Tag: measure ula

Bass asks LA City Council to roll back ULA for Palisades victims

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Pacific Palisades residents could be in for relief from Measure ULA as Angeles Mayor Karen Bass presses the City Council to move forward on a temporary pause of the so-called “mansion tax.”

The request marks the first major move at the municipal level to adjust the tax’s parameters, and follows months of talk about ULA’s impact on the Palisades post-wildfires real estate market. An announcement of the request by the mayor’s office indicated that the pause would not be citywide, providing a “one-time exemption to Measure ULA for Palisade homeowners.”

Measure ULA’s two-tiered tax on commercial and residential transactions has loomed large over dealmaking since voters passed the November 2022 ballot measure. It applies a 4 percent tax on deals starting at $5.3 million and 5.5 percent on those $10.6 million or more. It’s been cited as a significant hurdle in the Palisades, a community within the city of Los Angeles, with many agents saying the assessment has stopped deals from happening.

Bass, in a letter to members of the 15-seat City Council sent on Thursday, requested they pass an ordinance that would give the finance director the authority to enact the limited ULA pause.

The move came after Bass met with developer Rick Caruso in his capacity as founder of the nonprofit Steadfast LA, which he established to aid in the rebuilding of the Palisades and Altadena after both areas were hit by wildfires earlier this year.

The stirrings of action brought some early cheers from the residential marketplace.

“Pausing the ULA mansion tax is a game changer for Pacific Palisades,” Amalfi Estates founder Anthony Marguleas told The Real Deal Thursday evening. “Families rebuilding after the fire need relief, not more financial hurdles.

Marguleas said the move would “help unlock much needed inventory for our community.”

Bass proposed the one-time exemption on residential properties only, which would mean single-family homes, condominiums and what she described in her letter to the council as “other residential housing” impacted by the fires.

Such a move would “speed up sales of these properties and spur rebuilding and rehabilitation of the Palisades,” Bass said in her letter. “This will create more housing citywide and generate higher Measure ULA tax revenue when these rebuilt or renovated properties are subsequently sold to new homeowners because those second and subsequent sales will remain subject to Measure ULA.”

As it currently exists, Measure ULA “is silent on an issue now affecting our Palisades community,” Bass said of the tax’s cost implications for those trying to recover from the fire.

It’s unclear if any moves have been made to place discussion of the ordinance on a future city council meeting agenda. An inquiry to Bass’ office was not immediately returned Thursday evening.

First crack

While Bass’ proposal is temporary, if passed, it would be the first crack in an armor that’s shielded ULA from exemptions or other changes since the ballot measure was passed and went into effect in 2023.

Lawsuits and a new ballot measure to have the tax repealed have routinely drawn the ire of housing and homeless advocates whose vocal responses have so far helped create a fortress around adjustments to the tax.

Bass’ proposal hits at a criticism some have had for the tax in its unilateral application to real estate transactions — both commercial and residential — without taking into account realities such as if a home sells at a loss or what happens in the case of a natural disaster.

Beyond residential, the tax has affected commercial transactions and land deals as it’s viewed as another layer of cost making it harder to get deals to pencil out.

“There are no parameters and no boundaries on the measure,” Beverly Hills Estates co-founder and CEO Rayni Williams told TRD last month in discussing the tax. “There’s nothing that [addresses] if you’re taking a loss on a sale or if it’s an inherited property. At least capital gains [tax] has parameters.”

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How LA’s top agents navigate Measure ULA

Measure ULA drives developers out of LA

Measure ULA under scrutiny as Bass considers temporary pause

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Kari Hamanaka

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October 10, 2025
Los Angeles approves plan to spend nearly $425 million in ‘mansion tax’ money

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The Los Angeles City Council on Tuesday approved a plan to spend nearly $425 million collected from Measure ULA, directing the money to a series of affordable housing and homelessness programs.

The spending plan for the 2025 fiscal year that started Tuesday is the largest yet under Measure ULA, also known as the mansion tax.

The voter-approved measure, which taxes property sales above about $5 million, has drawn criticism from the real estate industry for years and recently been the subject of several reports that found it has limited property sales and thus reduced property tax revenue and the construction of new housing.

