In 2022, the Los Angeles electorate voted to slap the sale of mansions and other high-value real estate deals across the city with a hefty tax.
Locals have been debating Measure ULA ever since. Supporters call it a vital lifeline for the city’s unhoused and housing insecure who stand to benefit from the hundreds of millions of dollars the initiative has already raked in. Critics call it an economic own-goal that has choked off new apartment construction in a city where new housing is in excruciatingly short supply.
That debate is about to go statewide.
The Howard Jarvis Taxpayers Association, a low tax advocacy group, is currently gathering signatures to put a measure on California's November 2026 ballot. A central part of their pitch: No more Measure ULAs.
The proposed constitutional amendment takes aim at two types of taxation common across California:
- Transfer taxes on the sale of real estate. The measure would cap rates at a little more than one-twentieth of one percent of the value of the property. Los Angeles' highest rate is one hundred-times higher.
- Local tax measures put on the ballot by voter-backed campaigns (as opposed those put there by city councils) that are earmarked for a particular purpose. The tax-capping proposal would raise the electoral support needed to pass these types of “special” tax measures to two-thirds, up from a simple majority of more than 50%.
Municipal governments across the state stand to lose billions of dollars (with taxpayers standing to save just as much) if the measure ultimately succeeds. Voter-proposed tax hikes have been approved by simple majorities in cities and counties across California. Transfer tax hikes have also been a popular funding source for certain local governments.
Measure ULA, which 58% of Los Angeles voters backed in 2022, happens to be both. The Howard Jarvis Taxpayers Association and its political allies appear happy to make it the face of the statewide campaign.
Putting a lid on both citizen-initiated tax measures and high transfer taxes “is something that we have always had as a priority,” said Rob Lapsely, president of the California Business Roundtable, a coalition that has yet to take a formal position on the measure but which backed an earlier version. “The question was, ‘can we actually find the right opportunity?’”
“And then suddenly, along came Measure ULA.”
The fight over the “mansion tax”
The City of Los Angeles’ measure was sold to voters as a “mansion tax,” because it sticks new, elevated transfer fee rates on only the highest value sales: 4% on properties between $5 million and $10 million and 5.5% for those above that. Those numbers have inched up with inflation. All sales below those thresholds are taxed at roughly half of 1%.
Since going into effect in 2023, the measure has raised some $830 million for affordable housing construction, subsidies for cash-strapped renters and legal assistance for tenants facing eviction. It is by far the largest single contributor to the city’s overall homelessness spending.
But ULA has its critics. Not just a tax on mansions, the high rates apply to commercial, industrial and multifamily residential projects too, including land sales for new apartment developments. Apartment construction has indeed slowed to a crawl across the city in recent years and developers and researchers have laid at least some of the blame on the city’s high transfer taxes which they argue has driven new construction down further than in surrounding cities. One report by researchers at UCLA and the Rand Institute estimated that the measure has resulted in 1,910 fewer apartments per year, including 168 fewer affordable units. Another study by researchers at Harvard, UC Irvine and UC San Diego, found that property tax collections fell steeply as a result of the dramatic slow down in sales, off-setting an estimated 63% of the collect transfer tax revenue, if not significantly more.
Backers of the mansion tax have taken issue with the UCLA study in particular. They also note that the program is currently accepting applications for its first major distribution of funds, with plans to push nearly $400 million out the door, which could ultimately ramp up affordable housing development across the city.
But there’s growing concern, both in Los Angeles and among Democrats in Sacramento, that ULA as it currently exists has become a political vulnerability — and one that could fuel the campaign behind the statewide tax busting measure.
“Measure ULA is the tail wagging the dog,” said Mott Smith, a developer and board member of the California Infill Builders Association who co-authored another study that found a chilling effect on the housing market. “Anyone with assets in Los Angeles is like, ‘please where can I send my check to Howard Jarvis?’”
In the final days of the California Legislative session, Mayor Karen Bass and former Assembly Speaker Bob Hertzberg tried to hammer a grand bargain into state law. Senate Bill 423 would have exempted certain new residential developments from the tax, offering a reprieve to many multifamily housing developers. It would have also given the city more flexibility to renegotiate affordability requirements on housing projects funded by the measure, addressing concerns by some developers and financiers that ULA cash comes with too many strings attached to be of use.
