Rick Caruso, the developer who leads a nonprofit initiative to rebuild Los Angeles’ recent wildfire-affected areas, said measurements of ULA taxes on property transactions have reduced the city’s revenues.
The behind-the-scenes measurements known as the “mansion tax” by supporters were passed by voters in a 2022 referendum and came into effect in 2023. It affected both residential and commercial buildings, slowing down the local real estate market significantly.
As Breitbart News had been paying attention at the time, Measure ULA requires the city to “collect 4% tax on sales of more than $5 million and 5.5% tax on sales of real estate worth more than $10 million.” (The minimum threshold continues to rise over time.)
The tax is intended to fund affordable housing and homelessness, but is generating far less revenue than expected due to the low transaction, primarily as a result of the new tax.
There are concerns that measuring ULA could undermine reconstruction efforts at Palisades in the Pacific Ocean. This is because it can increase the cost of reconstruction as it becomes more difficult to sell property and homeowners have to take that into consideration when financing their construction.
Mayor Karen Bass responded to questions from Breitbart News at a press conference last month, saying the city is looking for a way to suspend taxes during its post-wildfire reconstruction efforts.
Caruso’s team took the encouragement as a call to action, suing the law firm for the ULA measurement and asking the city to persuade them to take every step of their way to suspend taxes.
Caruso also noted that ULA measurements are generally harming cities. Not only by making less revenue than expected, but also by lowering tax revenue overall.
“In fact, fewer people would want to invest in Los Angeles, so they actually encouraged revenue cuts. Caruso spoke about a seminar for residents of Palisades in the Pacific, hosted by real estate agent Anthony Marguleas and community group 1Pali. “And that was a terrible negative for Los Angeles.”
Recent Reports by the University of California, Los Angeles Found Tax had “unintended consequences”:
Since the Measurement ULA was established, the probability that Los Angeles property will sell at a price that exceeds the tax base has decreased by up to 50%. In the raw sense, this sharp reduction occurred in all sorts of properties, but our most powerful evidence suggests that it is particularly pronounced in non-single family transactions, which have been reduced by 30-50%. Together, the evidence suggests that the measurement is not a true “mansion tax” or not a tax that only falls on wealth of unearned assets. Taxes fall on mansions, but they also hinder trade in commercial, industrial and multi-family property. In doing so, you will build new homes in LA, revitalize struggling commercial and industrial properties, and risk your ability to generate profits in property taxes.
The UCLA report also said that as the city relies on the sale of property to revalue the value of the property at its high tax value, reducing property sales would reduce property tax revenue.
Ironically, Los Angeles Times It’s attracting attentionMeasure ULA actually reduces the development of apartment buildings, making rental units less and potentially more expensive than they would otherwise have.
Caruso vowed to continue his fight to convince the city to stop readings.
Joel B. Pollack is a senior editor at Breitbart News; Breitbart News Sunday Sirius XM Patriot will be available Sundays from 7pm to 10pm (4pm to 7pm). He is the author of Agenda: What Trump Should Do in His First 100 Daysyou can pre-order on Amazon. He is also the author Trump’s Virtue: Lessons and Legacy of President Donald TrumpIt is now available on Audible. He is the winner of the 2018 Robert Novak Journalism Alumni Fellowship. Follow him on Twitter @joelpollak.
