Constructions continues on AVE Hamilton Green, a new luxury apartment complex built on the site of the former White Plains Mall Jan. 30, 2025, The first residents have moved into one of the two buildings. The official grand opening of the apartment complex is scheduled for the Spring.
Los Angeles, California – A new study suggests Los Angeles’ “mansion tax” may be stifling the development of both market-rate and affordable housing, despite being designed to fund solutions to the city’s housing crisis.
Researchers from RAND and UCLA’s Lewis Center for Regional Policy Studies released a report Friday linking Measure ULA — approved by voters in 2022 — to an 18% drop in new housing construction. That amounts to roughly 1,910 fewer units built each year.
Measure ULA, which took effect in April 2023, applies a 4% tax on property sales over $5 million and 5.5% on sales over $10 million. The revenue funds affordable housing and tenant support programs. But researchers say the tax discourages developers from building new apartments, especially larger projects that typically include affordable units.
“We found that it is having a pretty strong negative effect on both market rate housing and affordable housing,” said Shane Phillips, a UCLA housing policy researcher and co-author of the study.
According to the report, most new multifamily projects in L.A. use state laws to include a percentage of affordable units in exchange for higher density. Because the tax has slowed down overall construction, the study estimates the city is losing around 168 low-income units annually.
Had the tax exempted recently built apartment buildings, the study concludes, L.A. might have ended up with more affordable housing overall. Researchers recommend an exemption for properties built within the past 15 years — a change that could reduce tax revenue by only about 8%.
Supporters of Measure ULA argue the tax is still in a transitional period. They say the funds have already helped build nearly 800 low-income apartments and provided aid to struggling renters.
Still, the debate raises new questions about how best to balance housing production with funding equity-driven housing solutions.
