Tempe is a proving ground for a start-up also called Culdesac, which was founded in San Francisco and moved to Tempe during the pandemic. Started in 2018 by two native Arizonans, the company announced the project last year to a mixture of curiosity and doubt. Urbanists cheered it as a bold and important step toward a future with fewer cars, while suburban developers said the concept could never work on a large scale.

Others preferred to simply ignore Culdesac. “If something is described as ‘car-free,’” Car & Driver wrote, “we’re generally not interested in reading any further.”

Although Culdesac was devised before the coronavirus emerged and has experienced some construction delays, the project could end up benefiting from the pandemic, as more Americans consider working from home indefinitely in cheaper cities. Culdesac says it expects the first residents will be able to move into their apartments next year, with the larger site completed by 2023 — a pedestrian oasis in the megalopolis known as the Arizona Sun Belt.

To be fair, Tempe, the home of Arizona State University, gets high marks for bike friendliness and has seen a recent boom in high-rise construction. But outside the campus area, it is very much a part of the region’s autoscape. Culdesac’s immediate neighbors include an R.V. park, a mechanic, a transmission shop and an auto-parts store, and nearby apartment complexes — the competition — are surrounded by parking lots that shimmer in the three-digit heat.

The car-addicted reality of the area makes Culdesac’s architectural renderings both intriguing and a little hard to believe. According to the images, neighbors will lounge in communal courtyards and walk to do their errands. Culdesac Tempe is directly on a light-rail line to downtown Phoenix, but residents may never need to leave: The complex will feature its own grocery store, coffee shop, restaurant, co-working space and other amenities.




The 167 rowhouse-size apartment buildings will be broken up by wide pedestrian malls, and there will be a half-acre park where residents can walk their dogs and stage picnics. A limited amount of parking will be provided for outsiders who want to visit friends or shop at the stores, but the people who live there will have to rely on public transit, bikes, ride-hailing apps, scooters and the like to get around greater Phoenix. Apartments start at about $1,000 a month for a studio and $2,200 for a three-bedroom, about in line with the area.

Because Culdesac’s founders come from the technology industry, where no idea is valid if it does not scale, the company’s plans go way beyond Arizona. Ryan Johnson, a founder and Culdesac’s chief executive — he’s also the Tempe site’s first official renter — said the multidecade goal was to retrofit American cities and end car ownership as we know it.

“After this one, we’re going to build something for 10,000 residents,” Mr. Johnson said in an interview. After that: entire municipalities. “The vision of Culdesac,” he added, “is to build the first car-free city in the U.S.”

Credit…Adriana Zehbrauskas for The New York Times

Mr. Johnson’s thesis, as laid out over a few hours of recent Zoom calls, is that (a) the future of American cities is the walkable urbanism found in New York and San Francisco but that (b) that future is headed to the Sun Belt.

The coasts may dominate American culture now, but for decades the biggest growth rates have been in sprawl-heavy places like Atlanta, Houston and Phoenix. The latter remains among the nation’s fastest-growing metropolitan areas, adding about 750,000 people since 2010. With a total population just under five million, Phoenix has edged out Boston as the country’s 10th-most-populous urban area.

Compare that with New York and Chicago, which are losing population, and with California, which continues to see a net outflow of middle-class residents to cheaper cities beyond its borders. If you want to be in the business of creating not just new buildings but entire neighborhoods, you go where demand is exploding, and that’s Arizona.

Megan Woodrich might become one of these coast-to-Sun-Belt transplants. “It’s absolutely untenable here long term,” said Ms. Woodrich, a teacher who lives in South San Francisco — a suburb of 63,000 that sits below its more famous neighbor — with her husband and three children. They are considering a move to a cheaper place like Arizona, but they want a walkable neighborhood — a combination of desires that led them to discover Culdesac. Ms. Woodrich is on a list of 200 people that have expressed early interest in the development.

Some economists and demographers have derided Phoenix’s growth as cheap. They note that many of the jobs being created are low-paid positions in sales and customer service, the result of the local government’s encouraging corporations in higher-tax states to move their back-office operations.

