**Los Angeles Reconsiders “Mansion Tax” as City Council Refers Proposed Measure ULA Amendments for Further Review**
The Los Angeles City Council has voted to refer proposed amendments to Measure ULA — the city’s so-called “mansion tax” — to the Housing and Homelessness Committee. The motion, introduced by Councilmember Nithya Raman, aims to ease the tax’s perceived negative impact on development activity by introducing new exemptions and adjustments.
Raman’s proposal includes a 15-year exemption from the ULA tax for new commercial, multifamily, and mixed-use developments. It also features a one-time exemption for victims of the Palisades fire and various technical modifications to help accelerate the deployment of ULA-generated funds. Raman acknowledged that since Measure ULA took effect in 2023, it has had a discouraging effect on construction permitting and development activity. Her ultimate goal is to place the amended measure on the November 2026 ballot, following an unsuccessful effort to have it appear in the June 2024 election.
According to reports, the proposed 15-year exemption — which would begin upon receipt of a certificate of occupancy — could significantly reduce the tax burden on qualifying property transfers within that timeframe. NAIOP SoCal noted this change could help restore financial predictability for developers and potentially revive stalled projects and reinvestment interest.
Measure ULA imposes a 4% transfer tax on property sales over $5.3 million and a 5% tax on transactions exceeding $10.6 million. Since its implementation, the measure has reportedly brought in $1 billion across more than 1,400 transactions. Supporters, including Joe Donlin, director of the United to House LA coalition, have hailed the measure as “an economic engine for the city.”
However, critics argue that the tax has adversely affected the city’s housing market. Developers and investors have called for a full repeal, pointing to research from UCLA and the RAND Institute indicating that Measure ULA may have resulted in 1,910 fewer apartments being built each year, including 168 fewer affordable units. Further, a study conducted by researchers at Harvard, UC Irvine, and UC San Diego found that the slump in property sales led to a significant drop in property tax revenue — potentially offsetting up to 63% or more of the revenue generated by the new transfer tax.
NAIOP SoCal announced its intent to work closely with Housing and Homelessness Committee Chair Nithya Raman and members Tim McCosker, Bob Blumenfield, Heather Hutt, and Vice Chair Ysabel Jurado. The organization will contribute to the process by preparing public comments and recommendations, and it has urged its members to share examples of transactions or project plans negatively affected by Measure ULA.
As discussions continue, all eyes will be on the city’s efforts to balance its fiscal and housing policy goals with the realities faced by developers and investors navigating an already complex market.
