LA City Council Places Measure ULA on Review

It’s looking more likely changes to the city of Los Angeles’s Measure United to House L.A. are coming.

What shape they take is unclear, but concerns about the tax’s “unintended consequences” for single-family residential properties have been overshadowed by commercial real estate. That’s not surprising given the 2022 ballot measure was sold as a mansion tax to help raise funds for tenant rights and homelessness programs.

This past week’s move by the L.A. City Council to establish an ad hoc committee on the two-tier property tax aims to address the ire that came after mayoral hopeful and 4th District Councilmember Nithya Raman sought to fast-track ULA amendments onto the June ballot.

Raman’s proposal for a 15-year carveout on new multifamily, commercial and mixed-use construction, plus a one-time carveout for properties impacted by a natural disaster, was critiqued in January for lacking the typical public comment process and was kicked over to the city’s Housing and Homelessness Committee.

Council President Marqueece Harris-Dawson and Fourteenth District representative Ysabel Jurado’s motion to create an ad hoc committee, which sailed through a vote Wednesday, consolidates Raman’s and other ULA-related matters under the three-person body. The committee has an April 30 deadline to sort it all out.

As it stands, most of the public-facing commentary around the tax’s issues has been around the tamp down on affordable housing development.

The Harris-Dawson motion said as much, citing a drop of 30 percent to 50 percent across commercial, industrial and multifamily deals since the tax’s 2023 rollout.

The Eighth District representative reiterated that during Wednesday’s council meeting, offering a hint of where amendments could go.

“There are things in ULA that I frankly think were not in the spirit of voters, like taxing the building of affordable housing as one example,” Harris-Dawson said.

Here we go again

It’s been all quiet on the western front since three bombshell lawsuits involving Douglas Elliman and former Orange County employees emerged back in October 2024.

Two of those suits, both now settled, were filed by a former escrow executive and a former manager in Newport Beach and, at the heart of both, sought to attack the brokerage’s corporate culture.

That peace was shattered when a dispute over alleged unpaid commissions was filed late last month in Los Angeles County Superior Court by attorneys for former Elliman agent Ernie Carswell.

While the suit was critical of an Elliman policy for outgoing agents that reduces their split to 50 percent on in-contract deals, a good chunk of the 11-page complaint was spent blasting the brokerage’s “toxic corporate culture.” The lawsuit alleged Elliman leadership raised to “positions of prominence” individuals such as former agents Tal and Oren Alexander, who along with brother Alon Alexander, were found guilty this past week on sex trafficking charges. The issues at the brokerage, the lawsuit said, are what pushed Carswell to pack up his 15-person team last year and leave for Sotheby’s International Realty.

An Elliman spokesperson called the filing a “bad faith lawsuit” filled with “false commentary unrelated to any legitimate claim.”

Swing state

Some last year didn’t care for the headlines on homes selling for less than ask. This year? More and more agents are open to admit L.A.’s high end has swung to a buyer’s market.

Price slashing continues driven by a more considered approach from buyers as some sellers still hold out for pricing from a different time.

“It’s a really, really hard psychology for sellers to understand, because they think they’re leaving money on the table, when in actuality it’s the worst thing they can do to themselves [to price wrong],” Nourmand & Associates Rochelle Atlas Maize said.

If anyone can sell rose-colored lenses, it’s someone in real estate as some agents project a pick-up in deal activity by mid-year.

Price is right

Just one more point on the state of the market.

Speculative residential developers such as Oren Levy’s’s Gesh Group are being more practical on where they buy land to build. That’s not just to do with where the market’s at, but a mix of factors that also includes rising construction costs and Measure ULA. To offset the headwinds, “speed is key” to keep carrying costs low, Levy said.

Levy factors in a one-quarter to one-third bite out of a project’s profits that end up going to pay the ULA tax. Of course, as many have said, that payout happens regardless of whether a developer comes through with a profit or not on their spec home.

That has prompted Gesh Group to explore opportunities in other markets, including three projects it’s now juggling in Rancho Mirage. Levy also said the firm is “actively looking” at Beverly Hills and West Hollywood.