Los Angeles keeps its “mansion tax.” Now the debate is nationwide

from Ben ChristopherCalMatters

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Los Angeles will keep its controversial “mansion tax” as is, thank you very much.

On Tuesday morning, the Los Angeles City Council declined eleventh hour proposal to put the quadrennial city high-value real estate sales tax rewrite on the June 2026 local ballot.

The decision, which came after a heated session filled with arcane procedural objections and spirited public comment from tenant activists and union members, effectively dashed the hopes of real estate developers, commercial landlords and a growing faction of housing advocates and Democratic elected officials who see the state’s highest transfer fee as both an investment killer and an urgent political liability — as in Los Angeles as well as throughout California.

A large majority of city voters approved the tax, known as Measure ULA, in 2022. It imposes a 4 percent sales tax on properties between $5 million and $10 million and a 5.5 percent transaction tax on those above that. So far, the tax has raised more than $1 billion in revenue dedicated to affordable housing and support for renters with financial difficulties.

Any changes to the tax will require voter approval, which today’s vote ensures won’t come soon. It also kicks off a broader multibillion-dollar debate over property sales fees for state lawmakers.

The specter of a proposal hangs over the debate throughout the country a proposal that would sharply limiting municipal transfer taxeswhile limiting other local taxes. This campaign is organized by the Howard Jarvis Taxpayers Association, which fights for lower taxes and is racing to collect signatures before the deadline at the end of February. If it qualifies, it will appear on the ballot in November 2026.

A a growing faction of Democrats and their political allies argue that local opposition to the ULA has strengthened political support for this larger anti-tax support, which they see as a fiscal disaster.

If a state anti-tax proposal meets the criteria, many believe lawmakers will be forced to offer concessions in the form of broader state limits on transfer taxes to convince backers of the Howard Jarvis measure to remove it from the ballot. This could include the Howard Jarvis Taxpayers Association itself, or perhaps the California Business Roundtable, a large business coalition that pony up most of the campaign funds so far.

Such big deals between state legislators and campaign supporters are a relatively common occurrence in California’s capital in the months leading up to elections.

Council Member Nitya Raman, the proposal’s author, hinted at that possible outcome as she implored her colleagues to put the local measure on the ballot.

“There are real threats to ULA from statewide ballot initiatives that threaten to take away transfer taxes entirely in California, from planned legislative action in Sacramento, and from local ballot initiatives, all of which are likely to make much deeper cuts to ULA’s revenue,” she said.

Raman also noted that the measure, which she supported in 2022, had economically and politically disastrous “unintended consequences.”

“Voters were sold a ‘mansion tax’ and ignoring the very real impacts on apartment development — apartments that people want and need and want to move into — doesn’t protect Measure ULA, it weakens it,” she said.

Since the transfer tax does not differentiate between the types of projects that are subject to the tax, it applies to large apartments, mixed-use projects and commercial projects as well as actual estates. In the years since apartment sales have declined significantly within the city compared to surrounding municipalities that do not have a tax.

Tax advocates counter that claims of a crash in Los Angeles’ real estate market are exaggerated. Citywide building permits increased 60% between fall 2024 and fall 2025, according to analyzed data by United to House LA, a coalition of unions, affordable housing developers and private development skeptics.

Jesse Zwick, regional director of the Housing Action Coalition, a pro-development advocacy group that supported the measure, and a Santa Monica council member, called that claim “disingenuous,” noting that 2024 represents a historic low point for permits.

“Even a dead cat bounces,” he said. “If you look at L.A vis à vis other cities in Los Angeles County, we are still in a deep deficit.”

of Raman proposed ballot correction would have exempted new flats, apartments, commercial and mixed-use projects from transfer tax for the first 15 years after construction in a bid to reduce the financial penalty on new construction. State housing regulators tasked the city with planning an additional 456,643 new units by 2029 to make up for the chronic shortfall.

The measure also would have exempted households affected by natural disasters, such as the Palisades and Eaton fires, and eased some of the restrictions on how revenue generated by the tax could be used for affordable housing.

Defenders of the current tax denounced the proposal as it was introduced on Fridayas hasty and poorly thought out.

“This proposal represents tens of millions, if not over a hundred million dollars, in cuts to ULA’s revenue for homelessness prevention programs and affordable housing solutions,” said Joe Donlin, director of United to House LA.

He also rejected the idea that the city should preemptively rewrite its transfer tax to prevent the Howard Jarvis-backed initiative. “There were a lot of boogeymen who tried to scare the public into giving tax breaks to developers,” he said.

Technically, the Los Angeles Council did not reject the measure outright, but referred it for further debate in committee. But with the June primary ballot deadline fast approaching, the delay likely removes the ability for the city to change its own tax before a potential state measure goes before voters.

“It seems unlikely that there will be more action on this issue at the local level this year,” Zwick said. Between the broader effort to severely limit transfer taxes by anti-tax advocates and supporters of current policy, he called Raman’s proposed fix “the best political compromise” that could be reached this year “without increasing leverage through tax measures across the country.”

If the statewide tax measure eventually becomes law, it would cost cities between $2 billion and $3 billion each year, according to an analysis commissioned by the League of California Cities, a lobbying group.

If and when it qualifies, it could trigger another round of negotiations over the state’s transfer tax policy, said Mott Smith, a commercial developer and board member of the California Infill Builders Association.

“Right now, the argument for transfer tax reform is that Measure ULA is not working as promised — which is a very good argument, by the way,” he said. “But once the Howard Jarvis initiative passes, and it looks like it probably will, it becomes a conversation about how we keep $3 billion in local revenue across the state.”

Asked about the signature-gathering effort, John Koupal, president of the Howard Jarvis Taxpayers Association, simply said he was “cautiously optimistic.” As for a broader deal if the measure qualifies, he insisted he is focused solely on his own measure for now.

This article was originally published on CalMatters and is republished under Creative Commons Attribution-NonCommercial-No Derivatives license.