The ULA (Measure United to House LA) program, implemented in Los Angeles since April of last year, imposes a real estate transfer tax on high-value residential and commercial property transactions, colloquially known as the “mansion tax.” Recent data indicates a significant increase in the revenue generated by this contentious new tax.
Passed by Los Angeles voters in 2022, the ULA initiative aims to fund affordable housing, prevent homelessness, and support tenant assistance programs. Currently, the measure imposes a 4% tax rate on property transactions exceeding $5.15 million and a 5.5% rate on transactions over $10.3 million.
Since the beginning of the new fiscal year, revenue from the ULA program has seen a notable uptick. However, since its inception, the program’s fundraising has fallen short of expectations. As of the end of September, it has generated approximately $400 million, significantly lower than the anticipated annual revenue of $600 million to $1.1 billion. The Los Angeles Housing Department (LAHD) reported that last year, the tax revenue fell about 55% short of the expected $606 million.
Despite the rocky start, the latest figures from LAHD have delivered some positive news to supporters of the initiative. In the first three months of the new fiscal year, the ULA program generated approximately $91.2 million in revenue, a 37% increase from the $66.5 million collected during the same period last year. The fiscal year for the city runs from July 1 to June 30 of the following year.
Among various property types, single-family home transactions have emerged as the largest source of revenue from this transfer tax. In September alone, revenue from residential properties totaled $11.6 million, accounting for 59% of total revenue. Since the tax’s implementation, single-family home sales have contributed around $156.6 million, representing 39% of all property-related revenues. The zip codes with the highest transaction volumes and amounts include 90049 (covering communities such as Bel-Air and Brentwood) and 90272 (Pacific Palisades).
Joe Donlin, director of the Los Angeles Alliance for Housing, stated, “The ULA program has proven to be one of the largest sources of revenue for affordable housing in Los Angeles history.” The funds raised in the first year far exceed those from a similar measure, Measure HHH, which generates approximately $120 million annually through bond sales. Regarding the ULA’s lower-than-expected revenue, Donlin attributed this to many sellers completing transactions before the law took effect, but he added that the tax revenue is now showing an upward trend.
In contrast to the growth from single-family home transactions, commercial property sales have remained stagnant, contributing only $11.24 million in revenue. Analysts note that, over the past two years, investment activity in Los Angeles commercial real estate has plummeted due to declining property values, decreased demand, and high interest rates.
At the same time, some housing policy experts argue that the ULA initiative is hindering housing development in the city. According to state law, Los Angeles is required to plan for nearly 500,000 new housing units by 2029.
