The $10.9M Line: ULA's Escape Hatch

JordynTen million and nine hundred thousand dollars and one more dollar. That's the number that just got expensive in LA.

DavidHansonbridgett's update on Measure ULA lays it out. Cross ten point nine million, and the transfer tax jumps from four percent to five point five percent overnight.

JordynSo picture the escrow officer redoing the closing statement because the offer landed a thousand dollars too high.

DavidOne dollar over the line, and the seller's writing a very different check.

JordynOh, man. And that's just our opener.

DavidRight. We're also looking at the Council's flip-flop on ULA relief. A vote for a break, then a retreat into something quieter.

JordynOkay, so get this. The multifamily exemption looked locked, then it wasn't.

DavidAnd we're asking whether it's the tax or the twenty twenty-six market pricing Bel Air under Beverly Hills in Malibu right now.

JordynOkay, plus a hypothetical twenty-four unit Palms building that shows two totally different tax outcomes depending which relief wins.

DavidOne of them doesn't even kick in until twenty twenty-eight.

JordynSeriously?

DavidYeah. We'll look at that clock later.

JordynAll right. Open the escrow file at ten million and nine hundred thousand dollars.

DavidBecause a single dollar shouldn't cost this much.

JordynOkay, get this. A ten point nine million dollar shack in Brentwood just got a lot more expensive.

DavidHow much more?

JordynHansonbridgett just published their ULA breakdown. On anything closing after June thirtieth, cross ten point nine million, and the tax rate jumps to five point five percent of the gross price. Seller pays, no exceptions.

DavidWalk me through the actual number.

JordynA ten point nine million dollar close writes the city a five hundred and ninety-nine thousand five hundred dollar check.

DavidOoh, and that's before the regular transfer tax. Combine city and county point five six percent on top, another sixty-one thousand and forty dollars.

JordynSo the city's cut on one house is pushing six hundred and sixty thousand dollars.

DavidRoughly. But drop the price one thousand dollars to ten million eight hundred and ninety-nine thousand dollars, and you fall out of the five point five percent bracket entirely. You're just in the four percent tier, which starts back at five point four million dollars.

JordynWhich comes out to...

DavidFour hundred thirty-five thousand nine hundred and sixty dollars.

JordynWait, one thousand dollars in price swings the tax bill by a hundred and twenty-five thousand four hundred dollars?

DavidSame house, same buyer probably.

JordynWow.

DavidJust a smarter escrow date.

JordynThat's not a rounding error, David. That's a used Porsche.

DavidAnd it doesn't sit still. The LA Office of Finance notes these thresholds reset every year on the chained CPI.

JordynSo the line keeps moving.

DavidEvery January, which is exactly why escrow officers dread anything closing near five point four or ten point nine million dollars right around that fiscal deadline.

JordynPicture some agent racing a Brentwood colonial with a pool cabana to close by June thirtieth just to dodge the higher bracket.

DavidHappens constantly.

JordynOkay, so who's actually trying to touch these numbers? Because I know there's a fight happening at City Hall over this exact math.

DavidOh, there is. And it got messy fast.

JordynSo that six-figure threshold cliff we just laid out-

DavidMm-hmm.

JordynTurns out the council actually tried to fix it.

DavidTried is the word. June seventeenth, they voted nine to five to have the city attorney draft a November third ballot measure exempting new multifamily and mixed-use buildings from ULA. Ten years, no transfer tax.

JordynWait, a full reversal? Back in January, they wouldn't even send reform to the June ballot.

DavidTotal reversal. Katy Yaroslavsky pitched it as leverage. Sacramento was negotiating with the Howard Jarvis camp on the statewide repeal, and she wanted the city holding a chip at that table.

JordynA bargaining chip. Sure. Who voted no?

DavidHernandez, Jurado, Padilla, Rodriguez, and Soto-Martinez. Same five who've guarded ULA revenue since day one.

JordynSo nine to five, big vote, relief is coming, and then what?

DavidThen July first hits, the actual filing deadline for the ballot, and MyNewsLA reported the council just held off, shelved it.

JordynShut up. They let the deadline pass on their own measure?

