LA Voters Say Measure ULA is OK

Ryan Heshmati

February 10, 2023

In November 2022, Los Angeles voters passed Measure ULA with 58% of the vote, despite opposition, according to the Orange County Register, from the city’s new mayor, Karen Bass. This measure is an unprecedented transfer tax on the sales of property at or above the $5 million threshold. Essentially, sellers of properties worth between $5-10 million will have to pay a 4% tax on the entire sale value to Los Angeles and 5.5% on properties above $10 million.  As a transfer tax, property sold at a loss is taxed just the same as at a profit, with taxation solely determined by the price threshold. The plan, now passed, will go into effect in April of 2023.

Proponents argue the measure, which some estimate will generate between $600 million and $1.1 billion in tax revenue annually, will fund needed affordable housing programs for the homeless. The proceeds will be funneled to fund the building of housing developments for the city’s unhoused. The cause is worthy; Los Angeles has almost 44,000 unhoused individuals within its city limits, according to The Guardian. Those in favor of the measure assert owners of multi-million dollar properties can easily afford the tax and its potential impact for the unhoused is life-changing.

Opponents may say that while allotment of units for affordable housing is a necessity, excessive taxation to fund dedicated projects will do more harm than good. The transfer tax can be viewed as unfair; affected sellers are penalized large sums starting at a quarter of a million dollars simply for wanting to sell a property, even if that property did not turn out to be profitable. Critics like Los Angeles Daily News’ Jason Ward also take issue with the projections made by proponents of ULA, asserting, “…voters would be well-advised to adjust their expectations of Measure ULA [regarding funds raised]…” Another criticism is a potential disincentivization of home sales around the tax’s price markers, wreaking havoc on the city’s luxury housing supply.

The passage of the measure in the November election prompted a lawsuit that could determine the fate of the measure. The plaintiff attacks the city’s ability to create and collect such a tax, contending it does not fall under a “general tax,” so the City of Los Angeles has no ability to impose  the tax. 

The transfer tax has not taken effect yet and if the lawsuit fails, other cities around the country will likely watch and see what impact it has on the unhoused crisis plaguing Los Angeles and luxury housing sales. Whether those advocating for the ULA will prove right or the opponents’ fears become reality, it will be very fascinating to watch the changes unfold in the city.