Editorial: L.A. ‘mansion tax’ to ease homelessness is in limbo
Los Angeles is an expensive city where most people are renters. More than half of tenants in the greater L.A. region are rent burdened, meaning they spend more than a third of their income on housing, leaving less money for savings, healthcare, transportation and other needs. About 36% of renter households in the city pay half their income or more to stay housed.
An additional 46,260 L.A. residents don’t even have the advantage of a rental unit they struggle to pay for — they are homeless. If any city needs a financial lifeline to help homeless people get permanent housing and prevent people from losing their housing, it is Los Angeles.
The city got that support in Measure ULA (United to House L.A.), a 2022 ballot initiative to fund affordable housing, rental assistance and eviction prevention and protection, among other services. The measure, which was approved by 58% of voters, established a real estate transfer tax of 4% on sales of property exceeding $5 million and 5.5% on property sales above $10 million. That’s in addition to the base tax rate on all property transfers of .45% and the county tax of 0.11%.
The tax falls on a tiny percentage of real estate transactions in the city. But it stands to have a big impact on reducing homelessness and housing insecurity.
But ever since it passed, some wealthy property owners have tried to avoid paying it. There was a frenzied push to sell high- value real estate before it went into effect April 1. Some property owners have tried to get around the new tax by breaking up their property into less valuable parcels.
The Howard Jarvis Taxpayers Assn. and the real estate group Newcastle Courtyards filed a lawsuit against ULA in state court, arguing variously that it violates the city charter, the state Constitution and the U.S. Constitution. Los Angeles County Superior Court Judge Barbara Scheper dismissed the lawsuit on Oct. 24. The plaintiffs are expected to appeal.
Another lawsuit against Measure ULA brought by Newcastle and the Mani Benabou Family Trust was dismissed in September. The plaintiffs plan to appeal. This continuing legal onslaught is unfortunate and flies in the face of what voters clearly said they wanted.
The relentless pushback against ULA isn’t only happening in the courts. The Jarvis group and the California Business Roundtable co-sponsored an initiative called the Taxpayer Protection and Government Accountability Act, which has qualified for the November 2024 ballot. Among other things, it would require two-thirds voter approval for all new local special tax increases retroactive to January 2022. If it were to pass, Measure ULA would be void. If proponents put a new transfer tax proposal on the ballot, it would require two-thirds of the vote to pass, not a simple majority.
The only taxpayers the initiative protects are wealthy ones. And it’s outrageous to make it retroactive and possibly result in needed funds having to be returned to property owners.
As a counterbalance to the taxpayer initiative, the state Legislature put a measure on the same November 2024 ballot that would require any initiative to raise the voter approval threshold for adopting a state or local measure to get at least the same level of votes.
But the city is appropriately preparing to spend the $150 million that Measure ULA is expected to generate this year. Mayor Karen Bass and the City Council have divvied up those funds among roughly half a dozen categories, including $56.8 million for affordable housing projects, $30.4 million for short-term assistance tenants and small landlords and $23 million for eviction defense and prevention.
Bass has said if the $150 million has to be returned, it could be covered with some of the $240 million the city is owed by the Federal Emergency Management Agency as reimbursement for the city’s COVID-19-related expenses, including for Project Roomkey hotel and motel rooms for homeless people during the pandemic. Bass and members of the council were in Washington recently and reminded Homeland Security Secretary Alejandro N. Mayorkas that the city is still due that FEMA money.
It’s heartening to see the city preparing to spend these much-needed funds. But how lamentable that other groups are spending huge sums of money to shut down this important revenue source.
Measure ULA passed with support from a majority of L.A. voters. The opponents should stop trying to thwart voters’ will for the benefit of a few wealthy people. It’s time to let this tax measure work to keep Angelenos in their homes and help those living on the streets get into housing.
