May 22, 2026
Los Angeles voters passed a so-called “mansion tax” in 2022 that was meant to raise revenue to help with the city’s housing shortage. But developers say that the levy has had a chilling effect on development in the city.
The ballot measure, known as Measure ULA, imposes a property transfer tax on real estate sales — 4% of the gross value of properties over $5.3 million, and 5.5% for those over $10.6 million, according to a report from the Wall Street Journal.
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The funds raised from the tax go to funding affordable housing projects and to resources for tenants at risk of homelessness. Those resources include an emergency assistance program for low-income renters who are at risk of homelessness and a program that provides legal resources to eligible tenants facing eviction.
But those who oppose the tax, including developers and some former supporters of the measure, say that it’s making the housing shortage worse, the WSJ reported.
That’s because it “makes no distinction between a Bel-Air mansion and a market-rate apartment building,” the report says, and while 61% of the revenue collected has been from the sale of single-family homes, the rest is from “commercial, multifamily, vacant and mixed-use properties.”
Chilling effect?
Developers building in Los Angeles already face “high land and labor costs,” the WSJ reported.
A 2025 report from the Rand Housing Center found that California was the most expensive state to produce multi-family housing in every cost category the study looked at.
The WSJ report says that sales of multi-family-zoned properties that are more than $5.3 million have dropped by almost two-thirds since the tax was passed, according to research from Rand Housing Center.
And a study out of Harvard Business School says that the tax impacted “high-value commercial properties hardest” which inadvertently had the impact of “ultimately [slowing] the growth of the city’s regular property tax revenue.”
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‘Unintended consequences’
Miguel Santana, chief executive of the California Community Foundation, which supported the ballot initiative in 2022, told the WSJ that “There have been some unintended consequences,” when it comes to the mansion tax.
While some on Los Angeles City Council have been meeting as an ad hoc committee to review the impact of the mansion tax and possible changes to it, which would need to be approved by voters, a taxpayers’ rights group has been fighting to do away with the tax, the WSJ reported.
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Real estate investors and tech billionaires including Peter Thiel, Eric Schmidt and Chris Larsen contributed to the effort led by the Howard Jarvis Taxpayers Association, according to the WSJ report. This effort, the “Local Taxpayer Protection Act,” qualified to be on the ballot for the state’s November election.
However, California election law allows that the measure could be withdrawn by its sponsors before the official qualification deadline, which is June 25. The WSJ reported that policymakers and backers of the measure “have started preliminary discussions about potentially withdrawing the measure.”
Those who stand behind the tax say it’s actually the high interest rates that arrived in 2023 that are the actual cause of the development slowdown, the WSJ report says.
Joe Donlin, executive director of United to House LA, told the WSJ that developers pushing to change the tax have spun the narrative. “What’s been proposed are drastic changes based off of faulty research and big narratives strung together by the real-estate industry,” Donlin told the WSJ.
Meanwhile, Measure ULA has been generating revenue, albeit less than the initial projections of $600 million to $1.1 billion annually.
In three years, Measure ULA has generated almost $1.19 billion. The WSJ reported that so far, most of the money spent has gone to eviction-defense cases and emergency rental assistance.
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Rebecca Payne has more than a decade of experience editing and producing both local and national daily newspapers. She's worked on the Toronto Star, the Globe and Mail, Metro, Canada's National Observer, the Virginian-Pilot and Daily Press.