DavidThe Real Deal covered the same retreat. Instead, they told the housing department to draft a pilot tax credit. No ballot, no voters, just an administrative fix.

JordynDavid, that's a bait and switch, not a compromise. You tell a builder in Sherman Oaks relief is coming, grab the headline, then quietly swap it for a program nobody's seen drafted?

DavidOr it's the smarter play. A ballot measure needs a majority of actual November turnout. A Council-directed credit needs five votes in committee. Which one lands faster?

JordynThe one voters actually get to weigh in on. United to House LA called a local measure a financial and strategic mistake, said it hand ammunition to the statewide repeal fight.

DavidRight. That's their read. Protect ULA's brand before Sacramento fights the bigger battle.

JordynSo developers get a maybe someday credit instead of an exemption on the books.

DavidFor now, and nobody's saying this out loud.

JordynMm.

DavidEvery month this sits in draft, the ten-year clock on any future project starts later too.

JordynWhich is why calling this reform feels cute but unnecessary if it never reaches a ballot.

DavidCute but unnecessary. But three things are still live before November third. Does the pilot credit get drafted? Does the Sacramento deal reshape the math again? And does council revisit the ballot if the pilot stalls?

JordynAnd every week this sits in draft, the ten-year clock on any future project ends before it's even begun.

DavidWhich is the real fight underneath this. Is ULA what's freezing high-end deals, or is it just easy to blame the tax when buyers already hold the leverage?

JordynThat's a fight for another day. Right now, I wanna know who actually qualifies on paper.

DavidYeah, because the fine print on units and permitting dates is where this gets ugly.

JordynOkay, flip the mechanics forward. Hypothetical, twenty-four units, Palms, mixed use with ground floor retail trading at twelve million.

DavidRun it both ways.

JordynUnder the drafted ballot exemption, this building pays zero ULA. Zero. Because it's five-plus units, and it broke ground after passage.

DavidRight. But after passage is the catch. The Real Deal's June thirtieth piece is clear. The exemption only covers projects permitted after the measure passes, and it runs ten years from certificate of occupancy.

JordynSo if you already pulled permits, which is half the pipeline-

DavidMm-hmm.

JordynYou get nothing.

DavidNothing. And CO on a build like this is eighteen to twenty-four months out minimum. Add the ten-year clock, and you're not seeing relief land until-

JordynWow.

DavidTwenty twenty-eight, maybe later.

JordynSo the whole council fight we just walked through doesn't touch a single deal closing this year?

DavidCorrect.

JordynThat's not a housing incentive. That's a subsidy for developers who haven't broken ground yet, dressed up as housing policy.

DavidI hear you, but underwriting doesn't run on this year's tax bill. It runs on exit pricing five years out. A lender who knows a project's ULA-free for a decade after CO changes the pro forma today, not in twenty twenty-eight.

JordynSure, on paper. Try telling a builder sitting on dirt right now that the relief shows up after they've already sold.

DavidWhich is exactly why the council built a fallback. Patch reported the pilot tax credit would cut the rate from five point five percent down to one point five percent for qualifying multifamily and mixed use.

JordynRun the twelve million Palms building through that version.

DavidOne point five instead of five point five, a hundred and eighty grand instead of six hundred and sixty.

JordynFour hundred and eighty thousand dollars of daylight just from which lever the city pulls.

DavidAnd on Patch's reference deal, a ten point nine million dollar apartment trade, that swing comes to four hundred and thirty-six thousand dollars.

JordynSo depending which version survives, a builder's either popping champagne or eating the difference.

DavidThe pilot's live now administratively. The ballot exemption needs voters in November and doesn't pay out till twenty twenty-eight.

JordynOne's a bird in hand, one's a bird in twenty twenty-eight.

DavidAnd both only exist for five or more unit projects, mixed use, conversions, apartments.

JordynWhich raises the obvious question, what happens to the person just selling their house?

DavidNobody's building a fourplex in their backyard. If you're a single-family seller in Brentwood or the Palisades-

JordynNone of this touches you. Not the ballot measure, not the pilot.

DavidNot even close.

JordynBuilding on that, here's who's actually left holding nothing. Single-family sellers. Not the ballot measure, not the pilot credit, not the Sacramento bill either.

