ULA's 1.5% Fix Is Builder-Only Now

JordynOkay, so remember the mansion tax fix everybody's been begging for the city all summer?

DavidThe one we've basically built half our episodes around? Yeah.

JordynPlot twist, the committee voted.

DavidAnd?

JordynAnd it's not the vote anyone was picturing.

DavidWait, wait. Did it pass or not?

JordynIt passed. That's the twist part.

DavidOkay, that's usually good news.

JordynUsually.

DavidI'm David, this is Jordyn. You're on Listing Price, and I already don't trust that face you're making.

JordynYou shouldn't, because the thing that that approved is wearing the same name as the thing everyone asked for, but I don't think it's the same thing.

DavidSo who actually wins here?

JordynThat's the question I'm not answering yet.

DavidCome on.

JordynNope, not yet.

DavidYou're insufferable when you do this.

JordynI know. Stick around anyway.

DavidFine. Here's what I'll give you. This vote was close, it was contested, and depending how you read it, it either fixes a real problem or quietly hands the fix to the wrong side of the table.

JordynOminous.

DavidAccurate. So let's get into what the committee actually put on paper.

JordynDavid, walk us through the vote. Okay, the actual math behind that vote. Jurado and Padilla voted yes, Lee voted no.

DavidWait, that's it? Two to one? Ad hoc committee, three members, two votes carries it.

JordynHere's, like, a lot of tax policy riding on two signatures.

DavidIt is, and what those two signed off on wasn't small. Westside Current framed it as the committee advancing localized pilot programs over the broader rollback push, specifically a one point five percent rate, but only for affordable multifamily construction.

JordynSo the discount lives in one lane: affordable multifamily, nothing else.

DavidRight, and you have to look at what got shoved aside to make room for it. LAist reported the committee sidelined a ballot measure from Lee and Harris-Dawson that would've asked November voters to cut the ULA's multifamily rate somewhere between two and three point five percent. So instead of letting the actual electorate vote on a number, three

Jordynpeople in a committee room pick the smaller, narrower version themselves. That's the sequence.

DavidAnd that ballot version, two to three and a half percent, that

Jordynwas multifamily too, not single-family mansion sellers. Multifamily, same lane.

DavidThe single-family relief everyone's been chasing since summer was never actually on the table in either version, at least not in what got voted on. on.

JordynJust so I've got the scale right, even the low end of that ballot range, two percent, is still higher than the one point five percent builders ended up getting.

DavidYeah. The range voters would've seen topped out over double the pilot's rate. Whatever landed in committee undercut even the most modest version of the public proposal.

JordynOkay, so nobody's asked the real question yet. Did the committee loosen the tax, or did they decide who gets to stand under it?

DavidThat's what the vote leaves open.

JordynBecause relief for builders and relief for sellers are two different checks written out of the same fund.

DavidTwo to one doesn't tell you which one won. It just tells you the builder version cleared committee.

JordynSo we've got a number, one point five percent, and a mystery about who actually gets to use it.

DavidAnd a discarded number too. The two to three and a half percent range never makes it to voters now.

JordynGone. Just gone.

DavidSet aside is the word LAist used. Not killed, not scheduled, just parked.

JordynParked where, though? On somebody's desk forever?

DavidPretty much. No hearing scheduled, no next step listed anywhere.

JordynSo the number that everybody could've voted on in November was always bigger than what committee handed the builders.

DavidRight. Well, whatever the final ballot number would've landed on, the committee's math came in lower than even the floor of that range.

JordynSo where does the one point five percent even come from? Did somebody just pick it out of a hat in May?

DavidNo, and that's the part worth backing up for. This didn't start as a builder-only pilot. It started three summers ago as something a lot bigger.

JordynBigger how?

DavidBigger as in mansion tax relief, full stop, for everybody paying it. What landed on the table in May is what's left after three years of that idea getting smaller.

JordynSo three years, David. Three years of every broker, every developer, every op-ed writer in this city screaming about Measure ULA.

DavidThe mansion tax that ate luxury real estate.

