The latest bid to give developers a break on Los Angeles’ big, bad “mansion tax” comes from a Democratic Socialist, with the progressive president of the Los Angeles City Council seconding the motion.
Fourth District Los Angeles City Councilmember Nithya Raman’s motion to create exemptions to the two-tiered real property tax called Measure United to House L.A. — and commonly known as ULA — is set to go before the council on Jan. 27. Eighth District colleague Marqueece Harris-Dawson, who serves as president of the 15-seat council, has signed on to support the effort.
Raman is proposing a ballot measure for June 2 that would create a permanent 15-year carveout for new or “substantial rehabilitation” of multifamily, commercial and mixed-use projects. The clock on each exemption would start at the time the certificate of occupancy is issued.
Currently, ULA applies a 4 percent tax on transactions starting at $5.3 million and it bumps up to 5.5 percent on deals of $10.6 million or more.
Voters approved Measure ULA in 2022 as a levy aimed at generating revenue to fund housing production and homelessness programs. The real estate industry has argued that the tax, which went into effect in 2023, has chilled financing for new construction and the flow of deals overall.
Raman has been a supporter of ULA since its inception, and she is casting the proposed carveout as a bid to preserve the tax in the face of steady attempts to roll it back amid a reduced pace of multifamily development that is compounding the local housing crunch. The limited pipeline is increasingly seen as linked to ULA tamping down lending.
“To be honest about the conditions that we’re operating in, multifamily and mixed-use housing production has slowed in the city of L.A.,” she said during Friday’s council meeting. “Lenders are pulling back from the market entirely, and there’s multiple efforts to undo ULA entirely, to take it away from us completely.”
The specifics around how each asset class is defined in the exemptions are broad. Any property with four or more units would be considered multifamily, while commercial is anything not used for residential.
Raman’s motion would also address concerns raised by Pacific Palisades owners whose properties were damaged in the Palisades Fire. It would allow those impacted by a natural disaster to be exempt from paying the ULA tax with proof of “hardship.” If this portion of the amendment was passed, it would be made retroactive to January 2025 for Palisades Fire victims.
Raman’s proposal is significantly broader than an idea floated by Los Angeles Mayor Karen Bass in October when she called on the council to pass an ordinance that would allow for a one-time ULA exemption over a three-year period for owners of homes, condominiums and other residential properties hit by the Palisades Fire.
To date, Measure ULA has generated over $1 billion since it went into effect, according to data from the Los Angeles Housing Department as of the end of last year.
The largest share of that revenue — about 60 percent, or $441.5 million — came from sales of single-family homes above the $5.3 million floor.
That’s across 864 transactions, netting an average of nearly $511,000 per deal.
The area that’s generating the largest amount of that single-family revenue is District 11, Los Angeles’ Westside. That includes neighborhoods such as Brentwood, Pacific Palisades and Venice.
Commercial, which does not include multifamily or mixed-use projects, accounts for the next largest bucket of ULA revenue at $354 million or about 24 percent of the overall pie.
This is a developing story.