But in the recovery since the subprime-housing bust, which leveled the local economy and its construction-dependent job growth, Phoenix has developed a budding tech scene and started to attract jobs from Silicon Valley. Zoom, the videoconferencing app that has gone from little known to ubiquitous during the pandemic, recently announced that it was opening a research and development office — full of the higher-paid software engineers that tech companies usually place in the Bay Area, Seattle and New York — in the Phoenix area.

At the Culdesac site, the developers are blending two ideas that usually have nothing to do with each other. The project is both an “infill” development that aims to sleeve itself into the urban landscape, and a master-planned community that recalls a Disney exhibition or a golf-and-condos parcel in Florida.

The goal might be termed instant gentrification: to open up with all the amenities that make a place desirable, and hope that they make the neighborhood a destination overnight. The development’s park, shops and co-working spaces will all be open to the public, and every penny spent on site, whether from a tenant’s rent check or an outsider’s bar tab, will filter up to the same company.


Credit…Adriana Zehbrauskas for The New York Times

When Culdesac Tempe was announced, the idea of a large, car-free development in Arizona seemed like the extreme but plausible edge of a long-term trend. Americans are getting serious about reducing their carbon footprint, and for years, cities across the country have been rewriting their zoning codes and building regulations to require fewer parking spots and encourage greater density.

Outside urban cores, there has been a parallel trend toward more duplexes, apartments in shopping malls and “car-lite” developments — building projects that acknowledge most residents must drive to work five mornings a week but may prefer to walk or use transit for errands and leisure. Even in Phoenix, the few relatively walkable neighborhoods command premium prices.

Still, there was probably going to be a ceiling on the number of tenants Culdesac could attract. The great bulk of the city’s working population has jobs requiring a car commute. Culdesac might have made a profit courting the subset that shunned automobiles and worked from home, but there’s no disputing it would have been a subset.

Then, of course, came the pandemic, causing tens of millions of Americans to begin telecommuting from their living rooms. Across the country, employers are re-evaluating whether they will ever reopen their downtown offices at full capacity, and some have told their staffs that they can accomplish their tasks via videoconference forever. Suddenly, the Culdesac pitch — a Sun Belt development that caters to people who work remotely and middle-class refugees from the expensive and crowded coasts — started looking eerily prescient.

Builders and urban planners have long denounced city-mandated parking minimums — requiring projects to include one or two spots per unit — as “apartment blockers” that raise the rent. Instead of telling developers how many parking spots to build, they argue, cities should allow parking to be built according to demand. The hope is that once residents see how much a parking space is costing them (a few hundred dollars a month in big cities), they will be more apt to embrace car-sharing and public transit.

In 2018, Seattle passed a law requiring developers to unbundle the cost of parking from the cost of rent, and various other cities, including Los Angeles, Portland, Minneapolis, Austin and San Francisco, have approved buildings with minimal or no parking for residents. Just a year after Culdesac announced its Tempe development, a more modest project — a 104-apartment complex with just six units of parking — was proposed in Charlotte, N.C. The developer, Grubb Properties, assembled a spreadsheet of car-free buildings and developments for the City Council to consider. Culdesac topped the list, which mostly consisted of smaller, one-off projects.

The more common it becomes to sever parking from development, the easier the concept is to sell to tenants. “When other developers get on board, it helps change the mind-set of lenders and others who are stuck in the traditional car-centric mentality,” said Clay Grubb, Grubb’s chief executive. In mid-October, Charlotte’s Council approved the project with a 6-to-5 vote.


Credit…Adriana Zehbrauskas for The New York Times

Arizona — for all the scorn heaped upon it by, ahem, car-despising coastal elites in professions like journalism — is actually a magnet for housing innovation. Like the rest of the West, the state boomed after World War II, attracting residents and industries as white Americans suburbanized and the baby boom commenced.

