Understanding Measure ULA: The New Property Transfer Tax and How Housing Regulations are Spun to P

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Understanding Measure ULA: The New Property Transfer Tax and How Housing Regulations are Spun to Purportedly "Benefit” Everyone

By Candace Kentopian, Keller Williams

When new laws, regulations, and bills are presented to citizens and to the voting public, whether it be by a Federal or localized governmental agency, there is a tendency for the regulation to be presented in a positive light.  Many proposed laws or ballot measures are cloaked as providing  a beneficial impact for the citizens, for the greater good of the residents, and in particular, to altruistically help those who are economically, or otherwise, challenged.

California Dreaming of Equitable Property Ownership

In the State of California, we saw this with Proposition 19, which passed in 2020. Prop. 19’s narrative was to provide “Home Protection for Seniors, Severely Disabled, Families, and Victims of Wildfire or Natural Disasters Act.” In theory, this seems like a worthy initiative. However, a major disadvantage of Prop. 19 is that property transferred from parent to children will trigger a property tax reassessment. Taxes will go up for the heirs if the market value of the home exceeds the Proposition 13 property tax value by more than $1.0 million, which for Californians, is very likely. This particular detail was overshadowed by positive rhetoric touting this Proposition. Details on this can be found through the Board of Equalization (BOE) and County Tax Assessors Office. This all relates back to the statewide elimination of Proposition 58. The interrelated Proposition 13, which protects property owners by limiting tax increases on existing properties and reassessments, also currently has protections for parent-child transfers. Both Propositions bear vital tax and financial consequences for property owners... Notably, Property Owners…Be Aware…Regulations like Measure ULA are an attempt to eliminate Proposition 13’s protections and tax you more.

Measure ULA: City of Los Angeles and its New, So-Called “Mansion” Tax

Now let’s peer through the veneer of Measure ULA that went into effect on April 1, 2023, and was passed in November 2022 by Los Angeles voters. Given that the majority of the City's residents are renters, public opinion on this measure was exposed. Property owners now face additional tax rates assessed on the gross transaction value of 4% for properties sold between $5 million and $10 million, and 5.5% for properties valued at $10 million or more.

Measure ULA's Scope and Purpose

Measure ULA, also known as the "United to House L.A." initiative, came into effect with the intention of funding affordable housing projects and providing resources to tenants at risk of homelessness. This is both a noble and necessary goal. However, at the time of its passage, there was a lack of clarity regarding the specific committees, budget allocation, a concrete strategy, and individuals responsible for overseeing these efforts.

An overarching concern is how will the funds collected through the Measure ULA tax be allocated? This remains in question. While no Measure ULA funds have yet been allocated, the City has proposed to deploy $150 million of “to be collected” funds allocated between Acquisition and Rehabilitation of Affordable Housing (~$62 million), and Homelessness Prevention Programs (~$88 million). Included within the approximate $88 million for homelessness prevention, it is contemplated that the city will spend about $37 million on private attorneys to represent renters faced with eviction or harassment by housing providers – studies have shown that nearly 90% of evictions are due to non-payment of rent, so one needs to question the need to spend millions in taxpayer dollars on private attorneys.

Unfavorable Impact on Property Owners Who Sell

One significant question among property sellers affected by Measure ULA is whether a 1031 Tax Deferred Exchange could provide relief from this new tax burden? Unfortunately, the answer is NO. Property sellers are still required to pay the additional tax, regardless of engaging in a tax-deferred exchange.

There is a loophole that exempts transfers involving non-profits, community land trusts, and limited equity housing cooperatives.

Like Creeping Weeds in a Garden

The neighboring city of Santa Monica also implemented a transfer tax, known as Measure GS, effective as of March 1, 2023. This initiative, titled “The Funding for Homelessness Prevention, Affordable Housing, and Schools” imposes a tax on the gross proceeds of properties sold for $8 million and above, with a rate of 5.6%. in Santa Monica, this is the 2nd voter approved real estate transfer tax in the city since 2020. Similar to weeds that overtake space in a garden, since 2020 other cities like Culver City’s voters adopted a real estate transfer tax, and this is a disturbing trend that looms as cities seek to raise revenues in this fashion.

Challenges and Criticisms

Measure ULA has faced significant criticism due to its impact on the real estate market. The proposition was criticized for misleading language, as it was initially marketed as targeting "Mansion" sales but in reality, it adversely impacts ALL property types valued over $5 million, including single family homes, apartment buildings, commercial properties, and even raw land.

Who now, will want to invest in the cities such as Los Angeles and Santa Monica, particularly when investors can go to nearby, business friendly jurisdictions and skip out on the new Measure ULA and Measure GS taxes?

The Apartment Association of Greater Los Angeles (AAGLA) and the Howard Jarvis Taxpayers Association (HJTA) are joint plaintiffs in a lawsuit filed last December in Los Angeles County Superior Court seeking to overturn the Measure ULA transfer tax.  The joint lawsuit alleges, in part, that transfer taxes such as Measure ULA were prohibited by Proposition 13 (Article XIII A, Section 4 of the California Constitution), but in charter cities like Los Angeles, transfer taxes have been permitted under case law since 1990 if they are for a general purpose. Because Measure ULA is a “special transfer tax,” the City’s charter prohibits its passage by initiative.

Daniel Yukelson, Executive Director of landlord organization, the Apartment Association of Greater Los Angeles, stated: “Punitive taxes such as those imposed by Measure ULA is the last straw that will cause property owners to invest elsewhere and never to come back to Los Angeles. Ultimately, this expensive measure will trickle down to consumers in the form of higher prices for consumer goods and services, including higher rent.”

All property owners need to pay close attention to proposed legislation, openly dialogue with peers and elected officials, become advocates for themselves, and support organizations like AAGLA and HJTA as they fight the good fight, and lobby on behalf of property ownership. Those who wish to support AAGLA’s and HJTA’s ongoing litigation efforts to overturn Measure ULA, please contribute to the AAGLA Legal fund at www.aagla.org/legalfund.


As a longtime member of the Apartment Association of Greater Los Angeles, income property owner and local realtor with Keller Williams Realty, Candace Kentopian has successfully brokered residential and multi-family transactions while creating substantial wealth for her investor clients. She is an Executive MBA graduate of Loyola Marymount University, who previously worked at Trammell Crow Company serving as Marketing Director for Century Plaza Towers and ABC Entertainment Center in Century City. She guides clients through the complexities of the real estate market with a collaborative spirit, strategic business acumen and sharp negotiating skills. She can be reached at (323) 559-0856 or Candace@CandaceSellsLA.com.