With plenty of votes still uncounted, initial results show strong support for Measure ULA, a controversial transfer tax that could reverberate through the city of L.A.’s commercial and luxury residential markets for years.
The measure on Tuesday’s ballot would add a 4 percent tax on property sales within the City of Los Angeles valued between $5 million and $10 million, with the tax rising to 5.5 percent on sales above $10 million.
As of Wednesday morning, the referendum was leading by about 7 percentage points, with about 252,000 votes in favor and 218,000 opposed. Those totals reflected about 44 percent of all the city’s expected votes, according to the L.A. Times, so the outcome could still change in the coming days, when the county finalizes its vote tally.
Revenue raised from the tax, which applies to both commercial and residential deals, would be used for homeless housing. On Wednesday, with the dust from a frenetic election night still settling, some groups who championed the measure were cautiously optimistic.
“Votes are still coming in, but things are looking good,” tweeted an account for United to House LA, a nonprofit that backed the measure. “People power > real estate lobby.”
The tax had been fought aggressively by some industry groups, who argue the higher tax will cool the city’s market, disincentivize development and even drive wealthy residents out of L.A. altogether.
“It sounds great,” Dan Yukelson, executive director of the Apartment Association of Greater Los Angeles, said earlier this fall. “It’s a great rallying cry for voters — ‘We’re going to take all this money from rich people and help the homeless.’ In the long run, this is going to come back and bite us in the ass.”
In the runup to the vote, L.A.’s large luxury residential sector, including high-profile brokers such as Stephen Shapiro and Jason Oppenheim, was particularly agitated over the prospect of the so-called mansion tax, with some brokerages sending out blast emails in a last-minute mobilization.
Analysts have predicted that residential sales that fall around the margins of the two tax thresholds — $5 million and $10 million — could be most affected, as well as some residential development projects, because the higher tax makes certain projects harder to pencil. But the greater impact is likely to be in the city’s commercial market, where nearly all large deals would be subject to the tax.
Two similar measures were also on the ballot in Santa Monica: With a majority of the city’s votes counted, Measure GS, which would add a 5.7 percent tax on deals above $8 million, was on track to pass. The other measure, which would add a smaller 2.5 percent transfer tax, was headed for rejection.
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