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Los Angeles Mayor Karen Bass quietly launched an effort at the California Assembly to\u00a0alter Measure ULA, but the legislators working with Bass withdrew the proposal just before it was scheduled for a vote.<\/p>\n
Measure ULA is a voter-approved transfer tax colloquially known as the \u201cmansion tax.\u201d<\/p>\n
Bass sought to drastically reduce the tax rate on transactions involving apartment buildings, offices and shopping centers built within the last 15 years, the Los Angeles Times reported<\/a>\u00a0Wednesday.<\/p>\n By Thursday afternoon, the bill, co-written by\u00a0state Sen. Lena Gonzalez and Assembly Member Tina McKinnor,\u00a0had been withdrawn \u201chours before its first critical vote,\u201d\u00a0the LA Times reported<\/a>.\u00a0<\/p>\n Bass promised to bring it back.<\/p>\n \u201cDue to a need for additional amendments and further technical changes, I\u2019ve asked both leaders to continue SB 423 so that we can make further improvements this fall and reintroduce in January,\u201d Bass said in an emailed statement.\u00a0<\/p>\n Bass\u2019 statement also\u00a0says\u00a0the bill was intended to remedy \u201cunintended consequences of policies impacting families trying to rebuild after January\u2019s fires.\u201d<\/p>\n If the bill were to pass, a 4% tax rate on single-family home sales over $5.3M and 5.5% on homes sales\u00a0of more than $10.6M would still stand, unless those homes were in an area, like the Palisades, where there had been a local emergency.<\/p>\n But while the bill\u2019s text does include conditions that would allow a house lost in the Palisades fire to receive reduced taxes if it sells for more than approximately $5M, a significant portion of the bill focuses on giving a break on Measure ULA taxes to commercial properties.\u00a0<\/p>\n Senate Bill 423 would drop the tax rate to 1.5% for commercial properties under 15 years old, according to the LA Times.\u00a0<\/p>\n One critique of the measure is that\u00a0the transfer tax, levied on property sales\u00a0of more than $5M, is harming housing production and sales of multifamily housing.\u00a0<\/p>\n The rushed nature of the bill alarmed some organizations that might, under other circumstances, support the bill. The California Business Properties Association, the greater Los Angeles chapter of the Building Owners and Managers Association and the Southern California chapter of NAIOP wrote a letter in opposition to SB 423.\u00a0<\/p>\n \u201cThis bill, drafted hastily earlier this week, contains potential legal vulnerabilities and technical flaws that may prevent it from effectively addressing the challenges created by Measure ULA\u2019s high transfer taxes,\u201d the letter says.\u00a0<\/p>\n \u201cSB 423\u2019s transfer tax provisions may not apply to properties in the manner intended or could be blocked in court, which would create greater uncertainty in the L.A. real estate market and further harm the city\u2019s economy and housing crisis,\u201d the authors of the\u00a0coalition\u2019s letter wrote.\u00a0\u00a0<\/p>\n Bass\u2019 bill was, in part, an effort to take away supporters from\u00a0a proposed ballot measure<\/a>\u00a0by the Howard Jarvis Taxpayer Association that would put new limits on local tax hikes and ultimately void Measure ULA entirely, according to the LA Times.<\/p>\n Any changes to Measure ULA due to SB 423 would only go into effect if the HJTA measure doesn\u2019t make it onto the ballot next year.\u00a0<\/p>\n