A state bill backed by Los Angeles Mayor Karen Bass to reform Los Angeles’ Measure ULA, the voter-approved “mansion tax” to fund affordable housing, was quietly pulled late last week following swift pushback from both housing advocates and real estate industry leaders.
Introduced in the final days of the legislative session, the proposal sparked concerns from ULA supporters that it could reduce funding for affordable housing and homelessness prevention. Some real estate groups, meanwhile, argued the measure came too late and failed to adequately address the tax’s economic impact.
Measure ULA, approved by voters in 2022, levies a 4% tax on property sales above $5 million and 5.5% on sales over $10 million. The funds are earmarked for affordable housing production, rental assistance, and homelessness prevention programs.
The reform bill, Senate Bill 423, co-authored by Democratic lawmakers Lena Gonzalez and Tina McKinnor, would have maintained those tax rates for most high-end residential properties, while reducing the rate to 1.5% for some commercial developments built in the last 15 years. It also included exemptions for homes rebuilt after recent natural disasters.
By Thursday, state lawmakers had withdrawn the proposal with plans to revisit it in the next legislative session. The mayor’s office confirmed Monday that the legislation had been continued due to “a need for additional amendments and further technical changes.”
“Whether working in Sacramento or here in Los Angeles, my goal is to build more housing and make it more affordable while fixing unintended consequences of policies impacting families trying to rebuild after January’s fires,” Bass said in a statement.
She added that the city is “working to safeguard local revenue for affordable housing and homelessness prevention,” and expressed support for reintroducing the bill in January after further improvements.
But the proposal quickly drew fire from housing advocacy groups, who accused Sacramento lawmakers of trying to undermine local voter will.
United to House LA, which championed the 2022 ballot measure, called the bill “rushed” and “based on flawed research,” and said it would have slashed revenue earmarked for affordable housing and homelessness prevention.
“The research driving the deal was flawed so it’s no surprise that the legislation wasn’t ready for prime time,” the group said in a statement Monday. “Los Angeles voters passed Measure ULA to build the affordable housing we need, so we don’t think Sacramento politicians should go over their heads to give that money back to for-profit developers.”
Supporters pointed to signs of recovery in the housing market, saying development has picked up since the city approved long-delayed zoning reforms in February. More than 17,000 units have been proposed since then, they said — a trend that runs “contrary to claims of the real estate industry.”
Fred Sutton, senior vice president of local public affairs at the California Apartment Association, countered that the measure has “failed to deliver on its promises,” citing lower-than-expected revenues and a chilling effect on property sales.
“The message to city leaders should be clear: constant intervention in the housing market is counterproductive,” Sutton said. “Policies like ULA may sound appealing but they ultimately reduce housing supply and drive up costs.”
Daniel Yukelson, executive director and CEO of the Apartment Association of Greater Los Angeles, said the bill was proposed “extremely late in the legislative session” and still wouldn’t have done enough to ease burden on developers.
“You’re 4% or 5.5% behind on your investment the minute your investment is ready to be occupied,” he said. “And so, given where we are with interest rates and the softening of the real estate market, it doesn’t pencil out for people to want to make these costly investments in Los Angeles.”
Sutton said the city’s transfer tax structure is out of balance and needs reform to avoid further harming the housing market. Yukelson went further, calling Measure ULA a deterrent to new development and arguing that it should be repealed entirely.
ULA advocates rejected that view, saying the measure has already begun to make an impact. As of July, the city had collected $830 million, which they said helped keep more than 10,000 residents housed and launched construction on nearly 800 affordable homes.
The legislative proposal is expected to return in January, after further technical changes. In the meantime, both sides said the debate over Measure ULA is far from over.
“Reform is still necessary,” Sutton said. “Whether reform comes this year or in future sessions, the conversation is far from over.”
United to House LA, meanwhile, vowed to keep “holding our leaders in L.A. and Sacramento accountable” and said the group would continue fighting efforts to roll back ULA or divert its revenues.