A Los Angeles committee Friday declined to recommend a ballot measure to reform the city’s so-called “mansion tax,” noting that it was too early to fully understand the long-term impacts on the construction of affordable housing.
The Ad Hoc Committee on Measure United to House Los Angeles voted 2-1 to instruct the Housing Department to work on a pilot financial assistance program and a proposed initiative to lower the tax rate on the sale of certain buildings. City Council members Ysabel Jurado and Imelda Padilla voted in favor, while Councilman John Lee voted against the matter.
The action substituted a motion introduced by Council President Marqueece Harris-Dawson and Lee, who sought a ballot measure to amend ULA’s transfer tax rate from 5-5.5% to 2-3.5% on the sale of properties above $5 million and $10 million. The proposed cap rates were suggested for single family homes, not-for-profit medical, educational and or arts facilities.
The duo also sought to allow each City Council member to access ULA dollars and use them as they see fit, which could include street homelessness response and interventions, according to the motion.
“Angelenos voted for Measure ULA because they want where working families can afford to stay, where renters are protected, and where we are serious about addressing homelessness and the housing crisis,” Jurado said in a statement.
“This process was about making sure ULA delivers on the promise voters believed in. Over the last several weeks, we brought together advocates, labor, affordable housing leaders, service providers, city departments and community members to take an honest look at what is working, what is not and what needs to improve,” Jurado added.
The councilwoman, who chairs the ad hoc committee, emphasized the recommendations they advanced Friday were about strengthening accountability, speeding up delivery, getting more affordable housing built and making sure resources reach the people who need them most.
“This is a major step forward in ensuring Measure ULA remains strong, effective and capable of delivering real results for Angelenos for years to come,” Jurado said in a statement.
The committee’s recommendations now head to the full council for consideration.
However, while the ad hoc committee voted not to recommend a potential ballot measure to reform ULA, it could still happen.
Harris-Dawson oversees the five-member Rules, Elections and Intergovernmental Relations Committee. The council president’s motion is still pending before his committee and has not yet been formally resolved.
So, if the rules committee advances the motion, there could be two competing recommendations for the full council to consider.
Jurado’s recommendations call for a proposed financial assistance program to aid unhoused individuals moving into permanent housing.
The pilot program would operate for three years, with the goal of helping 1,000 households, while new construction for new permanent affordable housing is underway.
Additionally, the ad hoc committee recommended for the ULA Citizens Oversight Committee, L.A. Housing Department and City Attorney to develop a pilot tax program with the goal of reducing the tax rate for affordable housing projects to 1.5%.
Sales of newly constructed multi-family and mixed-use projects could also benefit. Under the proposal, these projects would need to have some affordable housing units for lower income households, subject to a recorded covenant, and used primarily for residential purposes, among other requirements.
Meanwhile, the ad hoc committee continued a proposal to establish a one-time, five-year exemption from ULA for residential properties impacted by the January 2025 Palisades fire.
But a recommendation for this proposal is expected to come from the rules committee and go before the full council, according to city officials.
As part of the ad hoc’s recommendations, they also unanimously approved three other motions to expand reporting requirements of the ULA Citizens Oversight Committee, explore the feasibility of issuing revenue bonds by future ULA revenue to build more housing and direct a long-term evaluation of ULA’s economic and housing impacts, as well as program outcomes.
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 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.
City Council members are attempting to reform 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 LA voters in the November ballot for consideration.
A LAHD report found that a broad exemption of commercial and multifamily development sales from ULA could result in a reduction of approximately 35%, or an estimated $177 million, in annual revenue for housing and homelessness prevention programs.
After Friday’s meeting, the United to House LA Coalition — which campaigned in favor of the tax — hailed Jurado’s recommendations.
“By not taking up the extreme calls for broad, 15-year waivers that could cost the program about a third of its revenue, the committee acknowledged that ULA is working, that the case for its negative effect on real estate development has proven overblown, and that the measure itself was built to be flexible, improvable, and responsive to sound proposals for change,” Joe Donlin, director of the coalition, said in a statement.
Critics of Measure ULA have argued the tax has slowed commercial development and property sales and hurt the availability of affordable housing.
A 78-page report, titled “The Effects of Measure ULA Transfer Tax on Economic Development and Municipal Finances in Los Angeles,” published by RAND Thursday found that ULA has reduced apartment construction, increased rent and cost jobs and funding for city services.
“Study after study confirms what affordable housing builders, construction workers and tenants are seeing first-hand — Measure ULA is slowing housing production, which increases costs for renters and those who want to own homes,” said in a statement Sarah Dusseault, a member of the Affordable LA: Mend It, Don’t End It coalition, who are advocating for ULA reforms.
“It’s time to follow the data and the peer-reviewed research and make practical fixes to Measure ULA so it better achieves its goals, which we all agree on — more housing, increased affordability and less homelessness,” Dusseault added.
The new RAND research conservatively estimates that ULA led a reduction in the construction of large apartment buildings in Los Angeles by 30% since it went into effect in 2023. The report also found that tenants in apartment buildings that paid the ULA tax saw their rents increase, and that ULA cost local, county and state agencies $452 million in revenues.
Donlin has said the impact of ULA on real estate development has been greatly exaggerated by critics, who said other reports have shown no effect from ULA on multi-family housing.
He added that Los Angeles real estate-permitting activity is on the rebound.
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 for the November election. If approved by state voters, the initiative would repeal Measure ULA and other real estate transfer taxes higher than 0.11%.