Los Angeles city leaders are revisiting the contentious “mansion tax” – officially known as Measure ULA – just over two years after its passage, voting unanimously on Wednesday to establish an ad hoc committee to review the policy and consider potential revisions. The move comes amid ongoing debate over the measure’s impact on both housing affordability initiatives and the city’s high-end real estate market. The committee’s findings could pave the way for a voter referendum in November 2026, potentially altering a tax that has already generated substantial revenue for affordable housing and homelessness prevention programs.
Measure ULA, approved by nearly 60% of Los Angeles voters in November 2022, imposes a tiered tax on property sales exceeding $5 million. A 4% tax applies to sales between $5 million and $10 million, while properties selling for more than $10 million are subject to a 5.5% tax. The funds generated are earmarked for affordable housing construction, tenant protections, and programs aimed at addressing the city’s persistent homelessness crisis. However, the policy has faced criticism from economists and real estate professionals who argue it has stifled high-value property transactions and could ultimately hinder housing development. The debate highlights the complex challenges facing Los Angeles as it seeks to balance revenue generation with maintaining a healthy housing market.
The newly formed ad hoc committee, comprised of three council members, will review all pending city matters related to Measure ULA and recommend next steps to the full City Council. Council President Marqueece Harris-Dawson and Councilmember Ysabel Jurado introduced the motion to create the committee, emphasizing the demand to assess whether the policy is achieving its intended goals and to address any unintended consequences. The committee is expected to deliver its report by April 30th, though that timeline could be extended if necessary. This review follows a previous proposal in January by Councilmember Nithya Raman, which sought to place amendments to the tax before voters on the June ballot, but that effort was ultimately referred to council committees after facing opposition from housing advocates.
Examining Unintended Consequences and Voter Intent
Harris-Dawson articulated the rationale behind the review, stating the intention is to ensure the policy aligns with the spirit of the voters’ original decision. He specifically raised concerns about the tax being applied to the construction of affordable housing, arguing that this outcome may not have been what voters envisioned when they approved the measure. “There are things in ULA that I frankly think are not in the spirit of the voters, like taxing the building of affordable housing, as one example,” he said during Wednesday’s council meeting. The committee will explore whether the city should present voters with a revised version of the tax in the November 2026 election, potentially offering a second opportunity to refine the policy.
The debate surrounding Measure ULA underscores the challenges of implementing progressive taxation policies in a complex real estate market. Supporters of the measure maintain it has been a significant source of funding for critical housing initiatives, generating over $1 billion since its implementation in 2023. According to the Los Angeles Daily News, these funds are vital for addressing the city’s severe housing shortage and providing support for vulnerable populations. However, critics contend that the tax has discouraged large property transactions, potentially exacerbating the housing supply problem by reducing investment in new developments.
Differing Perspectives on the Policy’s Impact
Councilmember Eunisses Hernandez voiced strong support for preserving the intent of Measure ULA, emphasizing the importance of upholding the will of the voters. “Angelenos led that conversation at the ballot box, and I know that the people expect to throw down for Measure ULA,” Hernandez stated. She too cautioned against undue influence from special interest groups seeking to weaken the policy. Councilmember Nithya Raman echoed this sentiment, expressing continued support for the measure while acknowledging the need to address potential unintended consequences. Raman believes the ad hoc committee can facilitate a constructive dialogue aimed at maintaining the revenue stream while removing barriers to new housing production.
Joe Donlin, director of United to House L.A., the coalition that spearheaded the campaign for Measure ULA, indicated openness to reviewing the policy, but stressed the importance of basing any revisions on evidence-based analysis. “Done right, this Ad Hoc Committee could be an opportunity to consider the value of our landmark affordable housing and homelessness prevention fund, take the time necessary to carefully examine the data and research questions before us, and lay this discussion to rest once and for all,” Donlin said. However, he also expressed concern that the committee’s timeline may be too restrictive for a thorough evaluation.
Economic Analysis and Ongoing Debate
Research on the economic impact of Measure ULA has yielded conflicting results. Shane Phillips, housing initiative manager at UCLA’s Lewis Center for Regional Policy Studies, has pointed to research indicating that the tax has led to a significant reduction in sales of properties valued above $5 million in Los Angeles compared to neighboring cities without similar transfer taxes, particularly impacting sites suitable for apartment development. However, supporters of the measure have cited alternative research suggesting that the initial analysis relied on flawed data and failed to adequately account for broader market trends and the benefits of the housing programs funded by the tax. These conflicting findings highlight the complexity of assessing the true impact of the policy.
The debate extends beyond City Hall, with the Howard Jarvis Taxpayers Association actively gathering signatures for a statewide ballot initiative that could limit the ability of local governments to impose transfer taxes like Measure ULA. This initiative represents a broader challenge to local control over revenue generation and could have significant implications for cities across California seeking to address housing affordability and other pressing issues. The association argues that such taxes stifle economic growth and discourage investment.
earlier proposals to amend Measure ULA, spearheaded by Raman and Harris-Dawson, aimed to exempt newly constructed multifamily, commercial, and mixed-use buildings from the tax for 15 years, create temporary hardship exemptions for properties affected by natural disasters, and streamline affordable housing development. These proposals, while ultimately referred to committees, demonstrate the ongoing efforts to refine the policy and address concerns raised by developers and other stakeholders.
Next Steps and Future Outlook
The ad hoc committee is expected to begin its review process in the coming weeks, gathering data, soliciting input from stakeholders, and analyzing the potential impacts of various policy options. The committee’s report, due by April 30th (unless extended), will be a crucial document informing the City Council’s decision on whether to pursue further changes to Measure ULA. The possibility of a voter referendum in November 2026 remains on the table, potentially giving Los Angeles residents another opportunity to weigh in on this pivotal policy.
The outcome of this review will likely have far-reaching consequences for the city’s housing market, affordable housing initiatives, and overall economic development. As Los Angeles continues to grapple with a severe housing crisis and a widening gap between the rich and the poor, the debate over Measure ULA serves as a microcosm of the broader challenges facing urban centers across the nation. The committee’s function will be closely watched by policymakers, housing advocates, and real estate professionals alike.
The next scheduled action regarding Measure ULA is the formation of the ad hoc committee and the commencement of its review process. Interested parties can follow updates on the Los Angeles City Council website and participate in public hearings as they are announced. The city council’s website is https://www.lacity.org/. We encourage readers to share their thoughts and perspectives on this important issue in the comments below.
Worth a look