Developer Rick Caruso, who is leading a nonprofit initiative to rebuild areas affected by recent wildfires in Los Angeles, said Monday that the Measure ULA tax on property transactions has resulted in reduced revenue for the city.
Measure ULA, dubbed a “mansion tax” by proponents, was passed by voters in a 2022 referendum and went into effect in 2023. It affects both residential and commercial buildings, and has slowed down the local real estate market significantly.
As Breitbart News noted at the time, 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 are continuing to rise over time.)
Though the tax was supposedly meant to provide funding for affordable housing and homelessness, it has produced far less revenue than projected, because there have been fewer transactions, largely as a result of the new tax.
There are concerns that Measure ULA could also hurt the rebuilding effort in the Pacific Palisades, because it would make property harder to sell, and could add to the costs of rebuilding, as homeowners would have to factor it into the financing of construction.
Mayor Karen Bass said last month, in response to a question from Breitbart News at a press conference, that the city was looking for ways to suspend the tax during the rebuilding effort after the wildfires.
Caruso’s team took that prompt as a call to action, enlisting law firms to press the case against Measure ULA and to convince the city to take whatever action it could to suspend the tax.
Caruso also noted that Measure ULA has hurt the city generally — not just by producing less revenue than expected, but by lowering tax revenues overall.
“It has actually cased a reduction in revenue, because less people want to invest in Los Angeles, because they have to build in the cost oof ULA into their construction costs, right?” Caruso told a seminar for residents of Pacific Palisades organized by realtor Anthony Margulies and 1Pali, a community group. “And so it’s been a terrible negative thing for Los Angeles.”
A recent report by the University of California Los Angeles found that the tax had “unintended consequences”:
Since Measure ULA was enacted, the odds of a Los Angeles property selling at a price above its tax threshold have fallen by as much as 50%. In raw terms, this sharp decline occurred across all types of properties, but our strongest evidence suggests it was particularly pronounced for non-single family transactions, which fell by 30-50%. Together the evidence suggests that Measure ULA is neither a true “Mansion Tax,” nor a tax that falls solely on unearned property wealth. The tax does fall on mansions, but it also impedes the trade in commercial, industrial and multifamily property. In doing so it jeopardizes L.A.’s ability to build new housing, revitalize struggling commercial and industrial properties, and raise property tax revenue.
The UCLA report also noted that lower turnover of property would reduce property tax revenue, since the city generally depends on sales of property to reassess the value of property at higher values for tax purposes.
Ironically, the Los Angeles Times noted, Measure ULA is actually reducing the development of apartment buildings, thereby making rental units more scarce — and potentially more expensive — than they otherwise would have been.
Caruso vowed to continue the fight to convince the city to suspend Measure ULA: “We are not letting this issue go.”
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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