Measure ULA was sold to voters as a “mansion tax,” but in practice it applies to all kinds of real estate — hospitals, factories, office buildings, and smaller homes that family landlords often use to provide an income for themselves.
Breitbart News noted in early 2023 that Measure ULA requires the city “to collect a 4% tax on sales over $5 million, and a 5.5% tax on sales of property worth $10 million or more.” (The minimum thresholds have seen been raised, incrementally.) It was supposed to raise $900 million annually, and it was sold to voters under the notion of helping the homeless.
But the tax was a flop. One month after it went into effect — appropriately — on April 1, 2023, the tax killed the high end real estate market in L.A.
Public accounting firm HCVT reported in June 2024:
“The transaction volume declined by a staggering 80% or more versus a range of 41 to 61% for all other SoCal markets that were not impacted by the ULA tax,” said Alen Nazarpour, tax principal at HCVT.
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Beyond just depressing luxury home sales, Measure ULA is also grinding the typical real estate turnover to a halt. “It’s not only if you sell your property, but even if you exchange via a 1031 exchange, you’re going to be subject to the ULA tax.” This has severely curtailed the appetite for transactions among investors who regularly cycle properties.
The cooling effect ripples further when you consider the integral role real estate plays in the LA economy and tax base. “LA is a big real estate market. A lot of developers, investors – they’re going to object that,” said Nazarpour. “Some may even make moves to leave the region.”
Moreover, as wealthy homeowners pulled property off the market, Measure ULA has failed to bring in even half of what it was supposed to raise, partly because it has slowed transactions.
Real estate news website The Real Deal reported in December 2024:
The Measure ULA tax has collected about $480 million since its implementation in April last year. It was sold to voters as a means to generate up to $1.1 billion a year for affordable housing and homelessness prevention initiatives.
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The Measure ULA tax revenue is still far below the city’s $604.6 million projection in its 2023-2024 adopted budget.
The program’s projected revenue for the 2024-2025 fiscal year is a much more conservative $271.1 million, according to the City Controller’s Office.
The Los Angeles City Council voted to spend the majority of its $168 million in Measure ULA funds for the 2024-5 fiscal year on “social housing,” in which tenants buy the apartment buildings in which they live, and manage them.
Funds were also spent on non-governmental organizations, and on overhead costs — rather than directly benefiting the economy.
The city council spent the money, even though Measure ULA is still facing litigation that could invalidate the tax completely.
Lawsuits are being spearheaded by the Howard Jarvis Taxpayers Association (HJTA), which defends Proposition 13 of 1978, an historic referendum that limited property taxes in California.
HTJA argues that Measure ULA violates Proposition 13 by imposing an effective property tax via transactions.
Real estate developer-turned-political advocate Elaine Culotti told Breitbart News that the fires could wipe out the protections of Proposition 13 for fire victims.
“Under proposition 13, your land purchase … is preserved at one point of property tax until you sell that property. The only variable is property improvement,” she explained.
“It’s like the perfect storm, burn it all down and reset the land value and erase the benefit of proposition 13.”
Property in the Pacific Palisades that had been held by families for decades could now face much higher taxes, as their new valuations, even after the fire, could exceed what they were when Prop 13 was passed in 1978.
That could mean paying additional taxes under Measure ULA if homes are rebuilt and sold at some future time — which means many may decide not to rebuild at all.
There are also legal claims that Measure ULA violates the civil rights of those whom it taxes, especially those who may be selling their property due to financial distress.
The positive effects of Measure ULA have been minimal at best. Meanwhile, the property market in L.A. has slowed significantly.
Culotti called Measure ULA the equivalent of moving Wall Street out of New York City. Without sales of high-end property, there is not enough business to be done to sustain the current real estate industry in L.A.
“[Measure ULA] does not discriminate, if your home was burned and your lot is valued over 5 million you will be charged ULA tax. It has frozen the largest real estate market in the world. It has brought it to its knees.”
Ironically, Measure ULA may be exerting upward pressure on rental prices, since landlords have to raise rents to afford the tax they will have to pay if they are planning to sell their buildings.
In the communities affected by the Palisades Fire, Measure ULA could limit homeowners’ ability to rebuild, because it will impose a tax on them if the restored value of their homes, plus their land, is more than $5 million, and they try to sell.
Some homeowners in Pacific Palisades may leave their burned lots empty rather than risk rebuilding if the combined value of a home and the land exceeds $5 million in value. Banks may withhold lending on that basis.
There are still ongoing efforts to cancel and repeal Measure ULA, both through future ballot initiatives and the ongoing court cases and appeals. Whether these efforts can succeed before it is too late for victims of the Palisades Fire remains to be seen.
There is another alternative: making federal aid contingent on the repeal of Measure ULA. Ambassador Ric Grenell, who is representing the Trump administration in California’s rebuilding effort, has said there will be “strings” attached to aid.
One of them could be the repeal, or suspension, of Measure ULA. Just as Gov. Gavin Newsom has set aside state regulations to clear brush that could cause more wildfires — albeit belatedly — the city could pause the implementation of Measure ULA to allow communities to rebuild.
A recent study by the Los Angeles County Economic Development Corporation suggested that L.A. could recover as soon as 2029 — but only if rebuilding takes place immediately.
The repeal of Measure ULA is therefore an urgent necessity — before it is too late to rebuild what was lost.
Measure ULA may not be constitutional in the first place, and many Angelenos see it as as nothing more than a money grab that was imposed by conning the public into voting for it.
At a time of such devastation for so many, suspending or repealing Measure ULA could pump oxygen into a real estate market that has been strangled by an ineffective tax — one that has discouraged development and killed
the jobs that accompany that development.
Joel B. Pollak is Senior Editor-at-Large at Breitbart News and the host of Breitbart News Sunday on Sirius XM Patriot on Sunday evenings from 7 p.m. to 10 p.m. ET (4 p.m. to 7 p.m. PT). He is the author of The Agenda: What Trump Should Do in His First 100 Days, available for pre-order on Amazon. He is also the author of The Trumpian Virtues: The Lessons and Legacy of Donald Trump’s Presidency, now available on Audible. He is a winner of the 2018 Robert Novak Journalism Alumni Fellowship. Follow him on Twitter at @joelpollak.
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