Backers, however, tout the measure as providing crucial dollars to affordable housing and homelessness prevention programs at a time when the state and county have cut funding.

In all, the 2025 ULA spending plan is greater than all other years combined.

“Don’t believe the hate from big-money real estate or their lies appearing all over the media,” Joe Donlin, director of United to House LA, said in a statement. “Measure ULA is doing the steady work to create stable homes and good jobs for Angelenos.”

Under the plan approved Tuesday, more than $100 million is set to flow to homelessness prevention programs, including income support for at-risk tenants and eviction defense.

The majority of the 2025 funds, more than $288 million, is to be spent on the production and preservation of affordable housing.

Since voters passed the measure in late 2022, the tax has collected more than $702 million, according to the city’s Housing Department.

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Andrew Khouri

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July 2, 2025
Commercial property sales in LA County spiral down 18%

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Commercial property sales across greater Los Angeles have hit the bottom of the bucket, with office and industrial sales falling through the hole.

Commercial sales in Los Angeles County are down 18.4 percent since January, compared to the first three quarters of last year, the Commercial Observer reported, citing a market analysis by NAI Capital. And last year’s numbers represented a collapse from the previous year.

In the city of Los Angeles, the plunge in commercial deals was twice as bad with a nearly 40 percent year-over-year decline in sales — or $1.9 billion less than the same period last year.

Industrial and office sales in the city were hit especially hard. Industrial sales are down 63.2 percent so far this year, while office sales fell 45.1 percent.

At the same time, retail property sales in the city fell 32.6 percent, while multifamily deals declined 14.8 percent.

NAI Capital blamed the stark decline on falling property values, inflation, a Federal Reserve decision to keep interest rates elevated for most of the year, and government fees on transactions.

L.A.’s mansion tax takes a 4 percent tax for deals over $5.15 million and 5.5 percent on deals over $10.3 million. Measure ULA, which went into effect last year, put a huge damper on sales, according to NAI Capital.

Across the county, offices were the worst-performing asset class, tanking 55.4 percent, or just over $1 billion year-to-date, compared to the same period in 2020.

“The office market in Los Angeles County continues to face a slow recovery,” the report said. “Landlords are offering substantial concessions, such as rent reductions and tenant improvement allowances, to attract tenants, further eroding market values.”

Despite the chill, the median per-square-foot sale price of offices in the county rose 9.2 percent year-over-year, indicating the market may be adjusting to a new normal.

The price per square foot of retail properties in the county also rose 9.2 percent, according to NAI, though sales volume was still 7.7 percent below 2020’s level.

Industrial sales in the county dropped by 20.4 percent year-to-date because of declining lease rates and continually high interest rates, according to the analysis. The typical sale price per square foot of industrial properties fell by 16.6 percent quarter-over-quarter, and 9 percent year-over-year.

The brokerage said state legislation could further impact commercial activity in the Los Angeles market.

Proposition 33, a measure on the November ballot which aims to expand rent control in California and which opponents argue could discourage housing development, could affect the multifamily sector.

Real estate interests are also waiting to see the effects of AB 98, which will further regulate statewide warehouse development once it goes into effect early next year.

— Dana Bartholomew

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LA leads the world in commercial property deals

Good news/bad news: LA’s office market finds bottom

LA office building sales plummet 41% in 2023

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TRD Staff

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October 10, 2024
California Supreme Court to Rule on Anti-ULA Ballot Measure

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The California Supreme Court will take up the constitutionality of a November ballot measure that would kill the voter-approved “mansion tax,” or Measure ULA, in Los Angeles.

The state’s top court will hear arguments on May 8 regarding the constitutionality of the real estate transfer tax, plus dozens of other recently enacted special taxes, Bisnow reported. The court said it would issue a ruling by the end of June.

The court agreed to examine the measure after Gov. Gavin Newsom and the state legislature petitioned to strip the anti-Measure ULA measure from the ballot.

The measure, known as the Taxpayer Protection and Government Accountability Act, seeks to change the percentage of a voter majority that proposed special taxes need to become law.

Measure ULA, enacted a year ago, included a 4 percent tax on nearly all commercial and residential property sales or ownership transfers above $5 million, and a 5.5 percent levy on properties selling or transferring above $10 million.