DavidRight. That state bill explicitly kept the five point five percent rate on mansions while it cut the rate on apartments and commercial. Single family got zero movement.

JordynAnd Hansonbridgett's June update says that's already changing who even lists. They cite UCLA research estimating the odds of a five million dollar plus sale-

DavidMm.

JordynDropped by as much as fifty-five percent.

DavidFifty-five percent. And Hansonbridgett also notes ULA's cleared a billion dollars in collections since April twenty twenty-three. The city's not exactly starving for a reason to leave this alone.

JordynWhich is why Beverly Hills and Malibu are basically running as tax havens inside the Westside right now. Jordan Pollack's analysis on LaLuxuries.com pegs the savings at one point one million dollars on a twenty million dollar flats purchase versus the same house in Bel Air at resale.

DavidI'll take the number. I'm just not convinced the tax is doing that work. Twenty twenty-six is a brutal buyer's market for anything north of twenty million dollars, full stop.

JordynThen explain the gap. Same buyer pool, same lot size, same view. One side of the street just costs more to leave.

DavidThe line's been there since twenty twenty-three. What's new is the weight. Trophy-tier data on 9007 has Bel Air Estates sitting an average-

JordynWow.

DavidTwo hundred and seventy-three days right now.

JordynAnd La Fin up on Bel Air Road asked one hundred and thirty-nine million dollars back in twenty twenty-two, now chopped to just under one hundred million.

DavidA forty million dollar haircut. Tell me the mansion tax alone did that.

JordynI'm not saying alone. I'm saying it's baked into how buyers price both sides of that line now permanently.

DavidWe're not settling this one tonight.

JordynNope, but three threads stay alive heading into November third.

DavidThe ballot exemption, the pilot credit.

JordynAnd something new for one very specific group of single-family owners. Shifting to November third, there's exactly one single-family exemption still alive, and it's the Palisades fire relief.

DavidRight. That's the piece that rode along with the June seventeenth vote, a five-year ULA exemption for anyone who lost a home in January twenty twenty-five fire.

JordynFive years. No certificate of occupancy games, no unit count. That's the whole carve-out.

DavidWhich tells you the council moves fast when the optics are sympathetic enough.

JordynNoted. Now, remember when everyone thought Sacramento would blow the whole tax up statewide?

DavidDead. MyNewsLA's coverage on that ballot fight says the legislature's real move was a two-thirds vote threshold for future special taxes in November. Anything already enacted, like ULA, stays untouched.

JordynWow. So the state closed its door and just left ULA standing right where it was.

DavidExactly. Anyone hoping Sacramento would do the council's dirty work, cross that list off.

JordynWhich dumps the pressure back on City Hall's pilot credit. The housing department still owes us the actual ordinance.

DavidWatch that filing. No date's locked, but that's the document turning a concept into a number escrow officers can actually use.

JordynAnd here's a number worth sitting with. The council's already approved something like five hundred and forty-four million dollars in ULA spending for this fiscal year.

DavidOoh, housing, homelessness services, tenant assistance, money already budgeted against revenue this tax brings in.

JordynWhich is why repeal talk stays theoretical. Nobody's voting to kill five hundred and forty-four million without naming what gets cut.

DavidSo three things to track: the housing department ordinance, the budget votes tied to that number, and November third itself.

JordynBecause whatever the ballot decides, somebody's writing the check right now, and today that's every seller sitting north of five point four. That's the show, and honestly, the ULA reversal still gets me.

DavidThe council setting their own deadline, then just letting it pass?

JordynShut up. They really did that?

DavidThey did. Relief on paper. Nothing actually landing for anyone yet.

JordynReal talk. If your deal's anywhere near those brackets, that cliff between price points is not cute. It's expensive. Talk to your escrow officer before you set a number.

DavidAnd watch November third. Three threads, one ballot—

JordynMm-hmm.

DavidA lot riding on it.

JordynNew episodes drop every Tuesday. Follow Listing Price wherever you listen.

DavidGot a deal or a listing we should look at? Send it our way.

JordynThanks for hanging with us today.

DavidSee you next Tuesday.