JordynThat's the pitch, yeah. Complaints that it's crushed high-end sales and frozen multifamily construction dead in its tracks.

DavidAnd to be fair, it's not nothing. People aren't just whining into the void.

JordynNo, there's a RAND Corporation report backing it up. Seventy-eight pages.

DavidSeventy-eight pages? Someone got paid by the word.

JordynMaybe, but the number that mattered, RAND tied the mansion tax to a thirty percent decline in large apartment construction.

DavidThirty percent. That's not a dip. That's a cliff.

JordynPicture every third crane you'd expect to see over a big apartment site just not there.

DavidSo we're not talking about a few permits slipping. We're talking about entire buildings that just never broke ground.

JordynThat's the picture RAND is painting, yeah. The kind of drop that shows up in skylines, not just spreadsheets.

DavidOkay. That lands.

JordynIt's the difference between fewer permits filed and buildings that don't exist.

DavidSame number, worse mental image.

JordynSo that's the ammunition. That's the report everyone waves around when they say the tax needs fixing.

DavidRight, but here's what nobody says out loud in the same breath.

JordynWhat's that? While developers are pointing to a 30% construction drop, the tax itself is still hauling in real money.

DavidHow much are we talking?

JordynMeasure ULA has generated $1.2 billion in gross revenue since it started.

DavidWait, billion with a B?

JordynBillion. So you've got this tax that's simultaneously the villain crushing apartment construction, and a one point two Billion dollar cash machine for the city.

DavidIt's almost funny. You could build a case for taxing this thing harder using the exact same revenue number.

JordynSure, if the goal is city coffers. But that's a completely different argument than the one builders are making about construction.

DavidBoth things being true is exactly why this fight has dragged on for Three Years.

JordynNobody wants to kill the golden goose, they just want it to stop pecking them.

DavidSure, but Somebody has to eat the loss if the rate drops.

JordynAnd that's the tension the whole Ad Hoc Committee's been sitting inside.

DavidThe RAND Corporation number gives cover to anyone who wants relief.

JordynExactly. It's the headline stat. It's the thing you quote when you want sympathy for builders.

DavidBut it doesn't say anything about single family sellers.

JordynNo, it doesn't. It's a construction study.

DavidSo who actually walks away using that RAND number as their justification?

JordynOkay, David, this is the part.

DavidGo.

JordynThe committee takes that 30% construction stat, a stat about apartment buildings, and uses it to justify a pilot that only touches apartment buildings.

DavidHuh.

JordynThe committee takes that 30% construction stat, a stat about apartment buildings, and uses it to justify a pilot that only touches apartment buildings.

DavidHuh.

JordynThe people the whole three-year outcry was supposedly about, sellers sitting on nine-figure estates in the Palisades, in Holmby Hills, they don't show up anywhere in that fix.

DavidWait, so the justification and the beneficiary aren't even the same group?

JordynThey line up on paper. RAND talks construction, the pilot helps construction. Clean story.

DavidBut the actual money, the one point two billion, that's mostly coming from mansion sales, not apartment deals.

JordynRight. And none of those sellers get a rate cut out of this.

DavidSo who qualifies and who's just left standing there?

JordynThat's exactly where we're headed next. So here's who actually gets to touch this 1.5% rate.

DavidNewly built affordable housing projects. That's it. That's the whole list.

JordynNot a fixer in Brentwood, not a widow selling her house of 40 years in the Palisades.

DavidLAist reported it plain. The committee picked the narrower pilot that lowers the transfer tax only for newly brand new affordable construction. Nothing for anyone selling their own home.

JordynSo if you're not pouring concrete for a developer, this vote didn't happen for you.

DavidCorrect.

JordynOkay, but who's actually paying into ULA in the first place? Because I feel like we've been assuming it's mansions.

DavidIt is mansions. A tax advisory breakdown citing Real Deal reporting put single family sales at roughly Fifty-nine% of everything ULA has collected.

JordynWait, Fifty-nine%?

DavidFifty-nine.

JordynSo the majority of the money comes from houses, and the relief goes to apartment builders.

