L.A. Mayor Considers Pausing City’s ULA Tax

Los Angeles’ Measure ULA tax will turn 2 years old in early April, but there’s now a possibility that it might not make it to that milestone. 

L.A. Mayor Karen Bass last week told reporters at a press conference that her office was looking into temporarily suspending the measure — colloquially known as the city’s “mansion tax” — to help the rebuilding process for people who lost their homes in the Palisades fire earlier this year. But it’s unclear if, and for how long, that suspension could be possible. 

“There’s two schools of thought,” Bass said. “One is, that [suspending ULA] can’t happen, it has to go back to voters. And the other is that it might be able to happen with action from the council and the mayor’s office. We’re having that investigated through our attorneys right now.”

“We are going to look at every possible option to support fire survivors and accelerate recovery while also confronting the humanitarian crisis of homelessness,” a spokesperson for Bass’s office told Commercial Observer via email on Monday. “Street homelessness declined 10 percent in Los Angeles for the first time in years, and we will continue moving forward.”

The ULA tax has walked a difficult path since it first went into effect in April 2023, fending off multiple legal challenges and so far pulling in significantly less revenue than city officials first projected, and at least in part causing a chilling effect on the investment sales market. The measure imposes a 4 percent tax on all property sales of above $5.15 million, and a 5.5 percent tax on deals above $10.3 million. While the tax has collected nearly $600 million since it was introduced, mostly via single-family home sales, the figure is still less than the $604.6 million projected in the city’s budget for last fiscal year alone. 

The L.A. City Council in December approved guidelines for how the city could spend part of the revenue it has so far accrued from the tax, about $168 million for the 2024-25 fiscal year. That includes about $133 million toward building and renovating affordable housing, $21 million toward renter support programs and $13 million for administrative costs. 

Commercial real estate sales volume in L.A. has also dropped since ULA was enacted, driven by a myriad of factors including high interest rates and lower demand. By the end of the third quarter last year, the city saw a 40 percent decline in commercial property sales compared to the same period in 2023, according to a report from NAI Capital at the time. 

Nick Trombola can be reached at ntrombola@commercialobserver.com.