A coalition of housing advocates, nonprofit and business leaders on Friday called for altering Los Angeles’ so-called “mansion tax” with practical reforms to ensure it delivers on its promise to build more housing, increase affordability and reduce homelessness.
The group — named The Affordable LA: Mend It, Don’t End It Coalition — presented their proposal to amend Measure United to House Los Angeles, which they say under its current structure is creating unintended barriers.
Coalition representatives joined the City Council’s Ad Hoc Committee on Measure ULA to discuss how the 2022-voter approved initiative is working in practice, and what targeted adjustments could strengthen its impact on housing production and homelessness prevention outcomes.
Councilmember Ysabel Jurado, who chairs the committee, emphasized that proposed reforms are not about ending the measure, but rather “protecting it, and making it work at the scale Angelenos were promised.”
ULA is “making L.A.’s housing crisis worse,” according to the coalition. They said the measure has resulted in a 32% decline in multifamily homes being built annually, a 67% drop in property transactions above $5 million, as well as a decline of $488 million in property tax revenue and 12% increase in rent since 2022.
The group is calling for six core reforms: establishing a 15-year exemption for newly built multifamily and commercial properties, enacting a cap rate of 1-2% on non-single family home properties to prevent rent inflation, creating a 3- to 5-year wildfire exemption for families who lost their homes in the Palisades Fire from the tax, streamlining financing rules and expand uses, setting clear performance and governance guidelines and using ULA revenues to bond $1.5 billion to jump start housing construction.
“ULA was sold as a mansion tax,” Sarah Dusseault, a housing advocate, said. “What it has become, in practice, is a tax on housing and jobs. The deals don’t happen, the buildings don’t get built.”
Builders Alliance CEO Beatrice Hsu emphasized that LA is on a bad trend for housing production and affordability. She noted that 2024 was a record-setting year for new apartment deliveries in the U.S., with the highest number of new construction in cities like Denver and Austin, Texas. However, Los Angeles was passed over.
“We need to think bigger about getting supply-and-demand in balance and moving toward system affordability,” Hsu said.
Nella McOsker, president and CEO of Central City Association, and daughter of Councilman Tim McOsker, came to speak on behalf of nonprofit housing developers and service providers, who are “on the ground dealing with the real-world consequences of ULA.”
She stated that developers were excited when Mayor Karen Bass issued her first executive directive to expedite affordable housing. So far, there’s more than 42,000 units in the pipeline, but of those projects more than 36,000 units have been stalled. Only 6,000 units are under construction or have been built, McOsker added.
McOsker recognized there are a number of reasons for these delays, but she emphasized that the number-one issue is access to private financing.
“Banks are not lending because projects don’t pencil in, a large part, ULA,” McOsker said.
Mott Smith, an adjunct professor of real estate development at USC, previously co-authored a study on the impacts of ULA. He projected the city could see a downturn in property tax, totaling $643 million, in 10 years with a potential loss of $900 million for Los Angeles Unified School District, which heavily relies on property tax to fund schools.
The coalition also lamented that Measure ULA is not moving fast enough. About $589 million in revenue generated from the tax has not been used, which in part is due to a lack of flexibility in how the money can be used, as well as due to legal concerns amid a threat to overturn the initiative.
Council President Marqueece Harris-Dawson created the ad hoc committee in an effort to improve Measure ULA after some studies showed the initiative is having a negative effect on housing development.
Elected officials and housing advocates are also seeking to improve Measure ULA in a bid to deter a statewide effort to rescind the tax.
This week, California qualified a measure, which is being led by the Howard Jarvis Taxpayers Association, California Business Roundtable, and the California Business Properties Association. The Local Taxpayer Protection Act to Save Proposition 13 aims to repeal Measure ULA and other real estate transfer taxes higher than 0.11%.
Rob Lapsley, president of the California Business Roundtable, previously said their initiative is about reaffirming Proposition 218. The 1996 law requires voter approval for all local taxes, assessments and property-related fees in California. It also mandates that any “special taxes” must be approved by two-thirds of the voters.
“Taxpayers deserve certainty and fairness,” Jon Coupal, president of the Howard Jarvis Taxpayers Association, said in a previous statement. “This is about defending taxpayers and making sure local governments live within their means.”
Miguel Santana, president and CEO of the California Community Foundation, said that if reforms for Measure ULA advance, it will give L.A. voters a third choice in ensuring the initiative survives.
“That option is based on allowing Angelenos to take control of their own destiny by proposing a ballot measure here in L.A. that allows us to respond to the unintended consequences of this ballot measure, and have voters here in L.A. make that decision,” Santana said.