The Los Angeles City Council delayed a vote Tuesday on a proposal to let voters decide whether to amend the city’s controversial “mansion tax,” which is facing intensifying repeal efforts.
Officially known as Measure ULA, the transfer tax imposes a 4% levy on property sales of $5.3 million to $10.6 million, and a 5.5% levy on sales over $10.6 million. That is on top of a 0.45% tax the City of Los Angeles already imposed on all real estate transactions. Both taxes are paid by the seller.
The full city council declined to place a recently introduced measure by City Councilmember Nithya Raman on the June ballot to reform the tax, instead referring it to the Housing and Homeless Committee for further analysis and public input.
Although colloquially referred to a “mansion tax,” Measure ULA applies to all real estate priced at over $5 million, including apartment buildings, commercial properties, and vacant lots.
Since going into effect in April 2023, the tax has generated over $1 billion and counting for the city, according to the Los Angeles Housing Department’s online tracker. The revenue goes toward funding new affordable housing projects, homeownership initiatives, low-income tenant assistance, and eviction defense legal services.
Critics, however, argue that the tax has discouraged investment in new multifamily housing developments and dampened high-end home sales.
In a bid to quell growing opposition to the tax, Councilmember Raman, who endorsed the tax, introduced a motion on Friday to add a measure to the June primary ballot that would amend Measure ULA.
Raman’s proposal includes a 15-year exemption from the tax for newly constructed multifamily, commercial, and mixed-use buildings, which should put developers at ease.
In addition, the amendment would grant a three-year exemption after any natural disaster if the property owner can demonstrate that the tax will cause “an undue hardship.” The provision would apply retroactively to homeowners affected by last year’s devastating Palisades and Eaton wildfires.
Proponents of Measure ULA, led by United to House LA—the coalition that championed the initial ballot initiative in November 2022—have pushed back against proposed changes to the tax.
“Measure ULA is keeping people housed, funding affordable homes, and creating good union jobs,” the coalition wrote on its Facebook page. “The proposed changes would delay and substantially reduce funding, shifting resources away from permanent housing toward short-term solutions.”
Addressing protesters who opposed changes to Measure ULA at Friday’s City Council, Raman said her proposal is aimed at preserving the core of the tax, reported CalMatters.
“Multifamily and mixed-use housing production has slowed in the City of L.A., lenders are pulling back from the market entirely and there’s multiple efforts to undo ULA entirely, to take it away from us completely,” Raman was quoted as saying. “There may be different ways of thinking about how we protect this going forward, but I stand here with you in deep agreement with the comments that you’re making.”
United to House LA contends that the ballot proposal has been steered by real estate interests and political maneuvering without meaningful community input.
Joe Donlin, director of United to House LA, previously told Realtor.com® that Measure ULA is working exactly as it should by keeping Angelenos housed.
“It has funded 800 affordable housing units that are already finished or under construction,” he said recently. “It’s provided $30 million in renter assistance.”
It comes a month after a California appeals court rejected a legal challenge from the Howard Jarvis Taxpayers Association, which advocates for lower taxes in California. The group argued that Los Angeles lacked the legal authority to impose the tax, but the court upheld Measure ULA.
In turn, the Association has made it a statewide issue, gathering signatures to put a measure on California’s November ballot that would repeal Measure ULA and similar real estate transfer taxes exceeding 0.11% in some two dozen cities.