In the dominant Phoenix region, which accounts for about two-thirds of the state’s population, growth was steered by a cabal of civic boosters and Chamber of Commerce men, who courted out-of-state employers by hoovering up federal infrastructure dollars and fostering a good “business climate” — that is, they kept unions weak, taxes low and regulation minimal.

The mix of fast growth and low-key rules has given Phoenix a reputation for being “the petri dish for housing experiments.” It’s a great place to build because people are constantly showing up. And because so many houses look the same — terra-cotta roof, rock lawn by the driveway, and exteriors in your choice of tan, tan or tan — the region emerged from the housing bust with a reputation for being one of the easiest places in America to gauge the price of a home.

In the aftermath of the Great Recession, when investors built single-family-home empires from the wreckage of a mortgage crisis, the Phoenix region was one of the first markets where institutional buyers started amassing foreclosed properties. More recently, Phoenix also became a test market for an emerging class of “iBuying” (short for instant buying) companies, including Redfin, Zillow, Offerpad and Opendoor, which hope to upset the traditional broker model by offering home sellers quick cash offers, then flipping the properties back on the market.

Arizona is so encouraging of new real estate schemes that its Commerce Authority has a program, Property Technology Sandbox, in which companies can apply to test new ideas to buy, sell and develop without having to get the usual licenses. It’s a place that attracts builders because the local attitude seems to be “Eh, give it a try.”

Unlike so many other Arizonans, Mr. Johnson is actually from here. He grew up in Phoenix and was one of those kids who spent hours building rail networks and skyscrapers in SimCity. Being a good student and interested in software and public transit, Mr. Johnson expected that he would attend the Massachusetts Institute of Technology or some other elite university in a dense, Eastern city.

Instead, he went to the University of Arizona with a full-ride scholarship plus $50,000. This came from the Flinn Foundation, whose Flinn Scholars program aims to keep smart locals from leaving the state.

Mr. Johnson used the $50,000 to invest in the Tucson rental market, then left for a succession of out-of-town jobs in consulting, finance and in public service, the latter at New York’s Metropolitan Transportation Authority. In San Francisco, he joined Opendoor, and in 2018 started Culdesac with Jeff Berens, his college roommate.

“What we saw at Opendoor,” Mr. Johnson said, “was there is enormous demand for walkable neighborhoods, and with all these innovations in transportation, ride sharing, scooters, et cetera, we realized that there was a way to build it. So we said, ‘Where can we build a new type of walkable neighborhood?’”

Doing this would require three things: raising money, finding land and getting a city to let them do it. The first two could be satisfied anywhere. The last required a place with a loose approach to housing regulation. However much Arizona is associated with sprawl, the Phoenix region is actually a builder of everything — towering condos, garden apartment complexes, golf course villas.

The company approached Tempe with its plans in 2018 and by late last year had a development agreement that allowed it to build the project without residential parking so long as the residents were prohibited from parking nearby. With that, Mr. Johnson went home. Soon the company followed him: In May, Culdesac canceled its office lease in San Francisco and instituted a remote work policy. A half-dozen of the company’s 20 employees have since moved to the Phoenix area.


Credit…Adriana Zehbrauskas for The New York Times

Before Culdesac’s backhoe went in, the Tempe site was a neighborhood eyesore. The ground consisted of dirt and broken glass. On top of it stood abandoned buildings with stray wires and punched-out windows. Standing there in early February, I imagined it being the site of a dystopia-themed paintball war or a great place for teenagers to vape.

This is, of course, how developers make money: They see potential where others don’t, and profit through the timeless process of turning land that is worth little into land that is worth a lot. But I wondered how viable Culdesac’s expansion prospects were beyond the sure-why-not regulatory ethos of Arizona. Even if the Tempe project is a success, it’s unclear how many times Culdesac can assemble large, underutilized lots along existing transit lines and persuade cities to let them rezone with the eagerness that Tempe did.

I asked Mr. Berens to show me Culdesac’s potential development sites in other cities, and he agreed on the condition that I describe them only generally. Recently, over Zoom, he took me on a satellite tour of five metro areas: Denver, Washington, Dallas, Atlanta and Raleigh, N.C.

