The Los Angeles City Council is expected to vote Tuesday on a proposal to amend the so-called mansion tax in a bid to address concerns it limited construction of housing units and could face a challenge at the state level.
Council members are expected to discuss and vote on a motion introduced Friday by Councilwoman Nithya Raman, chair of the Housing and Homelessness Committee, and seconded by Council President Marqueece Harris-Dawson. If approved, the motion would instruct the City Attorney’s Office to draft a measure for the June primary ballot that would alter Measure ULA.
Voters approved Measure ULA in November 2022. It went into effect in April 2023, placing a 4% tax on property sales above $5 million and a 5.5% tax on sales above $10 million. Proponents of the measure celebrated the first $1 billion raised by the tax in early January.
Money from Measure ULA funds programs supporting affordable housing production and homelessness prevention.
Critics of the proposal have argued the measure has chilled the production of apartments and other multi-family housing.
Raman’s proposal includes exemptions for newly constructed multifamily, commercial and mixed-use buildings from the tax for up to 15 years. It would exempt properties impacted by natural disasters like the Palisades Fire from tax for up to three years.
The proposal would also encourage traditional lenders in funding ULA-funded affordable housing projects by changing financing terms, allow affordable housing groups first rights on buildings being sold, and would require the city attorney to complete legal review of Measure ULA-related actions within 90 days of City Council approval.
Joe Donlin, director of United to House LA, the coalition that campaigned for the passage of Measure ULA, criticized Raman’s proposal, warning that it would weaken a critical tool to help with the homelessness crisis.
He added that it was irresponsible to propose changes without an analysis of how much it would cost or to engage with affordable housing advocates.
Critics of Measure ULA have argued the tax has slowed commercial development and property sales and has hurt the availability of affordable housing.
The Howard Jarvis Taxpayers Association has argued that Measure ULA violates both the state constitution and Los Angeles City Charter.
The association is working to qualify an initiative for the November ballot that would repeal Measure ULA and other real estate transfer taxes higher than 0.11%.