New State Bill Would Shrink Measure ULA Transfer Tax

Los Angeles’ polarizing Measure ULA transfer tax could see a reduction by nearly 75 percent if a new state bill gets approval from both chambers and the governor’s signature.

On Monday, the California State Senate shared its version of Assembly Bill 736, a new piece of legislation that would impose a 1.5 percent transfer tax rate statewide. By contrast, Measure ULA calls for 5.5 percent for sales above $10.6 million and 4 percent for transactions exceeding $5.3 million.

Under the legislation, introduced by Assembly member Buffy Wicks, local jurisdictions such as cities and counties would be prohibited from collecting a transfer tax higher than 1.5 percent of a property’s sale price or value. The bill would also create a disaster-related exemption to the tax, stipulating that if a home is destroyed or rendered unlivable by a natural disaster such as a wildfire, earthquake or flood, the first sale of that property within five years after the disaster would not be subject to a local transfer tax.

If passed by the legislature and signed by Gov. Gavin Newsom, the new requirements would be a state-mandated local program, overriding local transfer tax legislation like Los Angeles’ Measure ULA and San Francisco’s local transfer levy. The legislation’s advancement through the state legislature comes two weeks after San Francisco Mayor Daniel Lurie and Supervisor Bilal Mahmood shelved plans to cut the city’s transfer tax in half, opening the door for AB 736 to impose a 1.5 percent tax where officials were proposing to drop the rate for sales of $10 million and more to roughly 3 percent.

The bill is seemingly an answer to the Howard Jarvis Taxpayers Association-sponsored Local Taxpayer Protection Act initiative, which has already qualified for a statewide vote. That initiative, if passed by voters, would cap local transfer taxes at just 0.055 percent, reducing transfer taxes — and as a result, local public revenue — in 27 charter cities across the state.

Measure ULA was put into place to fund affordable housing initiatives and preservation across Los Angeles. AB 736’s implementation would lead to about 500 fewer new affordable housing units, 2,100 fewer affordable homes preserved from falling out of covenant, 1,300 fewer low-income renter households receiving rental assistance and 1,700 fewer low-income senior or disabled households receiving income support, according to Los Angeles Housing Department data cited by United to House L.A., the namesake coalition of homeless service providers, affordable housing nonprofits, renters’ rights groups and other organizations behind the tax hike.

In January, Measure ULA reached the milestone of $1 billion in revenue raised since it went into effect in 2023. Last month, Mayor Karen Bass signed off on the inaugural Homes for L.A. Notice of Funding Availability, marking the first large-scale deployment of funds generated by the voter-backed transfer tax. Bass’ approval greenlights the Los Angeles Housing Department to distribute nearly $361 million across 80 projects, or more than 5,200 units, with most of the funding going toward keeping existing units online. Of the total, 1,528 units are slated for new development, while 3,713 will be preserved or stabilized.

The State Senate has referred AB 736 to its Committee on Local Government to determine next steps.