In Its First Year, LA’s Mansion Tax Falls Short of Revenue Projections

A satellite image of an affordable supportive housing development project site breaks ground in Los Angeles on Oct. 12, 2023. (Google Maps/Screenshot via The Epoch Times)

The Los Angeles mansion tax, approved by 58 percent of city voters in November 2022, has generated less revenue than projected. About $700 million less.

City officials held an April 4 news conference where housing advocates, developers, renters, and other stakeholders gathered to hear a report on Measure ULA’s first year.

Endorsed by more than 200 local organizations, the measure slapped a 4 percent sales tax on properties sold for over $5 million and 5.5 percent on those over $10 million. Early projections estimated the tax could generate around $900 million for affordable housing during its first year, but it wound up raising $215 million.

Measure ULA went into effect Jan. 1, but applicable property sales tax collections didn’t begin until April 1.

During the conference, officials including Councilors Nithya Raman, Bob Blumenfield and Hugo Soto-Martinez discussed a new report called “Measuring LA’s Mansion Tax,” which found the tax has generated an “unprecedented” amount of money for affordable housing.

As part of a plan previously approved by the City Council, $150 million of Measure ULA revenues have helped fund programs for short-term emergency rental assistance, tenant outreach and education, tenant protections, eviction defense, direct cash assistance for low-income seniors and people with disabilities, and affordable housing production.

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In its first 10 months, the measure raised $192 million, which is more than double the funding the city receives from the federal government directly for affordable housing, officials said during the conference.

Among those gathered were researchers from UCLA, USC, and Occidental College, who said they studied the effectiveness of Measure ULA and published their findings in a report online, which can be found at www.oxy.edu/ULA.

“The pace at which ULA is generating revenue, especially over the last quarter, is impressive,” reads a statement from lead author Joan Ling, a real estate adviser and policy analyst in urban planning. “ULA is enabling Los Angeles to finally meet the big structural challenges driving our housing crisis—like the skyrocketing costs of land and construction—so that we can build more homes more quickly.”

In their report, researchers revealed the measure has helped expedite the construction of 795 affordable housing units, including 331 units that provide health-related or social service programs, called support housing units.

For every $1 the measure brings in for affordable housing, the city at the same time is receiving $10 from private, state, and federal resources, for a total of $514.8 million, they said. It has also helped create 10,000 jobs by financing the projects, according to the report.

The measure has provided rental assistance for 4,652 renters and reimbursed eviction defense attorneys for 1,262 renters, the report says.

The Los Angeles city clerk’s voter information pamphlet for the November 2022 election said Measure ULA would “generate approximately $600 million to $1.1 billion annually for existing and new programs.”

But when the tax took effect, Los Angeles’s luxury home sales dropped. That was partly a pandemic hangover and a response to rising interest rates, the L.A. Times reported, but it also reflected many homeowners deciding to avoid the tax by simply not selling.