Measure to overturn LA’s ‘mansion tax’ heads to ballot. Here’s what voters should know for November

In a city that thrives on blockbuster sequels, the November election is set to plunge Los Angeles voters back into a heated debate around the city’s “mansion tax.”

The California secretary of state on Tuesday verified that backers of a statewide initiative to overturn the tax have collected enough signatures to place their measure on the ballot.

But other efforts to reform the tax — without ending it — may also end up going before city voters. Here’s what Angelenos need to know to make sense of the various efforts to re-do or nix the tax.

‘Mansion tax’ basics

Measure ULA was passed by city voters in 2022. It raises money for tenant aid programs and affordable housing construction by taxing real estate that sells for more than $5 million, annually adjusted for inflation.

It was widely pitched as a “mansion tax.” But it also applies to apartment buildings and other commercial properties. Economic studies have linked this additional cost with depressed housing development in the city relative to other parts of Southern California without the tax.

Measure ULA backers dispute those findings, blaming high interest rates and other economic trends for L.A.’s housing slowdown.

Supporters initially said the measure would raise up to $1.1 billion per year. But actual revenue has proven far lower. Three years after it first took effect, the tax has raised just over $1.1 billion total.

Some of that money has gone toward defending tenants in eviction court, as well as relief to struggling tenants through the city’s ULA Emergency Renters Assistance Program and ULA Income Support Program.

On the construction side, Measure ULA has helped subsidize about 800 units of affordable housing so far. The City Council will soon take up approval of a new round of developments, largely funded by Measure ULA. In total, those new projects seek to build 1,528 units of affordable housing and preserve affordability in 3,713 existing units.

Proponents of the measure say these numbers prove Measure ULA is working, and voters should not exempt new apartment buildings from the tax or overturn it.

Joe Donlin, director of the United to House L.A. coalition, said the initiative backed by the Howard Jarvis Taxpayers Association poses a real threat to the city’s progress on addressing housing affordability.

“They want to eliminate revenue for affordable housing, the type of housing that makes it possible for working families, working people of California, to live here and work here and thrive here,” he said.

The measure that just made the ballot

The Howard Jarvis Taxpayers Association has opposed Measure ULA from Day 1. The organization joined a 2022 lawsuit seeking to overturn the tax, which ultimately failed.

In recent months, the association has been collecting signatures for a ballot initiative that seeks to invalidate Measure ULA and other such transfer taxes in cities like Berkeley, Oakland, Santa Monica and Culver City.

Howard Jarvis organizers turned in those signatures last month. Now, state election officials have verified the organization has collected enough signatures to put the measure on the statewide ballot.

The measure seeks to limit transfer taxes to no more than 0.11% (Measure ULA’s tax tops out at 5.5%). It also seeks to counter recent court rulings, which have allowed California voters to pass new taxes with simple majority support as long as ballot initiatives are driven by citizens, not elected officials.

The measure would require future taxes to achieve more than two-thirds support from voters. Measure ULA, which was passed with nearly 58% support, would have failed to meet that threshold.

“California is very unaffordable, and the courts have made it easier to raise taxes,” said Susan Shelley, a spokesperson for the Howard Jarvis Taxpayers Association. “We don't think that's right, and we are going to make it harder to raise taxes.”

According to the state Legislative Analyst’s Office, the measure’s passage could lead to “a couple of billion dollars” of lost local revenue, plus potential losses from future taxes that could pass under the lower voter-approval threshold but won’t muster two-thirds support.

The ‘Mend It, Don’t End It’ option

Voters will get a simple binary choice on the Howard Jarvis-backed measure: “yes” to end the taxes and raise the threshold for approving new taxes or “no” to keep the taxes and the threshold as they are.

But to complicate matters, L.A. city voters may be confronted with yet another choice: to keep the tax mostly in place, with some new limits.

Affordable housing developers, business leaders and academics have formed a new coalition they’re calling “Mend It, Don’t End It.” They’re pushing the City Council to place a measure on the November ballot that would potentially exempt new apartment buildings from the tax, among other changes.

“The Jarvis measure is a blunt instrument that would harm our city,” said Melanie Mendoza, a spokesperson for the coalition. “We stand for surgical fixes that can be made to Measure ULA to build more housing, increase affordability and reduce homelessness. The qualification of the Jarvis measure adds urgency to act to make L.A. affordable.”

The City Council recently created an Ad Hoc Committee on Measure ULA, which is tasked with developing reforms that could potentially go to voters in November. The committee will also have to consider whether the tax should apply to Pacific Palisades homeowners who may end up selling their properties after 2025’s devastating fires.

Proponents of the reform-not-repeal approach say they hope that if local officials and voters get behind efforts to carve out new apartment projects, some developers will choose not to pour money into an expensive Howard Jarvis-led campaign.

Shelley, the organization’s spokesperson, said developers can choose to spend their money however they want, but the taxpayers association has no plans to back down from this fight.

“The courts have made it easier to raise taxes,” Shelley said. “We don't think they have any authorization to do that.”

The City Council’s Measure ULA committee is scheduled to meet Friday and has a deadline of the end of April to finalize its recommendations.