Dear Assemblymember Alex Lee,
Mountain View YIMBY is proud to support AB 946, a bill that would reallocate $230 million from wasteful subsidies to purchase a second home to programs like the CalHFA MyHome Program, providing over 23,000 first-time homebuyers with down payment assistance.
Mountain View YIMBY is a chapter of South Bay YIMBY. We are a group of people who live or work in the city of Mountain View and believe in increasing equitable access to the opportunities offered by this amazing city, and combating global warming through urbanization. We do so by advocating for construction of homes at all income levels from supportive housing to market rate. We protect Mountain View’s more vulnerable residents by defending Mountain View’s rent control law, and advocating for better displacement protection policies. Last but not least, we push for more transit, and bike and pedestrian infrastructure.
According to the Franchise Tax Board, approximately 175,000 wealthy Californians deduct the interest from their second home’s mortgage on their state taxes. This tax break equates to roughly $230 million a year in tax expenditures, subsidizing people who do not need it.
Mortgage interest deductions, particularly deductions on second homes, are regressive – on a federal level, filers with six-figure incomes receive 80% of the tax subsidies. A study from the St. Louis Federal Reserve found that savings from the MID are baked into the price of the home, or capitalized, which may depress homeownership by up to 5%. Congress has passed bi-partisan measures to curb this subsidy for the wealthiest taxpayers; however, California, with the second-lowest rate of homeownership in the United States, subsidizes the luxury of owning a second home.
Today’s minority homeownership rates reflect California’s history of racist and discriminatory housing policies – only 34.5% of Black people & 41.9% of Latinos are homeowners, compared to 74% for Whites. Fortunately, California has opened the opportunity for homeownership by funding down payment assistance and publicly insured mortgages. 65-70% of CalHFA first-time home loans go to people of color.
This bill would remove the mortgage interest deduction on second homes, and reallocate that money to CalHFA’s MyHome Assistance Program and other programs that support low- and moderate-income homeownership. By increasing funding to these programs, this bill would reallocate money that currently subsidizes mostly vacant, vacation homes to help low-to-middle income Californians afford their first home.
We are therefore proud to join the diverse coalition of organizations in support of AB 946 and urge your colleagues to support this bill.
Salim Damerdji, Lead
Mountain View YIMBY