The common element was that the sites were miles from the central business district but still (with the exception of Raleigh) proximal to a rail line. Their neighbors were industrial yards and towing companies and car dealers. Imagine riding a subway from downtown, in the direction of the airport, and looking out the window as you reach a stop on the industrial edge of the city.

That’s the sort of spot Culdesac is seeking: Places that can be bought cheap, covered with hundreds or thousands of new homes, and made to feel that they are connected to the heart of the city because a new generation of tenants fundamentally embraces transit — or maybe doesn’t want to go into the heart of the city at all.

Doing this will require lots of money and lots of interests, pools of debt and equity that developers assemble into a “capital stack” that lays out who is paid for what and when. If Culdesac is successful, it will operate like a franchise or chain hotel that links several individual companies through one brand.

One of those companies, Culdesac Inc., has raised $17 million from venture-capital firms including Khosla Ventures, Zigg Capital and Initialized Capital. That company plans to serve as the developer and property manager for the series of limited liability companies that make up an individual project, which in turn will be funded by individual investors and bank debt. Culdesac Tempe, for instance, is being codeveloped with Sunbelt Holdings, a local developer, and Encore Capital Management, a real estate investment firm, which raised most of the equity for the $170 million project’s construction.


Credit…Adriana Zehbrauskas for The New York Times

We are living in a moment of extreme disruption. (And that’s a sentence I’m typing before the outcome of the presidential election is known.) People are changing how they live, where they work, how they get there or if they get there at all. The process of getting back to normal is likely to be more disruptive still. Billions of people will create new habits, and no matter what happens, many of them will stick.

For whatever reason, changing addresses seems to open people to further change. In studies of military families, one of the few groups of people who are shifted around at random, researchers have found that marriage and children are often associated with long-distance moves.

“There is something about being told that you are going to be moving across the country that forces you to re-evaluate other big decisions in your life,” said Abigail Wozniak, an economist at the Federal Reserve Bank of Minneapolis who studies migration.

This “discontinuity hypothesis” seems to apply to environmental habits as well. A study in Copenhagen found that when drivers were nudged to take public transit, the nudge worked best with people who had recently changed addresses. Movers also seem more open to recycling more, conserving water and reducing electricity use. There seems to be a sweet spot, sometime within three months of a move, when people’s habits are upset and they open themselves to the possibilities of new ones.

To build anticipation for the opening in Tempe, Culdesac has been hosting semiregular video calls with prospective residents, who give input on the final design. Talking about bike-rack design or the rules of a future community garden, they come off as the urban-planning equivalent of the fanatics and early adopters who stand in long lines for “Star Wars” movies and Apple products.

Demographically, they mirror the two groups that have been credited with the past three decades of urban revitalization: young professionals like Ms. Woodrich, and empty nesters like Reynolds-Anthony Harris, a 67-year-old business consultant who lives in the Minneapolis area and is also considering a move to Phoenix.

“There are some of us who have no interest or desire whatsoever to be in a segregated senior citizens’ community,” he said. “That, to me, is the fastest way to the grave.”

Whatever the age, they also all seem interested in a kind of self-imposed shock and the discovery of something new.

Daniel Moreh, a software engineer in Oakland, Calif., isn’t even interested in Tempe itself. He’s heard nice things; he knows it has a university. The real appeal of Culdesac is the idea of being part of something new.

The start-up bug is something people take with them everywhere, so he uses phrases like “co-create the culture,” and he expects that the first few months of living there will be echo the feeling of traveling and making easy friends. “There’s not an established hierarchy of ‘Hey, I can’t talk to you yet,’” he said.

“It’s a bunch of people who are willing to pick up whatever they had in their life and move to try this thing,” he added. “I don’t know who they are yet, but that sounds like a group of people I would be interested in meeting.”

