Measure ULA tax incentive for new apartments clears oversight committee: how the 3-tier pilot works

The short version

The oversight committee for Measure ULA, the City of Los Angeles transfer tax known as the mansion tax, has backed a plan to cut the tax on some new apartment buildings. At a special meeting on Thursday, Oct. 22, the Measure ULA Citizen Oversight Committee reviewed a five-year pilot tax incentive program drafted by the Los Angeles Housing Department (LAHD). According to Mar Vista Voice, which covered the vote, the committee approved it without changes and sent it to the City Council.

The Measure ULA tax incentive would lower the tax on the first sale of a qualifying new apartment or mixed-use building within 10 years of completion, in three tiers: 2% to 3%, 1% to 1.5%, or no ULA tax. More affordable homes, labor standards and tenant protections earn a bigger cut. None of it is law yet. The housing department's meeting packet puts the earliest final council vote on an ordinance after spring 2027.

The backstory: what Measure ULA is

City of Los Angeles voters approved Measure ULA (United to House LA) in November 2022 with about 58% of the vote, and the tax has applied to sales since April 1, 2023, according to LAHD's page on the oversight committee. It is a one-time tax paid when property changes hands, added to the city's 0.45% base transfer tax.

For sales closing after June 30, 2026, the LA Office of Finance lists two rates:

• 4% when the price is above $5.4 million and below $10.9 million
• 5.5% when the price is $10.9 million or more

The rate applies to the full price, thresholds adjust every July, and the tax applies only inside City of LA limits. It covers apartment buildings, offices, stores and land as well as homes. Mar Vista Voice reports it has raised more than $1.4 billion since 2023 for affordable housing, homelessness prevention and tenant protections. Our ULA explainer covers the RAND study of its effects.

Why new apartments? A developer who builds to sell pays the tax on the finished building's full value. Builders argue that makes projects harder to finance; supporters say interest rates and construction costs matter far more.

How the proposal got here

• January 2026. Councilmember Nithya Raman proposed exempting new or substantially renovated apartment, commercial and mixed-use buildings from ULA for 15 years, Mar Vista Voice notes.
• May 29. The council's Ad Hoc Committee on Measure ULA voted 2-1 to set aside a ballot measure from Councilmembers John Lee and Marqueece Harris-Dawson that would have cut rates on multifamily and mixed-use sales. Chair Ysabel Jurado substituted a narrower pilot that needs no voter approval, LAist reported.
• July 1. The full council shelved a November ballot measure that would have exempted new apartments for 10 years, as LAist reported. The same day, the council voted 13-1 on Council File 26-0782 to have LAHD and the City Attorney design the pilot, with Councilmember Katy Yaroslavsky voting no. United to House LA, the coalition behind the 2022 measure, said the council widened the sale window from seven to 10 years after construction.
• Oct. 22. LAHD presented its framework to the committee.

Why does the committee get a say? The council can amend ULA without a public vote only if the change furthers the measure's goals, does not raise the tax and does not weaken its labor rules. The committee reviews each amendment first, and if it objects, the council must adopt written findings backed by substantial evidence to proceed, according to the City Attorney's report in the same packet.

What the pilot would do

Every project would first have to meet general rules, according to LAHD's framework:

• New permits only. Every unit must receive its building permit after the pilot takes effect. Existing buildings and projects already permitted do not qualify.
• Mostly housing. At least two-thirds of the floor area must be permitted as housing, with at least five new homes.
• First sale, within 10 years. The sale must be the first one after the permit and close within 10 years of the certificate of occupancy, the city document that clears a building for people to live in.
• A taxable buyer. Sales to nonprofit affordable housing developers are already exempt.
• A clean record. Every unit on the rent registry, no open code violations and no party on LAHD's anti-harassment violators list.

Three terms matter for the tiers. Extremely low, very low and low income are standard income bands measured against area median income (AMI); "lower income" tops out at 80% of AMI. Prevailing wage means paying state-set pay rates for each construction trade. A project labor agreement (PLA) is a contract between the owner, contractors and building trades unions that sets job terms before hiring.

