If single-family residential agents and brokers were looking to jump on a new coalition\u2019s bandwagon to get the city\u2019s mansion tax amended to be a bit more deal friendly, they\u2019ll find little relief in what\u2019s being proposed.\u00a0\u00a0<\/p>\n
There are a few options now in plan to make changes to ULA<\/a>, which applies a 4 percent tax on transactions starting at $5.3 million and kicks up to 5.5 percent on deals of $10.6 million or more. On one end of the spectrum is a camp saying the tax should be left alone, while the other end has advocates who want its complete dismantling.\u00a0<\/p>\n On Friday, another option was presented to the Ad Hoc Committee on Measure United to House Los Angeles<\/a> from the group Affordable LA: Mend It, Don\u2019t End It.<\/p>\n The group, which comprises several industry trades, outlined six changes. Only one of those pertains to residential transactions, despite (or perhaps because) single-family homes accounted for the largest share of the over $1 billion in ULA<\/a>-generated revenue (59 percent) since going into effect in 2023, according to Los Angeles Housing Department data through March.<\/p>\n That one proposal is a three- to five-year exemption from ULA for property owners impacted by the Palisades Fire and future natural disasters.<\/p>\n The coalition informed the ad hoc committee during Friday\u2019s meeting that if revenue streams from other property types \u2014 multifamily, commercial, industrial and mixed-use were exempt from the tax \u2014 the city would still have enough to spend the remaining balance of ULA funds budgeted for the current fiscal year. To date, about 9 percent has been spent, leaving $589.2 million left, according to the coalition.<\/p>\n The group\u2019s aim is to fix the tax before the matter swings to a statewide issue in the form of the Howard Jarvis Taxpayers Association\u2019s Local Taxpayer Protection Act, which qualified this week for the November ballot. The proposed change to the state constitution would require a two-thirds supermajority of voters to approve all local taxes.<\/p>\n If the Mend It, Don\u2019t End It group is looking for an alternative to the Howard Jarvis measure, they likely lose the support of the single-family side of the industry. Those left out in the cold from the proposed changes might see the November ballot measure making the tax null and void as the only choice to back.<\/p>\n ULA\u2019s profitability conundrum<\/p>\n 12th District Council Member John Lee appears to be zeroing in on the profitability problem with ULA.<\/p>\n He introduced an April 14 motion to have the Los Angeles legislative analyst and administrative officer also include in their ULA analysis what it would take to get the tax to only apply to sales that are profitable.<\/p>\n That\u2019s a big issue ULA critics have had, whether they\u2019re commercial brokers, single-family residential agents or developers. If a property sells at a loss, should ULA apply? The industry says \u201cno.\u201d\u00a0\u00a0<\/p>\n Lee brought up the subject again at Friday\u2019s ad hoc committee meeting when he asked the Mend It, Don\u2019t End It coalition members on whether there\u2019s been exploration of what the ULA revenue stream looks like if unprofitable projects were exempt.\u00a0\u00a0<\/p>\n The response was to cast such a move as difficult, although no clear specifics were offered. In any case, concerns about complication were part of what factored into the group\u2019s suggestion that ULA be capped at 1 percent to 2 percent on all commercial properties once a proposed 15-year exemption for new builds lapses.\u00a0\u00a0<\/p>\n Vent fest<\/p>\n If there\u2019s one more takeaway from Friday\u2019s meeting it would be the venting of some of the ad hoc committee members about inefficiencies elsewhere in the city.<\/p>\n Council Member Lee said it\u2019s \u201cextremely frustrating\u201d the committee\u2019s even in the position it\u2019s in to be analyzing the tax after the fact.<\/p>\n \u201cI wish more people would speak up at the time [before ULA went to voters]\u2026 because this was \u2026 not a surprise to us. Investors of all walks of life understood that this would be an issue,\u201d Lee said Friday before going on to blast the \u201cso many other things\u201d being done at City Hall that are \u201cnot promoting growth in our city.\u201d<\/p>\n Ysabel Jurado, 14th District representative and chair of the ad hoc, piled on.<\/p>\n She pointed out that ULA perhaps further highlights the fact that the city\u2019s \u201cplanning process is abysmal.\u201d<\/p>\n \u201cThe years it takes for [Los Angeles Department of Water & Power] to turn on the lighting for things that have already been built, [ULA] has just made those issues more pronounced,\u201d she said Friday. \u201cThe fact that we put ourselves into a structural deficit based on labor negotiations in our city\u2026 have made it even harder to make sure that our planning, processing, permitting rate is up to par with market needs, which it just isn\u2019t.\u201d<\/p>\n That\u2019s all out of the scope of the ULA ad hoc committee. However, that you have members of the council complaining about big-picture inefficiencies makes one wonder, who is in charge and who is responsible for fixing that?<\/p>\n \tRead more \t\t\t\t\t\t\t\t\t\t\t\t\t New group looks to scrap the \u201cbinary,\u201d keep Measure ULA\u2019s fate local<\/p>\n \t\t\t<\/a> \t\t\t\t\t\t\t\t\t\t\t\t\t Measure ULA committee weighs mansion tax \u201cbest practices,\u201d pros and cons<\/p>\n
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