Pacific Palisades residents could be in for relief from Measure ULA as Angeles Mayor Karen Bass presses the City Council to move forward on a temporary pause of the so-called “mansion tax.”
The request marks the first major move at the municipal level to adjust the tax’s parameters, and follows months of talk about ULA’s impact on the Palisades post-wildfires real estate market. An announcement of the request by the mayor’s office indicated that the pause would not be citywide, providing a “one-time exemption to Measure ULA for Palisade homeowners.”
Measure ULA’s two-tiered tax on commercial and residential transactions has loomed large over dealmaking since voters passed the November 2022 ballot measure. It applies a 4 percent tax on deals starting at $5.3 million and 5.5 percent on those $10.6 million or more. It’s been cited as a significant hurdle in the Palisades, a community within the city of Los Angeles, with many agents saying the assessment has stopped deals from happening.
Bass, in a letter to members of the 15-seat City Council sent on Thursday, requested they pass an ordinance that would give the finance director the authority to enact the limited ULA pause.
The move came after Bass met with developer Rick Caruso in his capacity as founder of the nonprofit Steadfast LA, which he established to aid in the rebuilding of the Palisades and Altadena after both areas were hit by wildfires earlier this year.
The stirrings of action brought some early cheers from the residential marketplace.
“Pausing the ULA mansion tax is a game changer for Pacific Palisades,” Amalfi Estates founder Anthony Marguleas told The Real Deal Thursday evening. “Families rebuilding after the fire need relief, not more financial hurdles.
Such a move would “speed up sales of these properties and spur rebuilding and rehabilitation of the Palisades,” Bass said in her letter. “This will create more housing citywide and generate higher Measure ULA tax revenue when these rebuilt or renovated properties are subsequently sold to new homeowners because those second and subsequent sales will remain subject to Measure ULA.”
As it currently exists, Measure ULA “is silent on an issue now affecting our Palisades community,” Bass said of the tax’s cost implications for those trying to recover from the fire.
It’s unclear if any moves have been made to place discussion of the ordinance on a future city council meeting agenda. An inquiry to Bass’ office was not immediately returned Thursday evening.
First crack
While Bass’ proposal is temporary, if passed, it would be the first crack in an armor that’s shielded ULA from exemptions or other changes since the ballot measure was passed and went into effect in 2023.
Lawsuits and a new ballot measure to have the tax repealed have routinely drawn the ire of housing and homeless advocates whose vocal responses have so far helped create a fortress around adjustments to the tax.
Bass’ proposal hits at a criticism some have had for the tax in its unilateral application to real estate transactions — both commercial and residential — without taking into account realities such as if a home sells at a loss or what happens in the case of a natural disaster.
Beyond residential, the tax has affected commercial transactions and land deals as it’s viewed as another layer of cost making it harder to get deals to pencil out.