The bill would have also exempted homes destroyed in the recent wildfires.
But there was a catch: The ULA tweak would only go into effect if the Howard Jarvis Taxpayers Association pulls its ballot measure or it fails to qualify for the ballot.
All of that ultimately proved too complicated, contentious and of questionable legality to ram through the Legislature in the final days of the session. Long Beach Sen. Lena Gonzalez and Inglewood Assemblymember Tina McKinnor, both Democrats, vowed to pick it up again in January.
But that may be too late to neuter the anti-tax campaign. The Howard Jarvis Taxpayers Association is already gathering signatures and raising funds.
“This was an attempt to cut us off early in the process, but since we’re moving forward I think the attempt to leverage this is not going to prevail,” Jon Coupal, the association’s president. “Their opportunity to ambush us is now over.”
That’s given local government groups billions of reasons to worry. Along with making it more challenging to raise revenue in the future, cities with existing high transfer taxes would see them slashed. Parcel taxes currently on the books that were approved by majorities of less than two-thirds would be similarly nixed.
Cities would lose between $2 billion and $3 billion each year if the measure becomes law, according to an analysis commissioned by the League of California Cities, a lobbying group. That includes hundreds of millions of dollars in foregone funding dedicated for new housing and homelessness services in Los Angeles and Santa Monica. But it also includes hundreds of millions more for cities that don’t use these transfer dollars for new, specific purposes and projects, but simply to top up their budgets.
The City of Berkeley, for example, stands to lose between $33 million and $63 million, according to the League’s analysis. That’s the equivalent of between 15% to 30% of the town’s general fund.
California’s favorite fight
Californians have been having some version of this fight for nearly half a century.
In 1978, voters passed Proposition 13, which capped property taxes and put strict limits on local and state governments’ ability to raise revenue. Defending, rolling back and revising those limits in court battles and subsequent state ballot measure campaigns is now a storied California political tradition.
The latest chapter begins in 2017 when the California Supreme Court ruled in a case against the southern California city of Upland that citizen-initiated special tax measures only need to get more than 50% of the vote to pass. Up until that point it was presumed that the required threshold was the much more electorally formidable two-thirds.
Since then cities and counties have passed two dozen of these measures by margins of less than two-thirds. That includes taxes on parcels, sales and gross receipts that have been used to fund local schools, parks, street repairs and housing and that have been put on the ballot by homeless advocates, environmentalists and organized labor groups. It also includes Measure ULA.
And since then, business groups have been clambering to close the “Upland loophole.”
“This is now the vehicle for unions and others to be able to try and pass new taxes on targeted business sectors using a majority vote,” said Lapsely. “That only hurts job growth.”
Over that same period some cities have also turned to transfer taxes as a new source of revenue. It’s a fiscal avenue only available to a select number of cities. Under state law, most municipalities max out their transfer taxes at 55 cents for every $1,000 in sale value. But for “charter cities” — local governments with their own municipal constitution — there is no upper limit. Twenty-six have taken advantage of that fiscal opportunity.
They include Santa Monica, which passed its own version of a high-value transfer tax (Measure GS) in 2022, and Los Angeles. Voters in cities across the San Francisco Bay Area have voted to make more modest or incremental hikes over the last 10 years.
Electoral hurdles to come
The transfer tax trend has particularly irked landlords and real estate developers.
Last year, they joined forces with anti-tax advocates and other business groups to rein in both types of bothersome taxation with a ballot measure. The California Supreme Court took the unusual step of striking it from the 2024 ballot, ruling that it proposed too “substantial” a change to state government to be enacted by a mere ballot measure.
This year’s version is much more carefully targeted making it less likely to hit this same constitutional snag.
But even if the signature gathering effort is successful, the Howard Jarvis campaign has its work cut out for it — even for a conservative-coded measure in reliably blue California. In late 2023, the Legislature floated its own head-spinning ballot measure that would require future initiatives that want to hike the threshold needed to pass other measures (see: the business-backed measure) to meet that same higher threshold (in this case, two-thirds) before becoming law.
That effort to hoist the Howard Jarvis Taxpayer Association on its own petard is already slated for the November 2026 election. If it passes, it would apply to any other measures also on the ballot.
This article was originally published on CalMatters and was republished under the Creative Commons Attribution-NonCommercial-NoDerivatives license.
