LA City Council Ditches Mansion Tax Ballot Measure

Reforming or repealing Measure ULA has dominated conversation in the real estate industry for the past three years, with a litany of complaints including that the property-transfer tax imposed across the board in the City of Los Angeles has put a damper on luxury residential sales and frozen multifamily development.

The latest turn saw the Los Angeles City Council shelve a proposal to exempt new multifamily projects from the tax. This would have appeared on the November ballot for residents to vote on — a move that would be necessary because Angelenos approved it at the polls three years ago.

The City Council’s move, however, came with a new bureaucratic play that could take voters out of the equation: The 15-member body, acting on recommendations from the city’s ad hoc committee on ULA, instructed the Los Angeles Housing Department to prepare an ordinance for a pilot tax credit program that would lower the ULA rate for certain multifamily and mixed-use projects.

The city’s proposition is just the latest in a tangled web of proposals on Measure ULA, which was sold to voters as a “mansion tax” despite its application beyond the residential sector to all categories of real estate. It was billed as a way to generate funds for affordable and permanent supporting housing developments, as well as homeless services, tenant advocacy programs and more. The measure places a 4 percent tax on all real estate sales of $5.4 million or more and a 5.5 percent on those above $10.9 million.

The city’s chief legislative analyst in 2022 claimed the tax would bring in between $600 million to $1.1 billion annually. Yet, after its more than three-year tenure, the revenue pot sits at about $1.2 billion — a number that, based on original estimates, the tax should have hit by April 2025 at the latest.

The majority of the revenue thus far has come from commercial transactions, rather than luxury home sales. The most recent revenue figures show that nearly 55 percent of the funds brought in by the tax came from transactions involving office, industrial, retail, mixed-use, multifamily and vacant land — while 45 percent came from single-family residential.

The decision to halt efforts on the city’s previous ballot measure came as one of the more significant campaigns against ULA took a turn.

The Howard Jarvis Taxpayers Association was set to put forth a statewide ballot measure in November that would have nullified Measure ULA by raising the voter approval threshold for passing transfer taxes to two-thirds — which Measure ULA did not receive. The association agreed to withdraw its measure after the state offered a substitute which specified the new threshold would not apply to existing laws, allowing ULA to stand.

Then, with the city dragging the state legislature into L.A.’s mess, Assemblymember Buffy Wicks introduced AB 736 two weeks ago which would cap all transfer taxes at 1.5 percent — a significant drop from ULA’s current 4 to 5.5 percent. As a piece of state legislation, if passed, the bill would carry implications for every city across California, several of which, including San Francisco, have transfer taxes of their own.

With mounting evidence of suppressed deal flow and dulled housing production, many in the industry blame ULA. But efforts to dismantle the controversial measure aren’t new.

Unintended consequences

Once ULA was passed, the industry saw its impacts coming, and groups including the Apartment Association of Greater Los Angeles and the Howard Jarvis Taxpayers Association unsuccessfully attempted to sue the City of Los Angeles shortly after its passing.

With a full reversal seeming unlikely, people began advocating for amendments.

The road to ULA reform has been paved by conflicting research, debates over causation versus correlation, unlikely alliances, and growing tensions between city leaders and the business community.

Much of the discourse surrounding the tax’s impact on the broader real estate market came to a head with the release of a study, “The Unintended Consequences of Measure ULA,” by UCLA’s Lewis Center for Regional Policy Studies. The study, published in April 2025, reported that Measure ULA led to a 30 to 50 percent decrease in the number of transactions across commercial, industrial and multifamily assets in the city; a $25 million loss in annual property tax revenue; and a 50 percent reduction in the likelihood for deals above the ULA threshold to occur.

Another Lewis Center research report released the same month estimated that ULA was reducing housing production in the city by “at least” 1,910 units per year which is an 18 percent decline from the two years prior to when ULA went into effect. This study cross-referenced data in other parts of L.A. County to account for macroeconomic factors, concluding L.A. city’s housing production decrease was sharper than its neighbors’.

