A broad exemption of commercial and multifamily development sales from Measure United to House Los Angeles could result in a reduction of approximately 35%, or an estimated $177 million, in annual revenue for housing and homelessness prevention programs, officials reported Friday.
A committee is currently conducting hearings to understand the impacts of potentially reforming Measure ULA, with the goal of establishing recommendations to be decided on by all 15 members of the City Council and Mayor Karen Bass.
On Friday, the City Council’s three-member Ad Hoc Committee on Measure ULA convened to discuss a report from the Los Angeles Housing Department on the impacts of proposed changes to Measure ULA.
Currently, elected officials are exploring whether to exempt newly constructed multifamily and commercial buildings from Measure ULA for up to 15 years, and exempt properties impacted by natural disasters like the Palisades Fire from the tax for up to three years. They are also exploring potential changes to financing terms to allow traditional lenders to participate in funding ULA-supported housing projects, among other possible reforms.
LAHD officials reported that a combination of the broadest exemption scenarios for commercial and multifamily properties could reduce total revenue by approximately 35%, or an annual reduction of $177 million in ULA revenue. Officials warned that actual loss may be higher considering potential lost interest revenue associated with ULA loans.
Specifically, exempting properties built or substantially remodeled within the last 15 years (excluding single-family homes, duplexes and triplexes) could reduce revenue by 29% or an estimated $145 million per year.
Exempting properties built within the last 15 years (excluding single-family homes, duplexes and triplexes) it could reduce revenue by about 13%, or an estimated $64 million per year.
Exempting residential transactions of properties impacted by the Palisades Fire could reduce revenue by 6% or about $32 million annually during the period that is agreed to. Exempting single-family homes destroyed by the fire could reduce revenue by 2% or an estimated $8 million annually for however long it is agreed upon.
Additionally, if the broadest exemption scenarios take effect, it could lead to a 350 fewer new affordable housing units, 1,500 fewer homes preserved, 950 fewer low-income renter households receiving rental assistance, 1,200 fewer low-income senior/disabled households receiving income support and 2,100 fewer low-income households receiving eviction defense, according to LAHD’s report.
Without any reforms to Measure ULA, Senior Housing, Planning and Economic Analyst for LAHD Maya Abud said they anticipate allocating more than $520 million in ULA funds in fiscal year 2026-27. Of that estimate, about $335 million would support affordable housing programs and nearly $144 million for homelessness prevention initiatives.
“This is by far the greatest annual amount of funding ever allocated by the city of Los Angeles for housing production and homelessness prevention services,” Abud said. “We anticipate that this funding level will likely continue.”
So far, Measure ULA has supported the production or preservation of more than 5,600 units, and financed more than 315 units, according to LAHD. On homelessness prevention, revenue has supported nearly 6,000 households via direct cash assistance and provided direct legal assistance to more than 14,000 households facing eviction.
Funding has allowed service providers to conduct tenants rights outreach to more than 250,000 tenants, as well.
Approved by voters in 2022, Measure ULA established a transfer tax on property valued above the annually adjusted $5 million and $10 million — this tax encompasses the transfer/sales of mansions, apartments, commercial buildings, multi-family housing, among other categories of buildings.
The measure took effect April 1, 2023, and through April 30, 2026, it has raised nearly $1.2 billion from 1,633 real estate transactions, according to LAHD officials. Revenue generated from the tax supports an array of programs: the construction, rehabilitation and preservation of affordable housing; and homelessness prevention programs such as rental assistance, income support for seniors and people with disabilities, eviction defense, and tenants rights education.
Housing officials clarified that of that $1.2 billion raised about $750 million has been allocated while only $114 million has officially been spent. Money can only be dispersed once a contract for a particular project or service has been signed.
“Today’s hearing was about putting data, public accountability and housing outcomes at the center of that review. My goal is to move forward deliberately, with recommendations that protect the intent of the measure while improving delivery for the communities it was designed to serve,” said City Councilwoman Ysabel Jurado said, chairs the ad hoc committee.
The committee also reviewed an analysis on housing production trends by the office of Chief Legislative Analyst Sharon Tso. While some studies link Measure ULA to reduced transactions, other analyses point to interest rates, financing constraints and broader market conditions as the main barriers to new housing, noting continued increases in permitting and multifamily construction activity.
City Council members are working toward reforming Measure ULA after concerns were raised that the tax is hurting affordable housing production. Any significant alterations approved by the full council are expected to be placed before the voters in the November ballot for consideration.
Critics of Measure ULA have argued the tax has slowed commercial development and property sales and hurt the availability of affordable housing. The Howard Jarvis Taxpayers Association has argued that Measure ULA violates both the state Constitution and the Los Angeles City Charter.
The association and other supporters qualified a so-called Local Taxpayer Protection Act to Save Proposition 13 with more than 1.3 million signatures to election officials on Feb. 25. If approved by state voters, the initiative would repeal Measure ULA and other real estate transfer taxes higher than 0.11%.