Committee Asks LA City Attorney for Report on Measure ULA Pause

A proposal to temporarily pause the mansion tax for property owners in the Pacific Palisades has new legs a month after Mayor Karen Bass first floated the idea in a letter to the city council.

On Monday, the Ad Hoc Committee for LA Recovery approved a motion asking the City Attorney to report back in 30 days on the feasibility of the one-time carveout of the Measure United to House L.A. tax. The update effectively pushes the issue into 2026, the earliest property owners could have clarity on the matter.

The proposal — if passed in any form — would be the first time a swing at getting the tax modified has landed, and could spell implications for real estate dealmaking more broadly.

Voters passed Measure ULA as a November 2022 ballot measure that applies a 4 percent tax on property sales starting at $5.3 million and 5.5 percent on trades of $10.6 million or more.

So far, the more than $880 million generated by the tax has been funneled to programs aimed at homelessness prevention, including eviction defense services and rental assistance, in addition to building affordable housing.

While the commercial and residential industries have blamed the tiered tax for casting a pall on deal flow and development, ULA has more recently been singled out as a hurdle to getting the Palisades — a community that’s part of the City of Los Angeles — rebuilt following January’s Palisades Fire in which 5,500 residential buildings were destroyed in the community.

Councilmember and Ad Hoc Committee on LA Recovery chair Traci Park said during Monday’s meeting she looked for possible ULA exemptions “given that there were hundreds of millions of dollars in ULA revenue going unspent earlier this year.”

“We had had hoped to see some of those funds be made available to renters from the Pacific Palisades who lost their homes as a result of the fire as well as to workers who lost jobs as a result of the fire, but sadly and infuriatingly, really, we were advised on each of those occasions that citizen-driven initiatives like ULA can only be amended at the ballot box and not by council ordinance,” Park said.

The expected revenue from ULA for the current fiscal year is about $425 million, with commercial properties–which does not include multifamily or mixed-use properties, by the city’s classifications–generating the biggest slice of funding so far. The commercial sector generated $88.6 million in the current fiscal year, according to Los Angeles Housing Department data as of Nov. 12. Single-family homes brought in the next largest bucket of revenue with $58.2 million.

Bass’ Oct. 9 request for a carveout would apply to single-family homes, condos and other residential properties affected by the fire. It’s a one-time exemption, across three years that Bass is pushing in a bid to “create more housing citywide,” she said in her October letter to the city council.

Among the properties hit by January’s fires, the city has so far issued permits for 526 unique addresses as of Monday, according to the Department of Building and Safety. Another 1,106 addresses have applications filed, while a little over 1,000 are in review.