The Los Angeles City Council approved a $150 million expenditure plan for revenue from its ‘mansion tax’ to go toward programs targeting housing issues in the city.
Los Angeles residents approved Measure ULA, dubbed the ‘mansion tax’, in November, placing a 4% property sales tax on residential and commercial real estate valued at over $5 million. Since April, the voter-approved measure has raised $55 million. The city can only spend the revenue as it trickles in, meaning until the tax brings in $150 million, they can't spend the designated amount.
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The City Council voted Tuesday to allocate those funds to six different programs aimed at helping ease the housing crisis in the city, from rental assistance to homelessness prevention programs.
The tax revenue will assist with eviction defense, putting $23 million toward the effort, and another $23 million will be spent on affordable housing support for seniors. $18.4 million will go toward rent debt aid.
The first program to launch will be for emergency rental assistance, opening in less than a month on Sept. 19.
Housing activists attended the Tuesday meeting to push the message that housing is a human right, urging for more programs to help with eviction defense and tenant outreach.
Early revenue predictions estimated the mansion tax would bring in $900 million a year for housing subsidies and tenant programs. However, the Los Angeles luxury housing market froze, experiencing a 24% drop in sales compared with numbers a year ago, according to Redfin. As a result, Los Angeles Mayor Karen Bass changed tax projections to $150 million in her $13.1 billion budget plan.
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The measure is currently in legal limbo, with a Los Angeles judge determining two lawsuits brought against the property tax should be consolidated into one. The lawsuit alleges the tax is unconstitutional and violates Proposition 13 under the California Constitution.
A 2024 ballot measure also puts the mansion tax in jeopardy. It would require all taxes passed by the legislature to be approved by two-thirds of voters. The proposed ballot measure, the Taxpayer Protection and Government Accountability Act, would give Los Angeles voters a say in local special tax increases.