Such studies and data were garnering attention both from developers who felt validated by these claims as well as some city leaders who still make references to these findings in current discussions on whether to reform the transfer tax.

Some pushback came several months later, when another report dropped from Occidental College, which called out both UCLA reports for “flawed methodology, data and conclusions” and relying on “abnormal” timeframes when depicting deal volume decline given there was a rush from the industry to close transactions between the time ULA was approved and went into effect.

Still, the push for amendments continued reverberating even to one of the City Council’s most left-leaning members, mayoral candidate Nithya Raman. The 4th District council member, a Democratic Socialist, in January urged the council to put amendments to ULA on the ballot for the summer primary. She advocated for a 15-year exemption of the tax for new or “substantial rehabilitation” of multifamily, commercial and mixed-use projects.

While her effort was nixed, as many council members said they felt it was rushed, the city established an ad hoc committee to review the impacts of ULA and potential reforms in March. After a number of meetings, the committee did not recommend any ballot measures to amend the tax, but rather suggested in-house changes the city could enact, including the aforementioned pilot tax credit program.

Developer exodus

Others participated in the conversation surrounding the divisive transfer tax, too. Originally formed to oppose the Howard Jarvis measure, the “Affordable LA: Mend It, Don’t End It” coalition emerged in late April, looking to find middle ground.

The group is led by Miguel Santana, former city administrative officer to the city and deputy CEO for the county who now leads California Community Foundation, one of the biggest community foundations in the country. In addition to advocating for Raman’s 15-year carveout, the Mend It group also called for a ULA ceiling of 1 to 2 percent after that 15-year period for all non-single-family property transactions.

In May, LAHD released a report saying that Raman’s carveout idea would cost the city $177 million in ULA revenue. The back-and-forth continued as Jesse Zwick, who is tied to the Mend It, Don’t End It group — said the LAHD study didn’t account for the loss of housing supply and funds from property taxes at the hands of ULA.

With the Howard Jarvis measure out and Wicks’ legislation still in the early stages, the city has the chance to amend the tax on their own terms — which 5th District City Council member Katy Yaroslavsky pushed hard for at last week’s meeting.

Yaroslavsky said she didn’t think the ad hoc committee’s tax credit solution was enough. To be eligible for the tax credit — which would change ULA’s rate to 1.5 percent or lower based on the degree of affordability for the project — developments must be built using prevailing wages and include some affordable units. This would apply to sales of buildings within 10 years of finishing construction.

The council needs to be honest about the unintended impacts ULA is having on property tax revenue, housing production and rent prices, Yaroslavsky said at the July 1 meeting.

“We are choosing to make housing production more expensive…We are choosing to kneecap other key city revenue streams by not acting,” Yaroslavsky said at the meeting. “Property tax growth has stalled… [and] our general fund hasn’t grown as quickly as it was growing pre-ULA.”

When it comes to housing production, state-mandated planning goals are looming. The City of Los Angeles must plan for more than 456,000 housing units by 2029 — which, despite being well over halfway through the period it must accomplish this by, it had only achieved 17.8 percent of that figure as of April.

Cityview CEO Sean Burton sees ULA as the most prominent hindrance to reaching that goal.

“If they don’t reform ULA, there’s going to be a housing boom in California, and it’s going to bypass Los Angeles city, because ULA continues to be the number one barrier to building new market rate or affordable housing in the city,” Burton said in a May interview with The Real Deal.

While the last couple of years have seen their fair share of macroeconomic turbulence, including from tariffs and ICE raids, those in the industry argue that neighboring cities in L.A. and Orange counties haven’t seen as drastic of a divestment as Los Angeles has.

Burton said his firm is looking to markets like San Diego, Irvine, Newport Beach and Culver City for new projects instead of L.A., and a big part of that is ULA.

Jon Curtis of Cedar Street Partners echoed this sentiment, saying “a lot of multifamily developers won’t touch the city of L.A.” in an April interview.