A failed court challenge has been appealed on grounds it had been misrepresented as a “mansion tax,” while the transfer taxes have mostly impacted commercial sales.

“There’s a two-tiered system right now,” Matthew Hargrove, CEO of the California Business Properties Association, told Bisnow, describing the way the state can pass special taxes.

The ballot measure that he and a coalition of supporters are backing aims to shut down that two-tiered system.

The system was made possible by a 2017 court decision on how cities can get special taxes approved. It essentially created two thresholds for approval — one allowing ballot measures proposed by citizen groups to pass with a simple majority, and another requiring government-proposed measures to pass with a two-thirds majority.

Measure ULA was passed in November 2022 with with 57.8 percent voter approval.

“If the City of L.A. had put [Measure] ULA on the ballot, it would have required a two-thirds vote,” Hargrove said. “But because the City of L.A. did not do it, they deferred to community groups to do it, they got the benefit of that 50 percent vote threshold.”

Hargrove and other measure backers say it restores the historical two-thirds requirement to pass special taxes. They also tout its transparency measures that require detailed ballot descriptions of how the money will be spent.

Closing the loophole would require making changes to the state constitution to clarify the voting threshold.

It would also require expanding the definition of a tax to include charges that state and local governments now classify as fees, according to the state Legislative Analyst’s Office. The measure could require them to be approved by two-thirds of California voters.

Newsom, the legislature and the United to House LA coalition that supported Measure ULA, contend the new measure is unconstitutional.

They argue the measure considered by the state Supreme Court seeks to restructure the state constitution, altering the fiscal powers of the legislative and executive branches and those of the voters well beyond the level of a constitutional amendment, Jonathan Jager, an attorney with Public Counsel who authored an amicus brief for United to House LA, told Bisnow.

“The governor’s position, which the coalition agrees with, is that the Taxpayer Protection Act measure so fundamentally rewrites the state constitution … it’s a revision to the constitution,” Jager said.

Unlike constitutional amendments, revisions to the state constitution can’t be proposed by citizens. They have to come from the legislature, Jager said.

If approved, the new measure would go into effect retroactively, requiring such initiatives passed since Jan. 1, 2022, to return to voters and get the two-thirds majority approval in 2025. That would effectively kill Measure ULA, among about 40 tax initiatives that would be invalidated, Hargrove said

The League of California Cities counts more than 130 initiatives that would be overturned, a figure that Hargrove contested.

— Dana Bartholomew

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TRD Staff

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April 26, 2024
Former Santa Monica Mayor Campaigns to Amend Transfer Tax

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Pam O’Connor, the former mayor of Santa Monica, filed a proposal with the city on March 28 seeking to exclude multifamily properties from Measure GS, or the so-called mansion tax, according to a release last week.

Measure GS, which came into effect last year, adds a 5 percent transfer tax on residential and commercial sales with a price of or above $8 million or more.

This is the first step in a bid to put this proposal up for a vote in the November elections. After the city issues a summary, O’Connor’s team will have to collect signatures. Her representative was not aware of how many signatures would be required for the initiative to proceed.

“We’re still trying to determine that,” Adam Englander, a representative for O’Connor, told TRD.

“Not only will this amendment allow us to meet our state-mandated housing requirements, it will help keep rents lower and prevent displacement,” O’Connor, a planning consultant, said in a statement last week. “Sometimes, initiative measures have unintended consequences that must be fixed.”

She elaborated further that “most of the housing units subject to Measure GS are apartments and renters — not mansions” and called the “mansion tax” name misleading.

“Instead of alleviating the housing crisis, Measure GS has actually undercut the production of much-needed multifamily housing in the city and threatens the financial feasibility of such new development projects,” according to the same statement.

Voters passed Measure GS through a ballot measure in November 2022 — the same month voters in the city of Los Angeles passed Measure ULA, a similar initiative that added a 4 percent transfer tax on all sales over $5 million and a 5.5 percent tax on all sales over $10 million.

If the effort is successful, it would likely encourage developers to take a new look at Santa Monica if they’ve previously shied away from the city due to the new measure.

