Measure ULA, a so-called Mansion Tax in Los Angeles, has been green-lit by nearly 58% percent of the city’s voters in a referendum this month, despite being panned by many in the real estate industry.
Critics in the industry have argued that Los Angeles residents are already over taxed, and that the measure will be an added weight on the market and won’t solve the very issue it’s trying to address.
The measure, which was on the Nov. 8 ballot, is expected to generate an estimated $900 million a year to support homeless individuals in Los Angeles by increasing the transfer tax on high-end property sales over $5 million starting in April 2023.
The tax rate, typically paid by the seller, will be 4% for properties valued at more than $5 million but below $10 million and will jump to 5.5% for properties valued at $10 million and above. A homeowner selling a $10 million property, for example, would be on the hook for $550,000 in additional taxes on the sale.
As of Nov. 25, there are 511,720 “yes” votes vs. 374,099 “no” votes for the measure, according to data from the county.
“Having been a resident of Los Angeles for more than 50 years, I have seen the city develop and evolve throughout various social movements, changes of leadership and proposals for improving our way of life,” said Sally Forster Jones, an agent with Compass. “We all agree that there needs to be a way to assist the unsheltered in finding homes and to alleviate the issue of homelessness. Measure ULA is simply not the solution to achieving this common goal.”
The measure, she said, will negatively impact all levels and price points of the market, from renters to homeowners to landlords, and discourage development at a time when the city is already struggling with a lack of inventory.
“We need a better plan that does not exacerbate the housing shortage while trying to alleviate the issue of homelessness,” she said. “We should not agitate one situation in an attempt to relieve another. Measure ULA will likely even make both issues worse.”
The funds raised by the transfer tax are aimed at reducing homelessness, making housing more affordable and protecting low-income seniors from losing their homes. It will be implemented “with strong citizen oversight from independent homelessness experts who know what works—not politicians,” according to United To House LA, the group that backed the measure.
However the initiative “could have a significant and potentially damaging impact on the [Los Angeles] housing market and our local economy,” Jon Grauman, of the Grauman Rosenfeld Group at The Agency, said in an email.
“While we are all sympathetic to the dire homeless problem that exists in L.A., taxing the wealthiest residents in a city that is arguably already over-taxed—thereby causing many individuals to leave the state—is not the solution,” he said.
Los Angeles already ranks as one of the top metropolitan areas that local residents are looking to leave, bested only by San Francisco, according to October migration data from property portal Redfin.
The data showed that one fifth, or 20%, of local residents using Redfin’s home search were looking at homes outside of Los Angeles.
Further criticism came in the form of the city’s spending record, argued Ari Afshar of Compass.
Los Angeles “needs to get a better handle on how it’s spending the billions already dedicated to solving the homeless crisis,” he said.
“Between Measure H and Project Roomkey, all Angelenos have been taxed to support the initiatives and yet there’s nothing to show for [it],” he said, referring to two other initiatives in place to provide homelessness services in the city. “Get to the bottom of the reckless spending, sharpen the pencils and actually do what we were told would be done. No one needs to be taxed further to have more Angeleno dollars squandered.”
