Published on Tuesday, June 9, 2026
Access our latest property investment summary by completing the form below.
The measure imposes a transfer tax on all real estate transactions above $5 million.
The ULA tax is continuing to scare away commercial activity in Los Angeles. The measure, approved by voters in 2022, imposes a transfer tax on all real estate transactions above $5 million, with duties of four percent for sales between $5 million and $10 million and 5.5 percent for sales above $10 million.
Although commonly described as a "mansion tax," the measure applies broadly to commercial properties and multifamily buildings.
Since taking effect, it has generated $1.16 billion for affordable housing production, acquisition and rehabilitation of existing affordable units and tenant‑focused programs such as rental assistance and eviction defense.
However, a report from think tank RAND Corp. spins a different perspective: the tax has produced significant unintended consequences for the city's economy and fiscal stability.
High‑value real estate transactions have fallen by 31 percent since ULA was implemented, reducing property tax revenue for the Los Angeles Unified School District and the city.
Because ULA revenue has not met initial projections, LA faces widening fiscal pressure at a time when population decline, rising labor costs, liability payments and a 38 percent reduction in reserves have already led major credit rating agencies to assign LA a negative financial outlook.
Commercial and Manufacturing Transaction Volume Down 38%
Jason Ward, PhD, economist and the director of RAND Housing Center, told GlobeSt.com that there is evidence on both the transaction and permitting sides.
The report compared transaction volume for high-value sales in the City of LA with the rest of LA County—an approach that accounts for both common shocks across the county and area-specific differences within LA County jurisdictions.
Additionally, RAND found that commercial, when combined with manufacturing transaction volume, is down around 38 percent in the city compared with other areas in the county. Plus, the decline is even wider for residential multifamily-zoned land, at close to 50 percent.
"This evidence suggests that ULA is directly costing the city and county property tax and transfer tax revenue, but it also points to declines in development activity," Ward said.
Studying Large Multifamily Projects Since 2020
RAND directly explored this channel by developing a countywide dataset of permitting data for large multifamily projects starting in 2020.
"From this analysis, we conservatively estimate that permitted units in large apartment buildings likely to be subject to the ULA tax if sold are down by approximately 30 percent in the city relative to the rest of the county," Ward said.
Ward added that the biggest issue appears to be the lack of an exemption for the first sale of a completed commercial or multifamily development.
"Most builders operate on a build-and-sell model, either in the short term or after a multiyear holding period, so that capital can be recycled and lenders and investors can realize a return," he explained.
A 5.5 percent ULA tax can represent more than a third of the projected return on an otherwise feasible typical multifamily or commercial project.
"This is simply a dealbreaker for many projects," he said.
In terms of housing production, this is especially true for the most marginal projects from a profit perspective that would tend to represent the most naturally affordable sector of new housing production, Ward said.
Falling 1,900 New Apartment Units Short
The 30 percent decline in apartment permits, RAND estimates, has been caused by ULA, which represents around 1,900 units per year or about 15 to 18 percent of the total annual permitted units among larger apartment projects.
In the three years since ULA passed, this amounts to around 5,700 apartments failing to enter construction. And approximately 600 of these apartments would typically be reserved for low-income tenants through density bonuses, a number larger than the number of new units awarded in ULA's first major $360 million funding round, according to Ward.
"It's noteworthy that these units would be produced entirely with private funding," he said.
Producing 600 low-income units with ULA and other public funding sources would require a total investment of around $480 million. Additionally, this forgone apartment production has cost the city and associated agencies roughly $200 million in lost impact and development fees, as well as nearly $20 million annually in new property tax revenue, according to RAND.
RAND's Recommendations
According to RAND, the Los Angeles City Council should consider reforming the tax structure of Measure ULA to remove barriers to investment in housing production and other pro-growth commercial activity in the city.
The Council should also consider amending ULA's funding rules to allow greater flexibility in how revenue is deployed, enabling the funds to support more sustainable, lower-risk strategies to improve housing affordability.
This could include directing a larger share of resources toward fiscally sustainable mixed-income developments as well as more flexible forms of tenant assistance and subsidies.