The Los Angeles City Council on Friday approved a plan to spend $544.3 million collected from Measure ULA, the so-called “mansion tax” that levies a transfer tax on L.A. property sales above $5.3 million.
The spending plan, set to be distributed during the 2026 fiscal year, is the largest allocation of Measure ULA funds so far — roughly 28% higher than last year’s budget. It calls for $381 million toward affordable housing programs and $163.3 million for homelessness prevention programs.
The approval arrives on the heels of a legislative challenge that would have given L.A. voters the chance to gut the measure on the November ballot. However, a deal was struck on Wednesday between state lawmakers and the Howard Jarvis Taxpayers Assn. that will keep the tax intact.
The taxpayers association, which has been fighting Measure ULA since it took effect in 2023, organized a measure that would have eliminated the mansion tax by capping transfer taxes at 0.11%. It also would have require future special tax votes to achieve two-thirds of voter support instead of a simple majority, and retroactively overturn recent tax votes that failed to hit that threshold. Measure ULA — which received 58% support — could have been overturned if the measure passed.
State lawmakers countered with a bill of their own, which would have trimmed the tax’s scope: preserving rates of up to 5.5% for single-family home sales above $5.3 million — mansions — but capping rates at 1.5% for non-mansions — apartment complexes, commercial buildings, etc.
However, the bill would appear on the ballot only if the taxpayers association pulled its. The taxpayers association refused, instead striking a deal with lawmakers to place an amendment on the ballot that raises the threshold for special taxes to two-thirds voter approval but spares existing taxes such as Measure ULA.
The tax has been a topic of controversy ever since it was passed in 2022. It levies a 4% transfer tax on all L.A. property sales above $5.3 million and a 5.5% tax on sales above $10.6 million.
Advocates claim it’s working as intended, raising hundreds of millions of dollars for much-needed housing initiatives in the midst of Southern California’s housing crisis. But critics claim the intended effects have backfired, instead stifling sales and slowing apartment construction by disincentivizing developers to build, as the tax eats into their profit margins.
Over the last three years, the tax has raised more than $1.24 billion — a healthy chunk of money for housing initiatives, but a far cry from initial projections of up to $1 billion per year.
To date, the city has used Measure ULA funding to build 1,409 affordable housing units, preserve 183 affordable housing units and provide 39 homeownership loans. It has also provided eviction defense for 14,258 households, rental assistance for 4,488 households and income support for 1,494 households, according to the Housing Department.
The spending plan now heads to Mayor Karen Bass for final approval.
