L.A.’s ‘mansion tax’ has collected $375 million. Where is the money going?
Nearly two years ago, voters in Los Angeles approved Measure ULA, increasing taxes on the sale of multimillion-dollar properties with the aim of raising hundreds of millions of dollars each year to help address the city’s housing crisis.
Its fate has been uncertain from the start, with opponents pursuing multiple pathways to try to invalidate it. But the so-called “mansion tax” remains in place and has brought in $375 million in revenue since it went into effect last year.
The amount is short of the $600 million to $1.1 billion per year that backers expected but still enough to provide major funding for an ambitious set of programs that housing and tenant advocates have long pushed for — including money to create housing complexes that are run by their residents, funding for lawyers for renters facing eviction, income support for rent-burdened seniors and people with disabilities and programs aimed at protecting tenants from harassment.
After an initially limited rollout last year, a citizens oversight committee last month approved guidelines for a full implementation of programs to be funded by the measure. Those guidelines, along with a proposed $160-million allocation from the ULA proceeds for next year, must now be approved by the City Council.
“This is really a groundbreaking effort of a whole bunch of Angelenos coming together, taking ownership, challenging themselves and challenging the city to actually look at new ways to address grinding, chronic problems,” said Greg Good, director of strategic engagement and policy for the Los Angeles Housing Department.
L.A.’s Tenant Anti-Harassment Ordinance was touted as a breakthrough for renters’ rights. But tenant advocates say it needs to be strengthened to have an impact.
The measure has faced numerous challenges since it was approved and its ultimate fate is still in some limbo — a state ballot initiative that could have rescinded the tax was blocked by the state Supreme Court this summer, but opponents have continued challenging the measure in state and federal court.
The Howard Jarvis Taxpayers Assn., which filed suit in state court, continues to believe the tax is invalid and is pursuing an appeal after a judge dismissed its case late last year, said Susan Shelley, the group’s vice president for communications. Critics have also alleged that the measure damps the housing market.
The city has opted to move forward and allocate some of the funds while the cases are being resolved. The tax imposes a 4% charge on property sales above $5.1 million and a 5.5% charge on sales above $10.3 million.
Last year, the city approved a $150-million spending plan for funds raised by the tax — with millions directed toward six programs, including emergency rental assistance, tenant outreach and affordable housing production.
This year, it is considering a plan to spend $160 million — about $100 million of which would go toward funding “social housing” programs that encourage renters to buy properties and run them together. Advocates say it could be a transformative approach to housing.
“In L.A. today, unless you’re wealthy it’s hard to see how you could ever buy and own a home at this point,” said Laura Raymond, director of the transit and housing advocacy group Act-LA, who also served as co-chair of the ULA campaign. “Social housing will be a way for low and middle income people to own their homes or at least collectively govern their homes, giving them a feeling of control and autonomy that people that are currently renting are missing.”
Collective governance would allow tenants to decide on matters such as how much rent to pay, which repairs to do, or whether people can have pets — the types of decisions that “make a real difference in people’s day to day lives,” Raymond said.
If approved, more than $11 million would also be allocated for a program to provide interest-free loans for lower-income first-time home buyers. And about $30 million would go to programs meant to prevent homelessness — such as monthly income support payments to rent-burdened households that include seniors or people with disabilities.
Local officials had applied for federal FEMA funds to help support newly-arrived migrants who have struggled to find housing in the city.
Eviction defense and measures aimed at protecting tenants from harassment would also receive millions in funding.
Despite efforts to invalidate it, Measure ULA remains “one of the biggest progressive housing measures we’ve seen in our lifetime in the state of California, if not the country,” said Joe Donlin, director of the United to House LA Coalition, which brought Measure ULA to the ballot.
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