A homeless encampment near Los Angeles City Hall in January.
(Gina Ferazzi / Los Angeles Times)
No measure would have a greater impact on the bottom lines of certain residents, or on the city’s ability to build housing for homeless people, than Initiative Ordinance ULA (which stands for United to House L.A.). It would impose a one-time 4% tax on property sales above $5 million that would rise to 5.5% on transactions above $10 million. A $5-million sale would generate a $200,000 tax bill.
The so-called documentary transfer tax would generate an estimated $600 million to $1.1 billion a year, according to a city analysis, and the proceeds would fund affordable housing construction, rental subsidies and tenant defense, among other things.
Proponents say this new tax is essential because city officials expect funds available for affordable housing construction to plummet in the coming years. Although the measure has received endorsements from a slew of unions, social justice groups and The Times’ editorial board, neither mayoral candidate has come out in favor of it (Remember, the editorial boards operates separately from the newsroom).
Opponents of the tax include the Howard Jarvis Taxpayers Assn., a number of real estate groups and the editorial board of the Los Angeles Daily News. They say the tax could drive up rents and make Los Angeles a harder place to do business, which could cause firms to flee the city. Some also take issue with how the proposal is being pitched to voters since it’s being called a “mansion tax,” even though most its proceeds would come from sales of multifamily housing and commercial property.
In 2019, if this tax had been applied, nearly half the proceeds would have come from the sale of commercial properties, and 27% would have come from the sale of multifamily residences, such as apartments, according to analysis conducted by consultant Mike Kahoe, who authored a paper on the measure for the Center for Jobs & Economy and the California Business Roundtable.
If the ballot measure were already in force, sales of these two types of real estate would have raised about $690 million, while sales of expensive single-family homes would have raised just over $200 million.
Benjamin Oreskes
Source link