DavidAlmost every reform proposal on the table is targeted commercial or multifamily deals. The group actually funding this thing barely shows up in the conversation.

JordynThat's not an oversight at that point, that's a choice.

DavidIt's a choice.

JordynGreat. Love that for the sellers.

DavidAnd remember, the sellers we're talking about, SmartAsset lays this out, the threshold's five point four million. No carve out for age, no first time seller break, nothing.

JordynNone?

DavidNone.

JordynAnd it's on the full sale price. Not profit, not equity, the whole number on the closing statement. So somebody who bought a house in the Hills in the '90s for 600 grand, sells it for six million-

DavidThey're taxed on the six million. The tax doesn't care what they paid.

JordynThat's brutal.

DavidThat's the current law, not untouched by any of this.

JordynSo even a good faith seller who's just moving on gets treated the same as a flipper?

DavidThe law doesn't ask why you're selling, it just asks what number's on the deed.

JordynOkay, so let's actually put the whole thing together, because I think we just answered our own question from three segments ago.

DavidGo for it.

JordynWe kept asking whether the committee killed mansion relief or just watered it down. It didn't kill anything.

DavidNo.

JordynIt moved the relief off single family sellers on to builders. Same committee, same meeting, completely different winner.

DavidThe sellers who generate the most money get the exact same tax bill they had yesterday.

JordynAnd the builders who weren't writing checks under this thing at anywhere near that scale just got a rate cut handed to them.

DavidWhich, fine, if the goal is more apartments, maybe that's defensible policy, but don't call it mansion tax relief when the mansions didn't get any.

JordynRight. Call it what it is.

DavidSpeaking of people this committee left standing in the same room with nothing.

JordynOh, here we go.

DavidThere's another group from that exact meeting still waiting on an answer. Fire-impacted sellers up in the Palisades.

JordynThe exemption that's supposedly still in discussion?

DavidSame ad hoc committee, same May session, and it's been sitting there before any of this pilot language existed.

JordynSo we've got builders getting a rate, single family sellers getting nothing, and the fire sellers getting a maybe.

DavidA maybe that's been a maybe for months.

JordynSame meeting, same committee. There's a second item on the agenda that never even got to a vote.

DavidSame meeting, same committee. There's a second item on the agenda that never even got to a vote.

JordynWait, another one? What is this? A committee full of unfinished business?

DavidKinda, yeah. Council members had a proposal in front of them for a five-year ULA exemption specifically for Palisades fire sellers. People rebuilding after the fire, trying to sell and get out.

JordynAnd?

DavidThey continued it.

JordynMeaning what exactly? Continued like paused, or continued like buried in a drawer somewhere?

DavidContinued like no decision. Not approved, not rejected. It just sits there for another session.

JordynUgh. Oh, come on. So the builders get relief today, and the fire sellers get a shrug?

DavidThat's the split in a sentence, yeah.

JordynSo if you're a Palisades seller listening to this right now, what do you actually do?

DavidYou wait. Honestly, nothing's changed for you legally. If your sale clears five point four million dollars, you're still on the hook the exact same way you were before this meeting happened.

JordynEven though the whole reason that exemption got proposed was because of what happened to these specific people.

DavidEven though. The proposal exists. It's written down somewhere. It just hasn't moved.

JordynOkay, so builders get relief today. Fire sellers get relief someday, maybe, unspecified. That's the local story.

DavidThat's the local story.

JordynBut ULA reform isn't only a city hall thing, is it? Because I feel like every time we talk about fixing this tax, there's this other conversation happening ninety minutes north.

DavidYou're thinking about Sacramento?

JordynI'm thinking about Sacramento because the council can vote two to one on pilots and exemptions and rates all day long, but none of that touches whether Measure ULA itself is even allowed to keep existing in its current form.

DavidThat's a different fight entirely.

JordynIt is, and it's the one that actually decide whether any of what we just talked about matters five years from now. So let's go there next, because there's a maneuver happening at the state level that could outrank everything City Hall just did in that room. So while a committee's been shrinking its own fix, Sacramento just quietly made the bigger threat disappear.

DavidWait, what threat?

