LA committee votes to explore canceling ‘mansion tax’ for Palisades homeowners

Pacific Palisades homeowners looking to sell high-end properties after the January fires could escape the city’s “mansion tax” under a proposal advanced Monday by a key committee of the Los Angeles City Council.

Measure ULA is a voter-approved tax on real estate selling for $5.3 million or more. The city uses the revenue for rent relief, eviction defense and affordable housing construction efforts.

Councilmember Traci Park, who represents the Palisades, said she has heard from hundreds of homeowners who say the tax is affecting their post-fire recovery plans.

“For some, recovery is going to mean leaving the Palisades,” Park said during Monday’s meeting of the Ad-Hoc Committee for L.A. Recovery. “In those instances — where a sale is by no means voluntary — I don't think we should impede that objective.”

Vote follows direction from mayor

Measure ULA levies a 4% tax on properties selling for more than $5.3 million, and a 5.5% tax on properties selling for more than $10.6 million.

Last month, Mayor Karen Bass sent a letter asking the City Council to pass an ordinance giving the city’s director of finance the power to exempt Palisades homeowners from Measure ULA within three years of the fire.

In her letter, Bass wrote: “After adoption of the ordinance, I will issue an executive directive instructing the Director of Finance to promulgate a temporary exemption that provides much needed relief for those Palisades residents who owned and occupied residential property in the Palisades at the time of the fire, avoids unintended loopholes, and furthers the purpose of ULA.”

Bass’ office said the letter was sent following a meeting she had with Rick Caruso, the billionaire real estate developer, former mayoral candidate and founder of Steadfast L.A., an organization focused on fire recovery.

How we got here

Any final tax exemption would still need further action from the City Council and Mayor’s Office to take effect.

The proposal cleared Monday’s committee in a 3-0 vote. But it needs further consideration by the full City Council before any ordinance is passed. Bass would then need to issue an executive directive with full details of the post-fire tax exemption.

This isn’t the first effort to cancel the “mansion tax” for Pacific Palisades homeowners. A state bill introduced days before the end of Sacramento’s legislative session would have carved out sales in the fire zone.

But the exemption would have only gone through if efforts to repeal the tax either failed to qualify for the ballot or were dropped by the Howard Jarvis Taxpayers Association, an anti-mansion tax group. The bill also would have sought to address concerns about depressed housing development in the city by lowering the tax on sales of recently constructed apartments.

Bass said she asked Sacramento lawmakers to shelve the bill so more amendments could be made in the upcoming legislative session.