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California Tax Revolt Faces a Retreat, 40 Years Later

OAKLAND, Calif. — In 1978, a Los Angeles businessman named Howard Jarvis led an insurgent campaign to pass Proposition 13, a ballot measure that limited California property taxes and inspired a nationwide tax revolt. The law has been considered sacrosanct ever since, something California governors and legislators challenge at their peril.

Now, as a pandemic tears through local budgets, a well-financed campaign backed by teachers’ unions has mounted a serious challenge to a major portion of the law: its application to commercial property.

If voters approve the effort next week, they would give labor and progressive groups a striking victory in raising the low tax rates that longtime property owners enjoy. If it fails, the campaign will have spent tens of millions of dollars only to affirm that Proposition 13 is untouchable.

The new initiative, Proposition 15, would amend the state’s Constitution so that properties like offices and industrial parks would no longer be protected by Proposition 13. By creating a “split roll” system, in which residential property would continue to be shielded from tax increases but commercial property would not, backers hope to capitalize on Democratic energy to raise taxes on large corporations without alarming homeowners.

“We can’t afford to continue to give large corporations a tax break they don’t need when we desperately need to invest in infrastructure, first responders, public health and public education,” said Catherine Bracy, executive director of the TechEquity Collaborative, a nonprofit group that mobilizes tech workers on issues of economic inclusion.

Proposition 15 would raise $6.5 billion to $11.5 billion a year for public schools, community colleges and city and county governments, according to a nonpartisan state agency. The Yes campaign, called Schools and Communities First, is backed by a number of public employees unions and the Chan Zuckerberg Initiative, the philanthropic organization founded by Mark Zuckerberg, the Facebook chief executive, and his wife, Priscilla Chan.

The measure’s opponents, including a number of business associations and large property owners like the Blackstone Group, argue that the tax increase would hurt small businesses. They have also tried to frame the measure as one that, if successful, will soon reach for residential properties.

“They want to do this because they believe now is an opportunity to break up Proposition 13,” said Rex Hime, chief executive of the California Business Properties Association, a trade group for owners of offices, industrial parks and shopping centers. “They’re coming after homeowner protections next.”

The two sides have raised more than $60 million each for their campaigns. Support is also evenly split: A recent poll by the Public Policy Institute of California showed that Proposition 15 has split the electorate, garnering the support of 49 percent of likely voters, with 45 percent opposed and 6 percent undecided. It has won a number of prominent endorsements, including those of Gov. Gavin Newsom; Joseph R. Biden Jr., the Democratic presidential nominee; and his running mate, Senator Kamala Harris of California.

Proposition 13’s lock on California politics began with the bouts of hyperinflation that shredded household budgets through much of the 1970s. In addition to the rising cost of food, electricity and other staples, the value of housing — and by extension, property taxes — also soared. In California, residential property values rose 250 percent from 1970 to 1980, while household income remained flat.

As tax payments consumed a larger share of homeowners’ budgets, Mr. Jarvis, a retired businessman turned anti-tax gadfly, mounted a 1978 citizens’ initiative, eventually called Proposition 13, that would cut California property taxes and limit future tax increases to no more than 2 percent a year, unless the property was sold. It passed with just under two-thirds of the vote and has since endured various legal challenges. In 1992, the U.S. Supreme Court upheld the legality of Proposition 13 but called it “distasteful and unwise.”

Credit…Associated Press



Proposition 13: Mad as Hell

In 1978, California voters passed Proposition 13, which lowered property taxes for millions of the state’s homeowners. Decades later, what has it meant?


In 1978, California voters passed Proposition 13, which lowered property taxes for millions of the state’s homeowners. Decades later, what has it meant?

Mr. Jarvis, who died in 1986, framed his campaign as a way to make the tax system more equal, but Proposition 13’s legacy has been the opposite. Because property values are reassessed for tax purposes only after a building is sold, the law has created a wildly disparate system in which new buyers pay vastly higher taxes than longtime owners.

It is not uncommon for neighbors to pay double or triple the taxes of a similar home on the same block. A recent analysis of property taxes across the Bay Area is rife with eye-popping comparisons, like a $9 million home in an exclusive neighborhood of San Francisco that has lower property taxes than a $331,000 home near an oil refinery across the bay in Richmond.

