A significant divide is emerging within the Los Angeles real estate industry as stakeholders clash over proposed amendments to Measure United to House L.A. Although some advocates seek the total dismantling of the tax, a novel coalition is pushing for a middle-ground approach that may leave single-family residential brokers behind.
The ‘Mend It, Don’t End It’ Proposal
The group Affordable LA: Mend It, Don’t End It, which includes several industry trades, recently presented six proposed changes to the Ad Hoc Committee on Measure United to House Los Angeles. Their strategy focuses heavily on commercial relief to maintain the tax’s fate local.
The coalition suggested that if multifamily, commercial, industrial, and mixed-use properties were exempt, the city would still have sufficient funds to cover the current fiscal year’s budget. According to the group, only about 9 percent of the ULA funds have been spent, leaving a balance of $589.2 million.
Residential Interests Left Behind
Despite the heavy reliance on residential revenue, only one of the coalition’s six proposals pertains to residential transactions. This single proposal suggests a three- to five-year exemption for property owners impacted by the Palisades Fire and other future natural disasters.
This narrow focus creates a bifurcation in the industry. Single-family residential agents and brokers may find little relief in these proposals, potentially driving them to support more drastic alternatives.
The Profitability Debate
Council Member John Lee of the 12th District is focusing on a critical point of contention: whether the tax should apply to sales that result in a loss. On April 14, Lee introduced a motion requesting an analysis of what would be required to ensure the tax only applies to profitable sales.
Industry critics, including developers and brokers, argue that the tax should not apply if a property sells at a loss. While the “Mend It, Don’t End It” group described such a move as tricky, they suggested capping the tax at 1 percent to 2 percent for commercial properties once a 15-year new-build exemption expires.
City Hall Inefficiencies
The discussions have also evolved into a critique of broader city governance. Council Member Lee expressed frustration that the committee is analyzing the tax after the fact, noting that investors had long anticipated these issues.
Ysabel Jurado, 14th District representative and chair of the ad hoc committee, described the city’s planning process as “abysmal.” She cited delays in the Los Angeles Department of Water & Power and structural deficits resulting from labor negotiations as factors that hinder market needs.
Looking Toward November
The coalition’s goal is to resolve these issues before the Howard Jarvis Taxpayers Association’s Local Taxpayer Protection Act reaches the November ballot. This proposed change to the state constitution would require a two-thirds supermajority of voters to approve all local taxes.
If the current proposed amendments fail to satisfy the residential side of the industry, those stakeholders may notice the November ballot measure as their only viable path to making the tax null and void.
Frequently Asked Questions
What are the current tax rates for Measure ULA?
Measure ULA applies a 4 percent tax on transactions starting at $5.3 million, which increases to 5.5 percent on deals of $10.6 million or more.
What residential relief is being proposed by the ‘Mend It, Don’t End It’ group?
The only residential proposal is a three- to five-year exemption from the tax for property owners who have been impacted by the Palisades Fire or other future natural disasters.
What is the Local Taxpayer Protection Act?
Proposed by the Howard Jarvis Taxpayers Association, this act would amend the state constitution to require a two-thirds supermajority of voters to approve any local taxes.
Do you believe a tax on property transfers should be exempt if the sale results in a financial loss?
