Los Angeles’ fight over its so-called "mansion tax" hit a hard stop at City Hall this week, as the City Council abruptly backed off a closely watched plan to loosen the levy on high-end real estate deals.
On Wednesday, the council voted 14-0 to shelve a proposed ballot measure that would have sent a broad rewrite of Measure ULA to voters this November, according to LAist. That decision leaves the transfer tax fully intact and effectively ends, for now, a push by developers and some council members to carve out new apartment projects from the charge.
The council did move ahead with a narrower tweak tied to wildfire victims. Members voted 13-1 to ask voters to exempt Pacific Palisades homeowners who are forced to sell within five years of the Palisades Fire, a separate question that will still appear on the fall ballot, LAist reported.
Measure ULA, approved by voters in November 2022 and effective April 1, 2023, slaps a special transfer tax on pricey deals. The rate starts at 4% for sales above about $5.3 million and jumps to 5.5% on sales at or above roughly $10.6 million, according to the Los Angeles Times. Supporters tout the levy as a lifeline for the city’s housing safety net, noting it has already generated more than $1.2 billion for affordable housing projects, renter assistance and tenant services. Critics fire back that the tax’s cliff structure has iced big-ticket deals and slowed new construction, leaving Los Angeles to juggle tough tradeoffs, according to CalMatters.
What researchers and the city say
A recent analysis tied to RAND found that Measure ULA has sharply reduced activity at the top of the market. High-value sales dropped by roughly 31% and multifamily investment took a hit, deterring more than 9,000 housing units through early 2026 and resulting in an estimated $452 million in forgone local and state revenue, according to RAND.
City housing staff, looking at a potential 10-year exemption for new apartment buildings, told council members that such a carveout would trim Measure ULA revenue by about 5% while nudging new apartment construction up by roughly 5%, or about 330 units a year. That is a modest bump in supply for a relatively small hit to tax collections, according to staff figures cited by LAist.
Politics and what’s next
The council’s decision to punt on broader changes followed a late-breaking deal in Sacramento that took a statewide ballot measure to kill or curb transfer taxes off the November ballot, easing the immediate political pressure on City Hall, CalMatters reported.
Even so, council members who had backed reforms warned that Los Angeles still needs to hunt for ways to protect housing production, while development and real estate groups signaled they are not done fighting and will keep pressing the issue in future council meetings and at the ballot box, according to the Los Angeles Times.
For now, Measure ULA remains firmly in place, and the revenue keeps flowing to affordable housing and tenant programs. Wednesday’s votes underscore that wholesale rewrites are off the table for this fall, but the tug-of-war between preserving funding for homelessness and tenant services and lowering barriers to new construction is almost certain to return to center stage.
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