The Los Angeles City Council Wednesday approved a motion to create a three-member ad hoc committee to review and make recommendations to alter LA’s so-called “Mansion Tax.”
The council unanimously approved the motion, which was introduced Match 4 by Council President Marqueece Harris-Dawson and Councilwoman Ysabel Jurado amid concerns that 2022’s voter-approved Measure United to House Los Angeles is hurting affordable housing production, and could be vulnerable to a possible threat led by the Jarvis Howard Taxpayer Association.
The tax on properties above $5.3 million is not just for mansions but apartments, commercial buildings and other developments.
All pending files related to Measure ULA will be referred to the ad hoc committee, which is expected to be dissolved no later than April 30 unless it is extended by the council.
“I want to be clear that it’s the full intention to stay in keeping with the spirit of the voters,” Harris-Dawson said. “There are things in ULA that I frankly think were not in the spirit of the voters, like taxing the building of affordable housing as one example.
“So as the leadership of this city, I think the onus is on us to take a look at this, examine it, examine what has worked and what has not worked and what is not delivered on the promise of ULA, and give the voters a second chance to improve on what they did in the past,” he added.
While supportive of the ad hoc committee, Councilwoman Eunisses Hernandez urged her colleagues to maintain an “honest open book conversation” about ULA.
“Right now, special interest groups are attempting to subvert voters through manufactured corporate panic,” Hernandez said. “We cannot allow greed to dismantle the progress made in making a dent in the eviction to homelessness pipeline.”
In January, the City Council referred proposals to alter Measure ULA back to committees, and those proposal are now expected to be discussed by the ad hoc committee.
Councilwoman Nithya Raman, chair of the Housing and Homeless Committee and a supporter of Measure ULA, nevertheless sought to change the measure via a June ballot initiative.
She proposed to carve out exemptions for newly constructed multifamily, commercial and mixed-used buildings from the tax for up to 15 years, and exempt properties impacted by natural disasters like the Palisades Fire from the tax for up to three years.
Raman, who is running for mayor in the June 2 primary, also sought to introduce language that would allow traditional lenders to participate in funding ULA-supported affordable housing projects by changing financing terms, allowing affordable housing groups first rights on buildings being sold and to require the city attorney to complete legal review of ULA-related actions within 90 days of council approval.
Proponents of the measure celebrated the first $1 billion raised by the tax in early January. Money from Measure ULA funds programs supporting affordable housing production and homelessness prevention.
But Raman said Measure ULA has resulted in unintended consequences that hampered the production of housing. Studies, including one from UCLA, have shown that the measure slowed apartment construction. The studies estimated that ULA is preventing the construction of at least 2,000 market-rate units a year, as well as hundreds of affordable units.
Shane Phillips, housing initiative manager at the UCLA Lewis Center for Regional Policy Studies, previously told City News Service that sales of properties have fallen much more than in other cities in Los Angeles County — about 50% more.
“Bottom line: Taxing privately funded mixed-income apartments to subsidize publicly funded apartments is lowering the supply of affordable housing in the city, and it’s making housing more unaffordable for everyone by worsening the housing shortage,” Phillips said.
“Measure ULA is known as the `mansion tax,”’ but ironically mansions are the only housing type we’re building significantly more of since 2022 — permits for single-family houses are up roughly 40%. Multifamily permitting is down about 40%.”
Joe Donlin, director of United to House LA, the coalition that campaigned for the passage of Measure ULA, criticized Raman’s proposal and warned that it would weaken a critical tool to help with the homelessness crisis.
He had said it was irresponsible to propose changes without an analysis of how much it would cost or to engage with affordable housing advocates.
“ULA is working, and the rest of LA’s real estate market is rapidly adjusting to it,” Donlin said in a statement. “It would be catastrophic to give away LA’s best tool in the fight against the housing crisis as a developer tax break because of sloppy math and a rush to judgment.”
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 is working to qualify an initiative for the November ballot that would repeal Measure ULA and other real estate transfer taxes higher than 0.11%.
“Councilwoman Raman’s proposal is irrelevant to HJTA’s efforts,” Susan Shelley, vice president of communications for the association, said in a previous email to City News Service.
“Regardless of any changes to Measure ULA that the City Council may propose or enact, the Howard Jarvis Taxpayers Association intends to qualify and campaign to pass the Local Taxpayer Protection Act to Save Proposition 13,” Shelley added.