JordynThe Howard Jarvis Taxpayers Association had a statewide initiative ready to gut ULA outright, off the ballot entirely.

DavidEverywhere, and it's just gone?

JordynPulled off November's ballot. There was a deal cut in Sacramento, and a substitute measure, one that needs a two-thirds vote to pass, took its place instead.

DavidTwo-thirds. That's a much higher bar to clear.

JordynExactly, which is the whole point of the swap.

DavidSo somebody traded a live grenade for a measure that's way harder to actually pass.

JordynThink about what that bar actually does. A two-thirds threshold means almost nobody can force a change to ULA at the state level without an overwhelming majority behind them.

DavidSo even if somebody wanted another crack at gutting it next year, they'd need way more votes than a simple majority to actually pull it off.

JordynLAist reports that's basically the shape of it, a deal that took the direct kill shot off the table.

DavidWho's calling this a win?

JordynThe coalition that's been defending ULA. They're framing the initiative's removal as a win for local housing funding, full stop.

DavidOf course they are. Their funding stream just survived a near-death experience.

JordynRight, but notice what didn't happen. Nobody in Sacramento fixed anything for the sellers we've been talking about all summer.

DavidNo, they just made sure the tax itself doesn't get wiped out.

JordynWhich, David, is genuinely the opposite move from what the committee did in May.

DavidHow so?

JordynThe committee carved out relief for one narrow group. Sacramento just protected the whole structure from getting nuked.

DavidTwo totally different fights, same month.

JordynSame tax, though.

DavidYeah. Poor ULA having a busy year.

JordynAt this point, it needs its own publicist.

DavidMaybe that's next year's episode.

JordynAnd that two-thirds wall doesn't just protect Sacramento's version of things. It kinda freezes the whole fight in place, doesn't it?

DavidPretty much. The committee narrowed the relief lane back in May, and now the state just walled off the exit so no future appeal can slip through easily.

JordynSo where does that leave us walking out of this episode?

DavidBuilders got their pilot. It's real, it's on the books, and it's a genuine test case for whether a lower rate changes what gets built.

JordynAnd single-family sellers above five point four?

DavidExactly where they were before any of this started. No committee action, no ballot relief, and now no statewide repeal risk either. The tax just isn't going anywhere for them.

JordynSo if you're sitting on a property in that bracket, nothing about your bill moved this year.

DavidNothing. Only thing that moved was who gets the discount.

JordynAnd that's builders, not you.

DavidFor now, anyway. Sacramento just made sure there's still a tax on the books to argue about instead of no tax left at all.

JordynOkay, so here's where this actually lands. The pilot isn't relief. It's a pipeline. Money that used to just sit in the general fund now gets steered towards specific buildings, specific developers, specific projects the city already wanted built.

DavidAnd zero of it touches the people we've been talking about all summer.

JordynZero. If you're sitting on a place in Bel Air or Holmby Hills worth eight, nine million, your bill this afternoon is identical to your bill in January.

DavidWhich is wild, because for three years, the headlines made it sound like the whole tax was up for grabs.

JordynIt was never up for grabs. It got narrowed until only builders could walk through the door, and everybody else just watched the door close. Okay, David, don't get poetic on me.

DavidNo promises.

JordynAll right, so what do people actually do with this? If you're a listing agent working a Palisades rebuild or a Brentwood estate sale north of five four-

DavidYou plan like nothing changed, because nothing did. Not this month.

JordynEven if your agent tells you otherwise?

DavidEspecially if your agent tells you otherwise.

JordynBrutal, but fair. Okay, that's the episode. New episodes drop every Tuesday, right here.

DavidIf you're not following the show yet, fix that.

JordynAnd if you've got a deal we should know about, a weird escrow, a price cut nobody's talking about, a listing with a story, send it our way.

DavidWe read all of them.

JordynMost of them.

DavidMost of them.

JordynHonestly, the part that gets me isn't the tax. It's that a room full of people spent three years arguing about mansions, and the mansions never even came up for a vote.

DavidThat's it. That's the whole story this week.

JordynSee you Tuesday.