Two years after Los Angeles began collecting a tax on multimillion-dollar property sales, nearly all of the funds intended to address the city’s housing and homelessness crisis remain unspent. Measure ULA, often called the “mansion tax,” was approved by voters in November 2022 and took effect in April 2023. It imposes a 4% tax on property sales over $5.15 million and 5.5% on those exceeding $10.3 million. The measure was expected to generate between $600 million and $1.1 billion annually to fund tenant protections, rent relief, and affordable housing.
Despite these projections, the tax has raised about $630 million in its first two years, falling short of expectations. According to LAist, the tax has been linked to a decline in new apartment developments, impacting both market-rate and affordable housing. A study by UCLA and RAND found that Measure ULA reduced new housing production by approximately 1,910 units annually, an 18% drop from pre-election levels.
The tax has faced legal challenges, with ongoing litigation seeking to overturn it on constitutional grounds. Morgan Lewis reports that taxpayer disputes are progressing through the city’s administrative review process, and a case challenging the tax is pending before California’s Fourth Appellate District Court.
Despite the challenges, Measure ULA has funded some housing initiatives. As reported by Shelterforce, the tax has helped develop about 800 new affordable homes and provided rental assistance to over 4,000 households. However, much of the collected funds remain in city accounts, awaiting deployment as legal and administrative hurdles are addressed.
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