Key facts
- The Los Angeles City Council will decide on July 1 whether to place a Measure ULA exemption for new multifamily housing on the November ballot.
- Measure ULA imposes a 4% tax on property purchases from $5.3M to $10.6M and 5.5% on trades exceeding $10.6M.
- The proposed exemption targets multifamily properties constructed within the last decade.
- State efforts to cap transfer taxes statewide, including a proposal by Assembly Member Buffy Wicks, have stalled.
- The city council approved the spending plan for $544 million in Measure ULA funds for the upcoming fiscal year.
The Los Angeles City Council is set to consider a ballot measure on July 1 that could exempt newly built multifamily housing from the city's controversial Measure ULA transfer tax. This decision comes shortly after state-level efforts to limit such taxes were abandoned.
The proposed ballot measure would allow voters to decide if properties built within the last 10 years should be excluded from Measure ULA, which imposes a 4% tax on transactions between $5.3 million and $10.6 million, and 5.5% on those exceeding $10.6 million. Critics in the commercial real estate sector argue that Measure ULA has negatively impacted investment and housing production, despite its proceeds funding housing programs.
Housing advocates and a city legislative analyst report have countered these claims, with the coalition behind Measure ULA opposing the proposed exemption, calling it a "financial and strategic mistake." However, California Community Foundation CEO Miguel Santana views the exemption for new housing as a crucial step to restart construction while preserving essential funding.
Meanwhile, the city council has approved the allocation of $544 million in Measure ULA funds for the upcoming fiscal year, designated for affordable housing and homelessness prevention. Developer Andrew Parker noted that investors are hesitant to invest in Los Angeles due to ULA, but he also acknowledged the critical need for reliable revenue streams for affordable housing developers.
At the state level, a proposal by the Howard Jarvis Taxpayers Association to cap transfer taxes at less than 1% and invalidate Measure ULA was withdrawn following an agreement involving Governor Gavin Newsom's office. In its place, voters will consider a constitutional amendment that preserves existing taxes but may require a two-thirds vote for new ones. Assembly Member Buffy Wicks' bill, AB 736, which aimed to cap commercial transfer taxes at 3% statewide, is now uncertain, with some supporters believing its legislative path is blocked. California YIMBY, a housing advocacy group, has conceded defeat on this specific bill but plans to pursue future efforts to regulate statewide transfer taxes.