“The proposed initiative would remove the mansion tax from apartment buildings to stimulate market-rate and affordable housing production so that more people have a place to live and rents can come down,”said Chris Tourtellotte, who runs multifamily developer LaTerra Development, which has been based in Los Angeles for 15 years. “If the measure is approved, investors and developers will immediately look to build more apartments in Santa Monica.”

O’Connor worked for Santa Monica’s city government for over two decades, including several stints as mayor, according to her LinkedIn page. Now she’s as a planning and policy consultant.

Earlier this year, Gov. Gavin Newsom designated Santa Monica as a “prohousing” city, a move that raised some eyebrows since Santa Monica was among the first cities where developers took advantage of the builder’s remedy provision.

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Daria Solovieva

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April 1, 2024
Residential Brokers Discuss Sales After Measure ULA

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Though Measure ULA has disproportionately affected the commercial industry, agents who sell the top 1 percent of real estate in the city of Los Angeles have also taken a hit.

Some say their clients are now more focused on Beverly Hills or Malibu, neither of which has its own transfer taxes. A handful said buyers are coughing up the cash anyway. Others are hopeful that Measure ULA will be overturned through the November ballot measure.

The Real Deal spoke to a number of top residential agents in the city of Los Angeles to get their thoughts on the transfer taxes and how they think the market has changed over the last year.

“There’s always the three D’s — death, divorce and disparities.”
Josh Flagg, Compass

Flagg, the star of “Million Dollar Listing L.A.” who recently jumped to Compass from Douglas Elliman, said some people are always going to need to sell.

“But, with that said, adding 5 percent onto the purchase price is never going to be a good situation for anybody,” he said. For the most part, Flagg said his clients understand. “It is what it is.”

Flagg also noted that sellers can’t raise their prices to take ULA into account, given that demand and pricing overall have softened.

“It doesn’t mean houses went up another 5 percent just because of this ULA tax,” he said. “A lot of sellers might be adding it on top of it, but it’s silly to do that because you’re just adding 5 percent over the value of your house.”

“Unless they have to move, people are not keen on taking a large hit.”
Stuart Vetterick, Hilton & Hyland

It’s hard to blame the huge drop in sales to just Measure ULA, Vetterick said. There’s also the huge rise in interest rates and the fact that presidential election years generally bring a slowdown in sales.

But without a doubt, there are people who are “looking to buy in Los Angeles, but will not buy in the city of Los Angeles,” he said.

People over the age of 70, long-term homeowners who see property as a “nest egg,” are the ones “losing the most,” Vetterick said.

One set of his clients looking to sell have been in their house for 11 years and have taken out loans against the property over time, accumulating significant debt. The home is likely to sell for over $10 million, meaning the client will have to shell out at least $550,000 in cash including the tax.

“That’s their retirement fund,” he said.

“I’ve lost an immeasurable number of clients to other states.”
Jason Oppenheim, The Oppenheim Group

A number of Oppenheim’s clients are “either hesitant or have decided definitively not to sell because of the tax,” he said.

Oppenheim said more of his wealthy clients have left in California in the last two years than over the last 10, with many critical of increased taxation.

“We’ve dug a 2-foot grave and are continuing to dig,”he said of Measure ULA, noting that the city has not reached its revenue estimates. “I’m not opposed to taxation philosophically. I’m opposed to inefficiency.”

Many of his clients are moving to Florida, Nevada, Arizona and Texas — or even Orange County.

If more continue to leave, the city of L.A. is going to lose a significant chunk of its wealthy tax base, he said.

“I’ve seen developers walk away from projects saying there’s not enough of a profit margin now.”
Carl Gambino, Compass

Much of Los Angeles’ luxury market is product from spec home developers — investors who build properties from scratch. If more developers walk away, citing Measure ULA, agents and buyers could be left with less product to market and purchase.

In the months leading up to Measure ULA coming into effect, Gambino said, he closed a number of large deals, including Mark Wahlberg’s $55 million sale of a home in Beverly Park.

If Wahlberg, who then moved to Las Vegas, had sold two weeks later, he would have been on the hook for $3.025 million in city transfer taxes.

Since then, “it’s definitely slowed down transactions in some capacity,” Gambino said, echoing other agents interviewed by TRD. “Some sellers have literally just decided they’re just not going to sell because of the tax, and some of them believe that it could be overturned.”

