LA City Council Approves Plan for Measure ULA Spending

Los Angeles plans to spend a majority of its Measure ULA mansion tax toward funding “social housing” programs that push tenants to collectively buy apartment buildings and run them.

The plan was approved by the City Council last week, which allocated $168 million of its “mansion tax” funds for fiscal year 2024-2025 for housing development and homelessness prevention programs, the Los Angeles Times and the Commercial Observer reported.

The money from the luxury and commercial transfer tax will also expand programs aimed at helping renters.

The bulk of the money, or $133 million, will be spent to build, revamp and preserve affordable housing.

Some $21 million will go toward rental support programs and eviction defense. Another $13 million will be spent on program administration.

The Measure ULA tax has collected about $480 million since its implementation in April last year. It was sold to voters as a means to generate up to $1.1 billion a year for affordable housing and homelessness prevention initiatives.

The real estate transfer tax charges a 4 percent fee on all residential and commercial property sales above $5.1 million and a 5.5 percent fee on sales above $10.3 million.

City Councilman Curren Price recused himself from the vote, based on guidelines from a citizens oversight committee with help from the L.A. Housing Department, because of his status as a landlord.

The council also approved an amendment by Councilman Bob Blumenfield calling for a report on how the city could reduce the tax burden on nonprofits building affordable senior housing.

Approving the guidelines allows the Housing Department to start soliciting proposals for affordable housing, develop the infrastructure for social housing and launch other Measure ULA programs.

The guidelines suggested $100 million would go toward funding “social housing” programs for renters to buy and operate multifamily properties together.

Social housing projects require tenants play a large role in how their buildings are run, encourage tenant ownership and include agreements that keep buildings permanently affordable, according to the Times.

The amount of money collected from the tax has improved, raking in $91.2 million in the third quarter compared to $66.5 million a year earlier. The Measure ULA tax revenue is still far below the city’s $604.6 million projection in its 2023-2024 adopted budget.

The program’s projected revenue for the 2024-2025 fiscal year is a much more conservative $271.1 million, according to the City Controller’s Office.

Its ultimate fate is still in some limbo. A state ballot initiative that could have rescinded the tax was blocked by the state Supreme Court this summer, but opponents have continued challenging the tax in state and federal court.

The Howard Jarvis Taxpayers Association, which filed suit in state court, believes the tax is invalid and is pursuing an appeal after a judge dismissed its case late last year, said Susan Shelley, a spokeswoman for the organization.

— Dana Bartholomew