When Proposition 13 passed, commercial property taxes were almost an afterthought. But since skyscrapers and shopping malls do not change hands as often as homes do, the law has shifted the property tax burden from corporations to homeowners. In 1975, a little under half the property taxes in Los Angeles County were paid by commercial properties. By 2017, commercial properties accounted for just over one-quarter of the property tax roll.

“It boggles the mind how ingrained this thing is in our culture, given how regressive it is,” said Christopher Thornberg, founding partner of Beacon Economics, a consulting firm in Los Angeles.

When backers started collecting signatures to qualify Proposition 15 for the ballot last year, the measure was framed as a way to make the state’s tax collections broader and more equitable by raising rates on commercial property holders. Now, as the state, like the nation, begins a difficult recovery from the coronavirus recession, it has become as much about backstopping essential services when budgets are under stress.

In addition to keeping homeowners under the 1978 limits, the new measure would not affect apartment buildings and agricultural land. It would be phased in over several years, and it has exemptions for business owners with $3 million or less in holdings in California. Because of the exemptions, various studies have shown that Proposition 15’s tax increases would sidestep most small businesses and instead fall on corporations that control huge parcels of real estate, like Walt Disney’s studio lot in Burbank, or 555 California, a San Francisco office tower owned by a partnership that includes Vornado Realty Trust and President Trump.

But with the economy still hampered by Covid-19, and many stores and restaurants on the brink of extinction, the opposition message has resonated with people like Barbara Stelzriede. Ms. Stelzriede is the general manager of George & Walt’s, a sports bar in the Rockridge neighborhood of Oakland, and a fourth-generation member of the family that has owned the bar’s building and surrounding property since 1945.

On a recent afternoon, in addition to neon beer lights and a 21-and-over sign, the bar’s window was emblazoned with a bright yellow sign that had “Vote NO on 15. It will put small corporations out of business!!!” in Ms. Stelzriede’s handwriting. Sitting on a bar stool, among a mess of hammers, drills and extension cords that were being used to install a plexiglass barrier around the bar and plastic curtains around the tables, she discussed her anxiety about the bar’s pending reopening, what business would be like afterward, fears that the Proposition 15 money wouldn’t go to schools as proponents have advertised, and suspicion that the measure would open the door to higher taxes on apartment buildings and houses.

“There couldn’t be a worse time in the world right now for them to be doing this,” she said.


Credit…Jim Wilson/The New York Times

Credit…Jim Wilson/The New York Times

Some of her neighbors disagree. Last week, someone taped the window with a passionate response to Ms. Stelzriede’s sign. “MILLIONS upon MILLIONS of school kids suffered for more than 40 YEARS,” the letter said. “Disneyland + other MEGA CORPORATIONS are still assessed at their same property values from decades ago. PROP 15 = FAIR + JUST! It’s TIME.”

But it’s not just businesses that own their buildings that are worried. Across the state, landlords construct commercial leases so that tenants are responsible for a portion of the property taxes (doing this increases the value of the building in the event the property is sold and the taxes are reassessed).

“Virtually no landlords give Proposition 13 protection,” said Gerald Porter, founding principal of Cresa, a commercial real estate company in Los Angeles.

Clauses like that have Laurie Thomas, the owner of two small restaurants — Rose’s Café and Terzo, both in San Francisco — worried that she and other restaurant owners will be hit by higher taxes if Proposition 15 passes. Today, as part of her lease, Ms. Thomas is responsible for about $6,000 a year in property taxes at one of her locations. She estimates that would jump to about $40,000 if the building was assessed at market value. “Our lease clearly says that I am on the hook for 50 percent of the property taxes — it’s a direct pass-through,” she said.

Mr. Thornberg, the economist, doubts that this can happen on a large scale. Much more than property taxes, he said, lease rates reflect market fundamentals like size, location and a building’s particular amenities.

