For months it’s been the elephant in the room for L.A. real estate, and CBRE’s Lew Horne seemed to have that scale in mind in calling it out.
“It’s probably the dumbest thing we’ve ever seen,” said Horne. “It was posed as a mansion tax … the truth is it’s a tax on development, it’s a tax on land, it’s a tax on office, retail and multifamily.”
Horne was speaking about Measure ULA — the City of L.A.’s controversial new transfer tax on property sales above $5 million.
The tax, approved by voters last November, was billed as a way to help alleviate the city’s homelessness crisis, and projected to raise more than $500 million annually. But since it came into effect in April it’s failed to raise funds anywhere near that pace, because deals in the city have largely dried up. And it’s also inspired near universal enmity among the city’s brokers and developers, who argue that it was not only unfairly conceived but also ends up backfiring by stifling the creation of the homes the city needs.
Horne, speaking as part of TRD’s Los Angeles Forum on Thursday, was both plainspoken and passionate in his assessment of the new tax’s impact.
“ULA now has essentially redlined the City of Los Angeles,” said Horne, president of CBRE’s Greater LA, Orange County and Inland Empire region. “I hope the county doesn’t pass the next measure because it will redline the county,” he added, referencing a potential similar tax coming from L.A. County.
The SoCal veteran also said L.A.’s real estate community didn’t work hard enough to stop the measure before it was approved in a referendum last fall.
“We were asleep at the switch,” he said. “Frankly we didn’t pay attention to it.”
But now, with the tax already in place, he’s advocating for local real estate players to engage more with public officials.
“It starts with a dialogue,” he said. “We’re coming in with research and knowledge. We’re really inviting the opportunity to have a real conversation so we don’t run into one of these ULA situations again.”
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Horne also pushed for more public-private partnerships as a way to help the city’s housing issues: CBRE, he said, already has initiatives underway that include a program where the commercial brokerage could help the city to select and manage hotel sites for homeless shelters.
“We’ve taken this on as our social responsibility,” he said. “But what we’ve got to get away from is this [system of] two camps, where we’re all adversarial against the elected officials … You’ve got a massive issue here that we’ve got to solve collectively, together, as a public and private community.”