Two years after the effective date of Measure ULA, the so-called “mansion tax” has caused sales of commercial properties in Los Angeles to fall by as much as 50%, says a new report from UCLA’s Lewis Center for Regional Policy Studies. Titled “The Unintended Consequences of Measure ULA,” the report by Michael Manville and Mott Smith also suggests that Measure ULA resulted in a 50% reduction in the odds that a transaction occurring will be above ULA’s price threshold of $5 million.
“The hardest-hit properties are not luxury homes, but multifamily, commercial and industrial buildings — the very types we need to support housing production and job growth,” Smith told the Los Angeles Times.
A commercial decline hurts the city in two ways, the report argues. First, commercial properties often sell for significantly more than single-family homes, so even a slight decrease in sales leads to a large drop in tax revenue. Second, commercial sales typically lead to new multifamily development, which the city needs amid a housing crisis.
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