What about resi in Measure ULA’s amendment talk?

Is there a way we can illustrate the splitting of commercial and single-family residential into two camps when it comes to Measure ULA amendments? If not, can we please do something with Miguel Santana, who is part of a coalition to amend ULA, and maybe background could just be generic office/multifamily/industrial buildings:

A bifurcation of the real estate industry is coming into view in the clashes over proposed changes to Measure United to House L.A.

If single-family residential agents and brokers were looking to jump on a new coalition’s bandwagon to get the city’s mansion tax amended to be a bit more deal friendly, they’ll find little relief in what’s being proposed.

There are a few options now in plan to make changes to ULA, which applies a 4 percent tax on transactions starting at $5.3 million and kicks up to 5.5 percent on deals of $10.6 million or more. On one end of the spectrum is a camp saying the tax should be left alone, while the other end has advocates who want its complete dismantling.

On Friday, another option was presented to the Ad Hoc Committee on Measure United to House Los Angeles from the group Affordable LA: Mend It, Don’t End It.

The group, which comprises several industry trades, outlined six changes. Only one of those pertains to residential transactions, despite (or perhaps because) single-family homes accounted for the largest share of the over $1 billion in ULA-generated revenue (59 percent) since going into effect in 2023, according to Los Angeles Housing Department data through March.

That one proposal is a three- to five-year exemption from ULA for property owners impacted by the Palisades Fire and future natural disasters.

The coalition informed the ad hoc committee during Friday’s meeting that if revenue streams from other property types — multifamily, commercial, industrial and mixed-use were exempt from the tax — the city would still have enough to spend the remaining balance of ULA funds budgeted for the current fiscal year. To date, about 9 percent has been spent, leaving $589.2 million left, according to the coalition.

The group’s aim is to fix the tax before the matter swings to a statewide issue in the form of the Howard Jarvis Taxpayers Association’s Local Taxpayer Protection Act, which qualified this week for the November ballot. The proposed change to the state constitution would require a two-thirds supermajority of voters to approve all local taxes.

If the Mend It, Don’t End It group is looking for an alternative to the Howard Jarvis measure, they likely lose the support of the single-family side of the industry. Those left out in the cold from the proposed changes might see the November ballot measure making the tax null and void as the only choice to back.

ULA’s profitability conundrum

12th District Council Member John Lee appears to be zeroing in on the profitability problem with ULA.

He introduced an April 14 motion to have the Los Angeles legislative analyst and administrative officer also include in their ULA analysis what it would take to get the tax to only apply to sales that are profitable.

That’s a big issue ULA critics have had, whether they’re commercial brokers, single-family residential agents or developers. If a property sells at a loss, should ULA apply? The industry says “no.”

Lee brought up the subject again at Friday’s ad hoc committee meeting when he asked the Mend It, Don’t End It coalition members on whether there’s been exploration of what the ULA revenue stream looks like if unprofitable projects were exempt.

The response was to cast such a move as difficult, although no clear specifics were offered. In any case, concerns about complication were part of what factored into the group’s suggestion that ULA be capped at 1 percent to 2 percent on all commercial properties once a proposed 15-year exemption for new builds lapses.

Vent fest

If there’s one more takeaway from Friday’s meeting it would be the venting of some of the ad hoc committee members about inefficiencies elsewhere in the city.

Council Member Lee said it’s “extremely frustrating” the committee’s even in the position it’s in to be analyzing the tax after the fact.

“I wish more people would speak up at the time [before ULA went to voters]… because this was … not a surprise to us. Investors of all walks of life understood that this would be an issue,” Lee said Friday before going on to blast the “so many other things” being done at City Hall that are “not promoting growth in our city.”

Ysabel Jurado, 14th District representative and chair of the ad hoc, piled on.

She pointed out that ULA perhaps further highlights the fact that the city’s “planning process is abysmal.”

“The years it takes for [Los Angeles Department of Water & Power] to turn on the lighting for things that have already been built, [ULA] has just made those issues more pronounced,” she said Friday. “The fact that we put ourselves into a structural deficit based on labor negotiations in our city… have made it even harder to make sure that our planning, processing, permitting rate is up to par with market needs, which it just isn’t.”

That’s all out of the scope of the ULA ad hoc committee. However, that you have members of the council complaining about big-picture inefficiencies makes one wonder, who is in charge and who is responsible for fixing that?