“There was an overabundance of properties for lease.”
Sally Forster Jones, Compass

Can’t sell? Lease instead.

Many with $5 million homes in 2023 decided not to sell but rather to try their luck at renting the property they otherwise might have sold.

Rental prices came down in 2023 as the number of properties on the market went up, according to Forster Jones.

“Clearly, the contributing factor was that the sellers did not want to sell or chose not to sell,” she said. “They decided instead they were going to put their homes up for lease.”

Forster Jones also had many conversations with her clients about what listing prices would be at the $5 million mark — the trigger for the initial Measure ULA tax tier of 4 percent.

“The discussion was always, ‘Do we put it up for sale over $5 million?’” she said. “Selling property at $5,000,002, the seller was going to net less than if they had put the property up for sale at $4,999,000.”

“ULA was a horrible measure. It was written terribly. It’s not a mansion tax, it’s a real estate tax. In a city that needs housing, it was the worst thing that anybody could have created.”
Aaron Kirman, AKG | Christie’s International

Kirman, whose brokerage did $2 billion in sales volume last year, said anything between $20 million and $200 million was “very difficult to sell.”

Sellers of $10 million-plus properties did not want to pay a 5.5 percent transfer tax, plus commissions, generally at another 5 percent, plus closing costs of 2 percent.

“Sellers were looking at a 12 percent closing fee before they even got out of bed.” Kirman said. “And that was very difficult for people to stomach — it still is, by the way.”

Kirman echoed the same sentiment about spec home developers — the transfer taxes are cutting into profit margins, meaning developers will just stop building.

“To be able to buy a piece of dirt anywhere in the city is running between $1.5 million and $3 million, sometimes $4 million to $7 million or more,” he said. “By the time you build and develop, you’re over the $5 million threshold, and developers are not going to run and build houses if it doesn’t make sense.”

However, in 2024, Kirman thinks things have started to settle.

“We’ve seen a lot of high-end luxury buyers back down to the market, we’re seeing a lot of sales,” he said. “I’ve had more billionaires call me in the last three months than I had the whole of last year, an interesting indication of where we are.”

“The margins have become slimmer and slimmer — now with [Measure ULA], in a lot of cases, it just won’t make sense to build a house anymore.”
Santiago Arana, The Agency

From Arana’s vantage point, Measure ULA is leading to less spec home development, and eventually, less inventory.

Arana, who is hoping ULA will be overturned with the passage of the Taxpayer Protection Act in November, said it’s hard to keep being an advocate for the city of Los Angeles.

“I’m going to think twice if I want to reinvest that money, that I’m gonna put it here in Los Angeles,” he said. “I’m going to invest [in a state] that is more friendly, tax-wise, for entrepreneurs like me, who are trying to diversify as a real estate agent.”

Arana also echoed Vetterick’s concerns about elderly people, noting they are a subset of the market more likely to be affected by a 4 percent or 5.5 percent transfer tax.

“If I want to sell the house to use that equity to go and live comfortably in a retirement home, but I gotta pay four and a half percent on the setbacks of that,” Arana said, “that very well could be a substantial amount of the money that I was planning on using.”

“And by the way, my $5 million house is not going to be a mansion. In Los Angeles, with $5 million, it is not really a mansion,” he added.

— Daria Solovieva contributed reporting

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Isabella Farr

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April 1, 2024
The year of the ‘mansion tax’: Hundreds of millions raised, but a chill to L.A.’s luxury market

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One year ago, Los Angeles’ “mansion tax” took effect. It has either been a godsend or an absolute disaster, depending on who you ask.

The transfer tax, formally known as Measure ULA, levies a 4% charge on all property sales above $5 million and a 5.5% charge on sales above $10 million, with proceeds funding affordable housing and homelessness initiatives.

When L.A. voters approved the measure in November 2022, it quickly became the dominating storyline in L.A. real estate.

Proponents say the tax generates crucial funding to address L.A.’s housing crisis, and they’re right. In its first year, Measure ULA has raised roughly $215 million, according to the L.A. Housing Department.

The L.A. City Council passed a $150-million spending plan for ULA funds in August, and the money has been flowing into six programs: short-term emergency rental assistance, eviction defense, tenant outreach and education, direct cash assistance for low-income seniors and people with disabilities, tenant protections and affordable housing production.

