Two and a half years ago, Los Angeles voters approved a tax measure aimed at addressing the city’s affordable housing crisis. Unfortunately, the initiative has exacerbated the problem, leading to an 18% decline in new multifamily housing.
The findings were published this month by RAND and UCLA’s Lewis Center for Regional Policy Studies. The researchers concluded that Measure ULA, dubbed the “mansion tax,” had resulted in 1,910 fewer apartment buildings being built in the city.
ULA applies a 4% tax to properties that sell for over $5 million and a 5.5% tax to properties that sell for over $10 million. The revenue goes toward affordable housing development projects, rent relief, and legal counsel for renters facing eviction.
Despite the “mansion tax” moniker, luxury single-family homes account for less than half of ULA revenue, the study found. Most of the money generated comes from the sale of apartment buildings.
The tax has discouraged developers from building at a time when the city is already falling short of its new housing goals. ULA has contributed to a 40% decline in new housing permits. That means less housing overall and higher prices. It also means falling property tax revenue, which services the city’s general fund. Annual property tax revenue losses from Measure ULA are around $25 million, according to the researchers.
Overall, ULA revenue has been disappointing. The tax was supposed to generate $900 million per year. It only raised $296 million in FY 2024 and $320 million in FY 2025.
The researchers don’t think the tax should be scrapped entirely. Based on their findings, they recommend an exemption for apartment buildings constructed within the past 15 years.
Advocates of ULA aren’t yet ready to acknowledge any shortcomings just yet.
“On its second anniversary, Measure ULA is already producing hundreds of units of affordable housing, protecting tens of thousands of renters and creating thousands of construction jobs,” said Joe Donlin, director of United to House LA, which spearheaded the measure. “Its initial dip in revenue owes more to developers and the real estate lobby hoping to overturn it in court or at the ballot box — and losing.”
Read more at LAist and the Los Angeles Times.