The Los Angeles City Council is advancing a proposal to scale back the city’s “mansion tax,” known as Measure ULA.

In a 9-to-5 vote, the council directed the city attorney to draft a November ballot measure that would exempt new multifamily buildings from the transfer tax if they are sold within 10 years of construction.

Enacted in April 2023, Measure ULA imposes a 4% tax on property sales above $5.3 million and 5.5% on sales over $10.6 million.

Opponents argue the tax has severely hampered multifamily development, with a RAND Corporation study finding it reduced large multifamily projects by 30%.

While the tax has raised over $1 billion for affordable housing, this is less than half of the initial projections.

The proposed amendment aims to spur new housing construction by removing this significant cost barrier for developers, addressing concerns that the tax has worsened the city’s housing affordability crisis by suppressing supply.