In a recent study for the Silicon Valley Foundation, Mr. Thornberg’s firm tried to gauge the impact of Proposition 15 on leases by analyzing commercial rents in similar buildings with different tax bills. “The owners of these buildings who are paying well below market tax rates are not passing the savings to their tenants,” he said. “In other words, they are charging what the market will bear and are unlikely to be able to pass along additional costs.”

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Airbnb Fights Its ‘Party House Problem’

The luxury cabin in Incline Village, Nev., just north of Lake Tahoe, has a hot tub, sauna, pool table, fire pit, two patios and a backyard full of towering pine trees. It sleeps 14, according to its listing on Airbnb. And it has been a nightmare for Sara Schmitz, a retiree who lives next door.

The home is frequently the site of raucous bachelor parties and weddings, Ms. Schmitz said. Recently, a crew of college students stayed there, blowing weed smoke into her house. When she asked them to stop, they threw trash in her yard.

“It’s a constant party house,” said Ms. Schmitz, 57. She has called the police a dozen times about the property and joined the Incline Village STR Advisory Group, an organization that fights short-term rentals — for which the largest source is Airbnb.

What Ms. Schmitz encountered is part of the “party house problem” facing Airbnb. That’s when guests who book its properties hold parties in them, something that appears to be happening more frequently in the coronavirus pandemic, as people look for places to socialize with bars closed and hotels appearing risky. In July, New Jersey police broke up a party at an Airbnb with more than 700 people in attendance.

Credit…Max Whittaker for The New York Times

The party houses pose a risk to Airbnb’s reputation and business as the $18 billion company prepares to go public this year. In many neighborhoods, people have been turned off by the rentals’ noise and annoyances. Complaints about party houses across sites like Airbnb and Vrbo soared 250 percent between July and September compared to last year, according to Host Compliance, which provides local neighborhood hotlines across the United States and Canada.

Worse, the party houses raise safety issues. Between March and October, at least 27 shootings were connected to Airbnb rentals in the United States and Canada, according to a tally of local news reports by Jessica Black, an activist fighting short-term rentals. The tally was verified by The New York Times.

Over the years, Airbnb employees have pushed executives to do more to address the party houses, said six people who worked on safety issues at the company. But they said the start-up largely prioritized growth until a deadly shooting last Halloween at an Airbnb made national headlines. Five people died.

The issues are now fueling Airbnb’s many fights with communities over how to regulate home rentals. Groups like the one in Incline Village are becoming more vocal and are sharing their strategies for fighting short-term rentals. Cities including Chicago, San Diego, Ann Arbor and Atlanta have recently proposed or enacted stricter rules or bans on the properties.

“Airbnb’s long-run viability and profitability is going to have a big question mark” if the party issue is not resolved, said Karen Xie, a professor at the University of Denver who researches the short-term rental industry.


Credit…Max Whittaker for The New York Times

Christopher Nulty, an Airbnb spokesman, said the company is combating the party houses with “robust new policies, products and technologies to stop large gatherings, which far exceeds measures taken by others.” He said Airbnb has made changes even though the moves “knowingly impacted growth and nights booked.”

Airbnb began rolling out new rules against party houses around the same time that it was preparing to file to go public. In July, it said guests under the age of 25 with less than three positive reviews on the site could not book entire homes near where they live. In August, the same month it filed for a public listing, it placed a 16-person cap on reservations, banned parties and sued guests who were responsible for the events.

Last month, it started testing technology to block suspicious last-minute bookings and suspended some party houses from its listings. And ahead of Halloween — the one-year anniversary of the shooting at the Airbnb in Orinda, Calif. — it banned one-night rentals on Halloween.

Some said the measures were too little, too late.

“The damage has really been done to the neighborhoods during that time,” said Austin Mao, an Airbnb host in Las Vegas. He said the costs of repairing damages from parties at his properties, which host as many as 2,000 guests a month, have been tremendous. Neighbors complained so much about parties over the summer that he converted a third of the listings to long-term rentals.