Tier 1: 2% or 3%. The project must set aside enough affordable units to qualify for the city's existing exemption from the Affordable Housing Linkage Fee, a fee on new development that funds affordable housing. That means 8% of units for extremely low income households, 11% for very low income or 20% for low income. Buildings over 85 feet need a PLA. If the project demolished protected units (rent-stabilized units, units with low-income tenants or deed-restricted affordable units), it must end with more affordable units than before.

Tier 2: 1% or 1.5%. Mixed-income projects meet the Tier 1 set-aside, pay prevailing wage and replace demolished protected units two for one. A second route covers projects with at least half their units affordable at 80% of AMI or below, if they sit in a "High Market Area," the parts of the city with the highest market rents.

Tier 3: no ULA tax. At least half the units must be affordable at 80% of AMI or below. The project must pay prevailing wage, replace demolished protected units 10 for one, and cannot have demolished 12 or more rent-stabilized units occupied in the prior five years.

Why tiers? LAHD said it modeled them on the city's land use incentive programs, which let developers build more in exchange for affordable units, and noted that about 85% of housing developments permitted in 2025 included affordable units.

A worked example from LAHD. A 40-unit, six-story building near transit includes six extremely low income units. It sells for $30 million within 10 years of completion. Today it would owe $1,650,000 in ULA at 5.5%. Under Tier 1, at 3%, it would owe $900,000, a saving of $750,000. A Tier 3 building at the same price would owe no ULA.

What it does not cover

Home sales, existing buildings, commercial-only projects and second sales are all outside the pilot. Raman's original plan included commercial buildings; this one does not.

The cost, and who disagrees

LAHD expects a very low early revenue impact. Multifamily buildings sold within 10 years of construction made up about 1% of ULA revenue, about $10.8 million from April 2023 through December 2025, though past sales may not predict future ones. LAHD estimated the shelved 10-year exemption would have cut ULA revenue about 5% while adding about 330 apartments a year, LAist reported.

Critics come from both sides. Mar Vista Voice argues the breaks are not needed, pointing to a BAE Urban Economics analysis that found removing the tax made little difference to whether most projects pencil out. It also notes that 80% of AMI means up to $93,300 a year for one person or $133,250 for a family of four under 2026 limits. It reports that United to House LA accepted the narrower approach.

On the other side, reform supporters say the pilot is too small. Yaroslavsky said in July that the tax credit approach was not enough, The Real Deal reported. Mott Smith of the Council of Infill Builders told LAist the council was "living in denial" about ULA's effect on the apartment market.

What happens next

LAHD's timeline, with no exact dates set:

• November to December 2026. LAHD sends the framework and the committee's findings to the City Council.
• After that. The council's Housing Committee and the full council consider it and direct the City Attorney to draft an ordinance.
• Early 2027. The City Attorney drafts the ordinance.
• Spring 2027. The oversight committee reviews the draft, then the Housing Committee and full council vote.
• After adoption. The pilot ends automatically after five years unless the council renews it based on a city study.

The committee also approved technical amendments, including an exemption for affordable housing partnerships controlled by nonprofits. Separately, City of LA voters will decide on Nov. 3 whether to exempt Palisades fire-damaged properties sold above the threshold, under Prop. TE, according to the Westside Current's voter guide.

What it means for LA agents

1. Home sellers see no change. A $6 million house in the city still owes 4% of the full price, or $240,000, plus the base tax.
2. Price development land at today's rules. Buyers of apartment sites may ask about the pilot, but it only covers projects permitted after an effective date that does not exist yet. Underwrite at the full rate.
3. Flag occupied rent-stabilized units early. On sites with tenants, the replacement ratios and the 12-unit limit decide which tier is possible, which affects what a builder will pay.
4. Confirm the city line. The tax and the pilot apply only inside City of LA limits, and the thresholds reset each July 1.
5. Watch the Housing Committee. The next decision comes when the council takes up LAHD's report. Check the council file and the Office of Finance before quoting any rate.