Comments
THE BOTTOM LINE - Last week, the Los Angeles City Council rejected a last-minute effort to place a targeted rewrite of Measure ULA the city’s controversial so called “mansion tax” before voters in the June election. The decision keeps the tax exactly as it is today. But it also guarantees something else: the fight over Measure ULA is no longer confined to Los Angeles. It is rapidly becoming a statewide political and fiscal confrontation with consequences for every city in California.
The council’s action followed a heated session marked by procedural maneuvering, ideological posturing, and sharply divided public testimony from tenant advocates, labor groups, developers, and housing activists. In practical terms, the vote shut the door on local course correction. Politically, it signaled that City Hall would rather defend a flawed status quo than confront mounting evidence that its own policy is misfiring. That is a risky bet.
Measure ULA was approved by Los Angeles voters in 2022 and imposes a 4 percent tax on property sales between $5 million and $10 million, and a 5.5 percent tax on transactions above that threshold. The tax has generated more than $1 billion for affordable housing programs, tenant protections, and homelessness prevention. Supporters point to that revenue as proof the policy is working.
But voters were sold a “mansion tax.” What Los Angeles implemented instead was a blunt transfer tax that does not distinguish between luxury estates and large scale apartment, mixed use, or commercial developments. In practice, the tax has landed squarely on the kinds of housing projects the city and state claim they urgently need penalizing new construction rather than narrowly targeting excess wealth.
Since Measure ULA took effect, apartment sales in Los Angeles have declined relative to neighboring jurisdictions that do not impose the tax. Developers, lenders, and even pro-housing advocates warn that ULA has become a deterrent to new construction and reinvestment at precisely the moment when Los Angeles has been ordered by state housing regulators to plan for more than 456,000 new housing units by 2029.
Councilmember Nithya Raman, who supported Measure ULA in 2022, attempted to address those unintended consequences without dismantling the tax itself. Her proposal would have temporarily exempted new residential, commercial, and mixed-use projects from the transfer tax for a limited period, provided relief for households rebuilding after natural disasters, and loosened certain restrictions on how ULA revenue may be used for affordable housing production.
It was not a repeal. It was not a giveaway to developers. It was an acknowledgment that voter-approved policies still require responsible governance and periodic adjustment when real-world impacts diverge from campaign promises. The City Council declined to even allow voters to weigh in.
Hovering over this local stalemate is a far more consequential threat: a proposed statewide ballot initiative backed by the Howard Jarvis Taxpayers Association that would sharply cap municipal transfer taxes while restricting other local revenue tools. Supporters are racing to qualify the measure for the November ballot. If approved, cities across California could lose between $2 billion and $3 billion in annual revenue.
Many Democratic lawmakers privately concede that backlash to Measure ULA has helped energize support for this broader anti-tax campaign. In other words, Los Angeles’ refusal to recalibrate its own policy is actively strengthening a statewide effort that could do lasting damage to local budgets, including funding for affordable housing itself.
In Sacramento, moments like this often lead to negotiated deals grand bargains designed to pull ballot initiatives in exchange for legislative concessions. But such negotiations require leverage and good faith. By freezing Measure ULA in place, Los Angeles weakened that leverage and undercut the argument that local governments can be trusted to govern responsibly.
Supporters of the current tax counter that claims of a real estate slowdown are exaggerated, citing a rebound in building permits from historic lows. That argument may be technically accurate, but it misses the broader reality. Investors compare jurisdictions, not talking points, and Los Angeles is losing ground to cities that have chosen more precise tools.
More importantly, the political narrative is now forming without City Hall’s consent. Outside Los Angeles, Measure ULA is increasingly framed not as a targeted affordability measure, but as proof that local governments cannot impose narrow taxes without distorting entire markets. That framing is precisely what statewide anti-tax advocates need to win.
Ironically, by refusing to adjust Measure ULA, its defenders may be putting far more at risk than they intended.
(Mihran Kalaydjian is a seasoned public affairs and government relations professional with more than twenty years of experience in legislative affairs, public policy, community relations, and strategic communications. A respected civic leader and education advocate, he has spearheaded numerous academic and community initiatives, shaping dialogue and driving reform in local and regional political forums. His career reflects a steadfast commitment to transparency, accountability, and public service across Los Angeles and beyond.)