Critics, including many L.A. real estate professionals, claim the tax has hampered the market — not just luxury home sales, but also multifamily developments and commercial properties, since the tax applies to all property sales above $5 million.

They’re also right.

When the tax first took effect on April 1, 2023, it all but froze L.A.’s luxury real estate market, with many sellers pulling their homes off the market at the prospect of paying an extra few hundred thousand in taxes if they sold.

A year later, the market is still just as icy.

The striking slowdown is partly due to chilled buying across Southern California, as soaring interest rates keep many prospective buyers out of the house hunt altogether. But in L.A. — the only city affected by the tax — home sales above $5 million have plummeted at twice the rate of other affluent cities, as buyers opt for homes in neighboring areas that aren’t subject to the tax.

From April 2022 to March 2023, the year before Measure ULA hit, L.A. had 366 single-family home sales of $5 million or more. In the 12 months since, there were just 166 — a drop of roughly 68%.

Luxury sales in nearby cities have slowed, but not nearly at the same rate, according to data from the Multiple Listing Service.

In Beverly Hills, single-family sales dropped 24%.

In Santa Monica, single-family sales dropped 29%.

In Malibu, single-family sales dropped 28%.

“My clients are leaving L.A.,” said Jason Oppenheim, a luxury real estate agent who stars in the real estate reality show “Selling Sunset.” “We can’t keep pushing the wealthy out of our city.”

Oppenheim and his team spent much of the seventh season of the show speaking out against the tax, which they claim pushes prospective buyers out of L.A. and into other affluent areas.

“This tax has not had the effect that was promised, and it’s time for everyone to put aside their egos and realize this was a mistake,” Oppenheim said.

The drop-off comes from a few different factors. Many luxury homeowners moved to sell their properties last spring before the tax took effect, including celebrities such as Mark Wahlberg and Brad Pitt.

Others explored loopholes to avoid paying the tax, such as splitting properties into multiple parts and selling them separately to stay under the $5-million mark.

As a result, Measure ULA hasn’t raised nearly as much as originally projected.

Early proponents of Measure ULA estimated the tax would raise roughly $900 million per year. Last March, a report from the City Administrative Office lowered that number to $672 million.

At $215 million, the total is well short of initial projections, but Greg Good, a senior advisor on policy and external affairs for the L.A. Housing Department, said he expects it to be much higher going forward.

In the first three months of Measure ULA, the tax raised $15 million, only $5 million per month. But from July 2023 to February 2024, the tax raised roughly $200 million, or $25 million per month. Projections for the city’s fiscal year, which starts on July 1 and ends on June 30, would be around $300 million.

“Despite litigation, despite the chilled market, despite the wealth defense industry designed to help the rich protect their money from taxes, that’s $300 million for housing and homelessness initiatives,” Good said.

So far, the city has spent around $28 million in aid to distressed tenants and landlords, $23 million on eviction protection and tenant outreach and $56.8 million on loans to accelerate the development of affordable multifamily housing projects.

“None of that happens without ULA,” Good said.

L.A.’s real estate community has fought the tax tooth-and-nail, campaigning against the measure when it was on the ballot in November 2022 and trying to find ways to overturn it after it was passed.

The latest challenge — a lawsuit claiming the tax was unconstitutional — was shut down in October, when an L.A. County judge dismissed the case, but the plaintiffs are in the process of appealing the decision.

The next hurdle the measure will face comes in November, when Californians will vote on a statewide ballot initiative called the “Taxpayer Protection Act.” If passed, the act would require special taxes to be approved by two-thirds of the vote instead of a simple majority, applying to all measures adopted after Jan. 1, 2022. Since Measure ULA was adopted in 2023 and only received 57% approval, it could require another vote or potentially be repealed.

Gov. Gavin Newsom filed an emergency petition to remove the initiative from the ballot, but the status of the petition is unclear.

“This is a David-vs.-Goliath story. Moneyed interests are trying to stop Angelenos from addressing this existential crisis, but I believe voters will flip the script at the polls and beat it back,” Good said. “We’re going to attack the housing crisis with vigor and zeal for as long as it takes.”

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Jack Flemming

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April 1, 2024