In 2016, Christopher Thorpe, an entrepreneur in Lincoln, Mass., said he faced $28,000 in damages after an Airbnb guest threw an 80-person rave, complete with ticket sales, at his home. Mr. Thorpe later learned that other hosts had reported that guest for parties, but Airbnb had not removed the renter from the platform.

“Airbnb put up as many roadblocks as they could to avoid dealing with this,” Mr. Thorpe said.


Credit…Kyle Oster/Fox5

Airbnb has long grappled with safety issues, said the six former employees who worked on trust and safety and who asked to remain anonymous.

Two of them said they asked Airbnb to sue people who frequently threw parties at the rentals for the damages, but executives feared that would draw attention to the events. Several also said they pushed to limit or remove the “Instant Book” option, which confirms bookings immediately without requiring approval from the host. But the feature, which was used by almost 70 percent of listings in 2019, boosted convenience and made Airbnb more competitive with hotels. So Airbnb did nothing, they said.

Mr. Nulty said Airbnb promoted Instant Book so hosts could not discriminate against guests by denying some of them a booking, adding that hosts can turn off the feature. He denied that executives had been urged to sue party promoters and said its legal team did not reject proposals because of concerns over public attention.


Credit…Max Whittaker for The New York Times

In Incline Village, which has a population of around 9,000, the Airbnb party houses have increasingly grated on residents. Shortly after Joe and Edie Farrell, retired physical therapists, moved permanently into their vacation home there last year, the house next door became an Airbnb. Blasting music and drunk people created “10 days of anxiety” around July 4, said Ms. Farrell, 70.

“Airbnb is basically helping people set up a hotel in our neighborhood,” Mr. Farrell, 68, said. “Now you have to worry about your safety and peace and quiet.”

Then came last year’s fatal shooting at the Airbnb in Orinda. A Vice news article that outlined Airbnb’s fraudulent listings and fake host accounts also went viral, raising questions about trust.

In response, Airbnb said it would ban parties thrown by professional organizers that were promoted on social media. It also said it would verify that all seven million of its listings were as advertised by Dec. 15, 2020, and announced a global hotline for neighbors to report parties. And it promoted its head of policy, Margaret Richardson, to be vice president of trust. (She has since left.)

But when the pandemic hit in March, executives scrambled to keep the company afloat. Verification stalled. (Airbnb said 40 percent of listings have “begun the verification process.”) The neighborhood hotline, which was supposed to be available globally, is only accessible in the United States, Canada and the Netherlands.

In May, Airbnb cut a quarter of its staff, including a large chunk of its safety team. In an internal Q. and A. with Brian Chesky, Airbnb’s chief executive, employees protested the layoffs. One said the decision would leave guests without support for weeks, according to a list of the questions viewed by The Times. Another wrote that he would feel unsafe staying in an Airbnb or renting his home on the site because of the lack of a safety plan.


Credit…Ray Chavez/The Mercury News, via Getty Images

In the first week after the layoffs, safety cases piled up, said former employees. Airbnb asked many of those it had laid off to return temporarily to work through the cases; many of those workers have since remained, said current and former employees. In Dublin, the layoff plans were rescinded altogether, they said. Airbnb said the team that manages user safety is now the size it was before layoffs.

In August, Airbnb introduced more changes to improve safety. It sued a guest who held a party in Sacramento that resulted in three people getting shot. It then sued another guest who hosted a party in Cincinnati, where a property manager was shot in the back while trying to break up the event.

On Oct. 19, the company sued Davante Bell, a party promoter in Los Angeles who threw parties at Airbnb mansions. “Airbnb has suffered and continues to suffer reputational harm and potential liability to third parties as a direct result of Bell’s actions,” the company’s lawsuit said.

Mr. Bell, who declined to comment on Airbnb’s suit, has been selling tickets to a new party called “Nightmare on King Bell Street Halloween Mansion Party” on social media. This week, he continued posting fliers for the event. When asked if the party would be held at an Airbnb, Mr. Bell did not answer.