The Los Angeles "mansion tax," the high-profile property sales levy designed to raise money for affordable housing, has faced criticism from the real estate industry for hindering deal activity and pushing developers outside of the area. One of its architects is responding by pointing to the $1 billion in revenue it raised in less than two years.
The voter-approved levy that applies to property sales above $5.3 million took effect in April 2023, as higher interest rates, rising construction costs and lingering effects of the COVID-19 pandemic slowed real estate transactions across the region. Critics say the levy exacerbated the city's challenges.
But Joe Donlin, director of the United to House LA coalition and one of the architects of the measure, said the tax has helped fund affordable housing developments and renter protections as the region works to increase its available housing to prevent locals from moving out of the area.
“You can’t solve a housing crisis without a permanent funding source,” Donlin told CoStar News. He added that the measure “is that source. It’s designed to provide hundreds of millions of dollars every year for affordable housing and homelessness prevention programs, creating stability that Los Angeles has never had before.”
Several states, including Maine, Rhode Island and New Jersey, are raising transfer taxes on high-value sales to help fund affordable housing and homelessness programs. Chicago voters last year rejected a similar tax on properties over $1 million, but Seattle voters approved a property tax last February aimed at helping low-income renters. New York raised property transfer taxes in 2023, while Boston officials are pursuing a similar levy.
In Los Angeles, some apartment developers, such as Cityview and LaTerra Development, have blamed the mansion tax for hindering development in the area. Donlin, meanwhile, said the measure's funds have supported the construction of nearly 800 affordable units, revived nine previously stalled projects, and helped more than 11,000 renters remain housed through rental assistance and eviction defense programs.
So far, only a portion of the $1 billion has been spent. The City Council has allocated $424.8 million of the funds for the 2025–26 fiscal year to be spent on the measure's various programs, including housing development. Meanwhile, Los Angeles has opened applications for its largest affordable housing funding round yet, a $376 million pool fueled heavily by collections from the tax. A typical year's fund would be roughly $50 million.
Donlin has served as director of United to House LA since 2023, after 12 years as associate director of Strategic Actions for a Just Economy in South LA, where he focused on community-driven development and tenant protections. He drafted and now oversees Measure ULA.
Billion-dollar experiment
Donlin said Measure ULA was designed to give Los Angeles a permanent, locally controlled funding source for housing rather than relying on episodic state or federal housing programs.
“At a time when so many Angelenos are struggling with rising rents and economic hardship, Measure ULA is proving that local action can make a real difference — building homes, keeping families housed, and creating good, stable jobs,” Donlin said.
Donlin said crossing the $1 billion mark shows the measure is beginning to operate at the scale voters envisioned when they approved it in 2022.
“A billion dollars raised means a billion dollars working for the people of Los Angeles,” he said. “This is the people’s billion.”
The city’s move to ramp up its annual funding rounds for affordable development is intended to give affordable housing developers more confidence when planning projects amid volatile capital markets.
In addition to funding affordable apartment development, the tax can be used to help renters fight eviction and pay back rent, prevent vulnerable populations like seniors and youth from becoming homeless, and create jobs tied to housing construction.
Still, critics argue that the tax has chilled investment in a market already struggling with high interest rates and cautious lenders.
“Developers are hesitant to build in Los Angeles because of the ULA tax on the back end,” Kitty Wallace, a vice chair at Colliers who has sold hundreds of apartment buildings across Los Angeles during her career, told CoStar News. “That tax significantly impacts returns, and as a result, many projects aren’t moving forward.”
ULA aims to address homelessness
Commercial real estate leaders and researchers continue to question whether the benefits cited by supporters outweigh the tax’s broader market impact.
The UCLA Lewis Center estimates Measure ULA reduced transaction volume enough to cost the city roughly $25 million annually in lost tax revenue during its first two years.
Landlords, brokers and developers say the tax has compounded existing headwinds from higher interest rates and insurance costs, making deals harder to underwrite. Some investors argue the levy has redirected capital toward nearby cities such as Beverly Hills and Santa Monica, where similar transfer taxes do not apply.
But those like Donlin are pointing to apartment developments that broke ground as a result of the tax.
Grace Villas in Lincoln Heights, a 48-unit affordable project on a former city-owned parking lot, and Alveare, a 303-unit development in downtown Los Angeles, were both restarted using funds from the measure, according to Donlin. The two projects are among nine developments revived with $54 million from the ULA’s accelerator fund, which Donlin said was designed to close financing gaps for stalled deals.
“Affordable housing developers know these funds will be available year after year,” he said. “That creates confidence and stability in long-term planning.”
Developers push back on extra cost
Some developers say the tax has made Los Angeles projects financially unworkable compared with other markets.
CityView, one of Los Angeles County’s most active multifamily builders over the past decade, is completing its last project in the city and shifting new development to markets such as Atlanta, Boston and Texas.
“In our home market you can’t make the numbers work because of this ULA,” CityView Chief Executive Sean Burton told CoStar News. “You have to raise rent $300 to $400 per unit just to pay for that. Now people are redlining Los Angeles.”
Burton said the tax reduces the value of Los Angeles multifamily projects by roughly 8%, making them less competitive for institutional capital.
Donlin said critics overstate the role Measure ULA has played in weakening the market and underestimate the impact of broader economic forces.
“When the tax went into effect, interest rates, construction costs and insurance premiums were all at historic highs,” Donlin said. “Those factors had a huge impact on transactions.”
Donlin said collections subject to the tax have increased quarter by quarter as the market has adjusted. He also rejected complaints that the levy extends beyond single-family homes — affecting office deals just as it affects residential sales — saying the tax was designed to be comprehensive.
“Housing affordability is tied to the entire real estate ecosystem, so the levy applies to high-value transactions across asset classes," Donlin said. "That was intentional because solving displacement and homelessness requires bold, systemic solutions.”