Last week, Mayor Karen Bass requested that the Los Angeles City Council grant a one-time exemption from Measure ULA for Palisades Fire victims. Through this announcement, Mayor Karen Bass effectively recognized what the data already shows: Measure ULA, the so-called “mansion tax,” is negatively impacting housing across Los Angeles.
Her honor’s office announced she will “assist in the establishment of a one-time exemption to Measure ULA” and, once approved, issue an executive directive to carry it out. That urgent request to the City Council is not just a minor change. It’s an admission that ULA is blocking vital transactions when people most need relief.
If Measure ULA were narrowly targeted and harmless, we wouldn’t see the measurable damage UCLA has documented. UCLA Lewis Center researchers found that since ULA took effect, “the odds of a Los Angeles property selling at a price above its tax threshold have fallen by as much as 50%,” with the steepest declines in non-single-family transactions (commercial, industrial, and multifamily) down 30% to 50%. Those are precisely the assets that fuel renovations, conversions, and new housing projects. When turnover stalls, projects stall.
A second UCLA study, Taxing Tomorrow, goes further. It links ULA to at least a 1,910-unit annual reduction in multifamily production, an 18% drop compared to recent pre-ULA levels. In a city starved for homes, that’s a self-inflicted wound resulting in fewer projects getting financed, fewer affordable set-asides, and slower progress overall.
Community Tax Coalition research reaches the same conclusion nationally: real estate transfer taxes suppress transactions, decrease supply, and do not generate the promised revenues, with the most hardship felt by lower-income households. That’s not a mansion tax, as Measure ULA supporters claimed. Los Angeles now serves as a case study of those unintended consequences.
Even ULA’s revenue has fallen short of expectations. UCLA noted that ULA has raised less than its backers projected. Measure ULA is producing only about $270 million to $830 million less per year than promised, depending on which projection is used. Budgets can adjust to shortfalls. Lost housing cannot be reclaimed.
Yet, politicians bemoan the city’s housing crisis but still find ways to increase the cost of building housing.
The Mayor herself acknowledged ULA’s structural flaws earlier this fall. Working with Sacramento allies, she supported a last-minute bill to lessen ULA’s impact on certain newer apartments, shopping centers, and warehouses, implicitly admitting that the tax is hindering deals the city needs to facilitate. Then, under pressure, the bill was withdrawn before the legislative deadline.
If Measure ULA’s design is sound, then state-house surgery shouldn’t be needed. If it’s flawed, postponing reform only delays the inevitable. Many of these same groups also push for exemptions to the California Environmental Quality Act to benefit a “chosen group.” They don’t recognize or refuse to acknowledge that this law raises building costs and causes costly delays.
Which brings us back to the Mayor’s proposed “temporary” exemption. It’s humane to help fire survivors. It’s politically crucial for a mayor on the ballot next June. It’s also revealing. Once politicians admit that ULA blocks essential transactions in an emergency, they have acknowledged the core policy failure: a blunt transfer tax discourages the very market activity – sales, recapitalizations, and conversions – that makes new and more affordable housing possible.
The Mayor’s own letter states the exemption is meant to “speed up sales of these properties and spur rebuilding,” clearly admitting that the tax hinders recovery and housing.
Leadership requires following the evidence to its logical conclusion. Carve-outs, pauses, and withdrawn fixes are political waystations, not solutions. If Los Angeles’ political leaders want more housing, especially affordable housing, they must eliminate the obstacles blocking transactions and construction. That begins by admitting ULA has failed and initiating a full repeal.
Temporary solutions are not a housing strategy. Repeal is.
Matthew Klink is the owner and president of Klink Campaigns, Inc. He is a founding member of the Community Tax Coalition.