AAGLA, Howard Jarvis Association Challenge Measure ULA

by John Carlucci - December 22, 2022


Apartment Association of Greater Los Angeles president Dan Yukelson (LinkedIn, Getty)
Apartment Association of Greater Los Angeles president Dan Yukelson (LinkedIn, Getty)

Landlord advocacy group Apartment Association of Greater Los Angeles has joined with a nonprofit tax policy lobbying group to file the first legal challenge to Measure ULA, the controversial new City of L.A. transfer tax measure.

“Measure ULA is invalid,” argues the complaint, which was filed on Thursday in L.A. County court.

“If the Measure ULA tax increase is imposed as scheduled on April 1, 2023, great and irreparable harm will result to plaintiffs, and to all Los Angeles property owners in being required to pay unconstitutionally imposed taxes,” the lawsuit states.

The legal challenge hinges on the new tax’s stated allocation: While some transfer taxes have been permitted in California charter cities, the complaint says, “transfer taxes that are ‘special taxes,’ however, are prohibited for all local governments.” It goes on to argue that Measure ULA is actually a special tax because the revenue it would generate is “specifically dedicated to housing and homeless services.”

To the proposal’s supporters, that was the whole point: The transfer tax, which passed with voters by a wide margin, is intended to alleviate the city’s seemingly intractable homelessness crisis by raising a substantial new revenue source. Backers argue it will raise as much as $1 billion annually. After it passed, some supporters praised it as “the largest housing ballot measure in American history.”

The measure, often called a mansion tax, was backed by a coalition of labor and community groups. It applies to all property sales in Los Angeles above a $5 million threshold. It imposes a 4 percent tax on deals between $5 million and $10 million, with the tax rising to 5.5 percent on deals above $10 million.

Yet while some affordable housing developers have been celebrating, many real estate players, including luxury brokers, have bitterly opposed the new tax, arguing it will not only cool residential and commercial sales but also backfire by actually stifling housing development. Some also took particular issue with the measure’s failure to account for a given property deal’s net profit or loss — the way the law is written a homeowner who sells a house for $5 million pays the same transfer tax whether he bought the home for $3 million or $10 million.

“The real issue is that this was not thought out by rational businesspeople, and it defies common sense and basic logic,” one email, from the luxury broker Stephen Shapiro, said this fall. Shapiro added in an interview, “Let’s call it the ‘Let’s get the rich movement. It’s so ill-conceived.”

“It is a major threat,” Dan Yukelson, the executive director of AAGLA — whose name is now on the legal complaint — said in October, before the measure passed. “It sounds great. It’s a great rallying cry for voters. ‘We’re going to take all this money from rich people and help the homeless.’ In the long run, this is going to come back and bite us in the ass.”

With the tax’s April implementation looming, some residential and commercial brokers are advising clients to sell now to avoid it, while other brokers and property owners have been pondering more dubious methods, such as agreeing to a sale price just under $5 million but separately selling the home’s furniture.

Some developers have frozen projects, concluding that the extra tax means their plans will no longer pencil.

The Howard Jarvis Taxpayers Foundation joined AAGLA as a plaintiff in the lawsuit. The 65-page complaint demands the City of L.A. invalidate the measure and pay the plaintiffs’ legal fees.

The City Attorney’s Office declined to comment.



Source link

MOST RECENT
Office Sector to Continue Shifting in 2023 – Commercial Property Executive
The office sector’s future remains uncertain nearly three years after the pandemic disrupted the industry. Although some companies became more ...
Lawsuit to overturn Huizar-approved permits goes to court
AIDS Healthcare Foundation’s Jonathan Eisenberg (NBCLA, Getty, Works Progress Architecture) A legal challenge at the state’s highest court could imperil ...
Singer-songwriter Ty Segall settles into a Topanga treehouse
Garage-rock artist Ty Segall is parking himself in the hills of Topanga, where he’s bought an architectural treehouse for $1.3 ...
What Lies Ahead for the Office Sector in 2023 – Commercial Property Executive
Image by alvarez/iStockphoto.com The past year brought many changes to the office sector, largely dictated by shifting work model strategies ...
Herbalife’s Dick Marconi lists animal-filled retreat for $23 million
For the last three decades, Dick Marconi has been crafting a private paradise in the hills of San Juan Capistrano, ...
1 2 3 173
logo
Prudential Cal strives to provide the most detailed information about the real estate industry. We assist people in making the best decisions possible by offering unique insights into the global real estate market and advice for both homebuyers and sellers.
Quicklinks
Additional Information
Copyright © 2023 Prudential Cal. All Rights Reserved.
DMCA.com Protection Status
linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram