Measure ULA is reducing apartment development in the city of L.A, report says
The study, from researchers at UCLA and Rand, focuses on Measure ULA — a voter-approved law that took effect in spring 2023. Though dubbed the mansion tax, the measure applies a 4% levy to nearly all property sales in the city over about $5 million, including apartment buildings, mini-malls and warehouses, and a 5.5% charge to sales above about $10 million.
In doing so, the real estate industry has argued that the additional costs to the buying and selling of land have made it too difficult to earn a profit on many new housing developments, thus killing potential deals.
The study released Friday supports that view, with authors basing their findings on a drop-off in sales of property where multifamily homes are typically built.
In all, researchers estimated ULA is causing a reduction of at least 1,910 units per year. Because apartments in the city often are built using density bonuses that require private developers to include some income-restricted housing, there's also been a reduction of at least 168 affordable units annually, the report said.
'If we are building less housing, then the city is going to become even more unaffordable,' said co-author Shane Phillips, the housing initiative project manager with UCLA's Lewis Center for Regional Policy Studies.
Los Angeles is not the only city where construction has fallen. Permits for new housing are down across the nation, as higher interest rates and material costs make it more difficult for developers to turn a profit.
ULA supporters have pointed to those rising costs to argue the measure isn't having the negative impact its real estate industry critics claim.
Report authors attempted to adjust for that dynamic by comparing land sales in the city of L.A. to other areas in the county where transfer taxes were not increased. They found land sales dropped much more in the city, and used the difference to come up with their estimate of lost units attributable to only ULA.
In a statement, Joe Donlin, director of the United to House LA coalition behind the tax, said the report was based on 'highly questionable assumptions' and furthered the interests of 'real estate millionaires and billionaires.'
ULA backers have said in addition to interest rates, declining property sales may be attributed to some investors waiting it out while the real estate industry fights, so far unsuccessfully, to overturn ULA in court. They tout positive impacts the measure has brought.
In all, city data show the tax has raised nearly $633 million within two years. And the ULA coalition has said the has funded rental assistance for 11,000 Angelenos, paid for eviction defense and contributed money to the construction of 795 affordable homes.
ULA 'has survived court challenges and referendum attempts from the real estate industry, and now, it's the largest source of affordable housing funding Los Angeles has ever seen,' Donlin said.
However, Rand economist Jason Ward, who also authored the report, said the measure is hurting overall housing construction in several ways by extending beyond luxury home sales.
One, it reduces the number of land owners who want to sell in the first place, thus limiting opportunities to build. And many multifamily developers sell their projects to other investors after finishing construction, and would impacted by the tax again when doing so.
Even if developers plan to hold on to their new apartment buildings, they have mortgages on the property, and Ward said lenders must factor in the cost of a sale if the developer falls into foreclosure.
'They are going to either give you less money or give you money at a higher interest rate,' said Ward, co-director of Rand's Center on Housing and Homelessness.
Ward and Phillips called for changes to the measure to limit its potential negative effects.
Not only do economists say that a reduction in market rate housing leads to higher rents, but the researchers argued that in the long run ULA will lead to a net loss in affordable units, as private developers of density bonus projects back away and ULA money isn't enough to back fill the hole.
The 795 affordable units cited by the coalition, for example, only received a minority share of funds from ULA, with other sources making up most of the project costs. Some projects had also already started construction before receiving ULA funds and needed more cash to finish after they experienced cost overruns.
Phillips and Ward said that while ULA likely sped up the construction of 795 units, those homes probably would have been built eventually as other sources were cobbled together and that more affordable units would be built without ULA.
To ensure more housing is built, the report recommended exempting from ULA multifamily projects built within in the last 15 years, which the authors say would only reduce annual ULA revenue by 8% at the most.
'Negative outcomes are not inevitable,' the report reads, in calling for change.
The UCLA-Rand analysis follows a study released last week that found declining sales it attributed to ULA have led to a $25-million annual loss in property tax revenue, which will compound in coming years.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
18 hours ago
- Yahoo
Trump Team Pissed as L.A. Juries Refuse to Indict ICE Protesters
It seems the city that rose up to protect its neighbors from Immigration and Customs Enforcement is similarly protective of its protesters—especially when they're being tried on trumped-up charges. Donald Trump's federal prosecutor in Los Angeles is struggling to get indictments for protesters arrested in anti-ICE demonstrations earlier this summer, the Los Angeles Times reported. Grand jury indictments only require probable cause that a crime has been committed—a lower bar than the standard for a criminal conviction. And even so, out of the 38 felony cases filed by Trump-appointed U.S. Attorney Bill Essayli, only seven have resulted in indictments. In a recent case, the grand jury refused to indict a protester accused of attacking federal law enforcement officials. And Trump's prosecutor was not happy: The Times described 'screaming' that was 'audible' from outside the grand jury room coming from Essayli. According to legal experts interviewed by the Times, it's incredibly rare that a grand jury wouldn't indict in cases like these—which indicates weak cases brought by an attorney whose goal may be to promote Trump's anti-immigration agenda rather than go after real crime. Meghan Blanco, a former federal prosecutor in L.A., said the cases are 'not deserving of prosecution.' Some may have even been based on faulty intel from ICE agents, the supposed victims of the alleged crimes. Either 'what is being alleged isn't a federal crime, or it simply did not happen,' she told the Times. In June, thousands of Angelenos took to the streets to protest ICE raids that saw the federal anti-immigration officers arresting people attending mandatory check-ins at a federal building and snatching people from Home Depot. Though the protests were largely peaceful, some escalated as ICE and the Los Angeles Police Department used tear gas and 'less-lethal' munitions on the crowd. Community organizer and protester Ron Gochez said at the time that it was 'brutal violence' but that 'what they didn't think was going to happen was that the people would resist.' To the Times, former prosecutor Carley Palmer said that Essayli's struggle to get his cases through was 'a strong indication that the priorities of the prosecutor's office are out of sync with the priorities of the general community.' Yet again, the Trump administration has likely underestimated L.A. residents' appetite for resistance.
Los Angeles Times
2 days ago
- Los Angeles Times
We may not have flying cars, but more food delivery bots are coming to L.A.
The robot invasion is coming to your neighborhood. Coco Robotics, a startup born on the UCLA campus, is about to carpet-bomb the city with hundreds of additional adorable delivery bots recently enhanced with some of the same AI that powers ChatGPT. The company has been testing bots around the city for years, and it is at last confident enough in its technology that it plans to grow tenfold in the coming year, adding 9,000 bots to its current fleet of around 1,000 across the country. Residents of Silver Lake — one of the neighborhoods most recently occupied by delivery bots from Coco and others — give the rolling bots mixed reviews so far. This spring, Coco deployed around 10 food delivery robots to serve the neighborhood's restaurants and residents. The pink, rounded machines represent the latest expansion for a company that started as a dorm room project at UCLA in 2020 and now operates hundreds of robots from Santa Monica to downtown. Silver Lake residents and retailers say their new neighbors are amusing and sometimes annoying. On one of Silver Lake's many hillside streets, a robot delivering a burger from the Window took an unexpected route. Instead of following the most direct path, it turned up a steep hill and tried to climb some stairs before getting stuck. The machine sat motionless while somewhere a customer waited for lunch that would never arrive. 'The robot would've just stayed there forever if I did not cancel,' a former Silver Lake resident said in an interview on Reddit describing how a five-minute delivery turned into a comedy of errors. 'I went without lunch.' Coco chooses neighborhoods based on density, prioritizing areas with restaurants clustered together and short delivery distances as well as places where parking is difficult. 'We wanted to create this vehicle that's very enjoyable for the merchants to use,' said Zach Rash, Coco's co-founder. 'It can deliver a lot of their orders without making our cities more congested, without taking up parking spaces or adding more cars to the road.' He wouldn't share which neighborhoods will be next but asked that people be patient with the bots. They get lost and stuck more often in places they are still getting to know, Rash said. 'With new neighborhoods, that's going to happen more often than our more mature neighborhoods, because we're still finding all the details of the area,' he said. Benjamin Attwell remembers the morning it began. He was working at MidEast Tacos, an Armenian-Mexican fusion restaurant, when six robots were unloaded from a truck on the corner of Maltman Avenue and Sunset Boulevard. He found them fascinating and endearing. He even made TikTok videos of them with music. 'I think it's actually quite a nice addition' to the neighborhood, he said. 'Makes me feel like we're living in the future.' The robots are designed to inspire affection. With their rounded edges and compact bodies, they navigate the neighborhood like cyber pets, stopping for pedestrians and maneuvering around obstacles. The neighborhood has already adopted them like local mascots, Attwell said. 'People kind of treat them almost like their dogs,' he said. 'Kids really like them.' Attwell has his own way to bond with the bots. 'I always pat them on the head for some reason,' he said. 'I don't know why, but I find them adorable.' Kreation Organic, a health-focused cafe that started using Coco robots in April, said they have been good for business. Senior operations manager Jefferson Noe Ortiz said robot deliveries have increased sales as families are drawn to the novelty. The restaurant handles about five robot deliveries per day. Ortiz expects that number to rise. The bots are more polite than the delivery drivers Ortiz deals with daily. 'DoorDash drivers and delivery drivers are sometimes knuckleheads' and tough to deal with, he said. 'The robot is convenient, it doesn't talk back or anything.' Bob Timmermann, a retired librarian, used a robot to send doughnuts to his former colleagues at the Los Angeles Central Library. The process was straightforward: Order through Uber Eats, watch the robot's progress on the app, then unlock the cargo compartment with a phone code when it arrived. 'It was probably easier in the morning commute time to use a robot than a car or scooter,' Timmermann said. Not every delivery goes smoothly. One Silver Lake restaurant worker recalled seeing the robots 'glitching out in intersections,' causing traffic and rolling off curbs, falling over on their sides. 'The future is a lot dumber than I thought it would be,' the worker said. Some people in the neighborhood see the bots as unfair competition. Food delivery driver Julia Roggiero works mostly in West Hollywood and Silver Lake and says she has already noticed an impact. She used to get five or six delivery requests an hour. 'Now, even when I'm in these areas like Santa Monica or Venice, it takes me an hour to get one or two, maximum three,' she said. Roggiero has responded by diversifying into Lyft rides, but the shift represents a broader trend that worries gig economy workers. 'They do deliveries that we can do, so they are taking our income,' she said. Rash says robots aren't necessarily displacing human drivers. 'We have way more demand than we can handle right now,' he said. 'The delivery market is enormous.' Rash says the bots focus on the shortest trips while leaving longer, more lucrative deliveries to human drivers. Coco operates more than 1,000 robots across multiple cities, spanning from Santa Monica and Venice through West L.A., Westwood, Mid-City, West Hollywood, Hollywood, Echo Park, Silver Lake, downtown, Koreatown and the USC area. With more than half a million deliveries completed and millions of miles driven, Coco is targeting 10,000 robots in production next year, a number Rash says would be 'probably five to 10 times bigger than any other autonomous vehicle fleet.' 'We are the cheapest way to deliver anything in a city today, and we can do that profitably,' Rash said. The company makes money through platforms such as Uber Eats for completing orders, direct payments from merchants for deliveries, and leasing parts of the fleet to restaurants and advertising services. But the economic concerns remain real for workers. Eric Ernst, an occasional Instacart delivery driver, says he doesn't want his food delivered by a robot because it has to be taking work away from a human. 'It's neat, you know, it's cool. This is like 'The Jetsons,'' he said. 'But, you know, that's a cartoon.'
Los Angeles Times
2 days ago
- Los Angeles Times
Group seeks to repeal L.A.'s $800-million business tax, citing ‘anti-job climate'
A group of business leaders submitted paperwork on Wednesday for a ballot measure that would repeal Los Angeles' gross receipts tax, delivering some financial relief to local employers but also punching an $800-million hole in the city budget. The proposed measure, called the 'Los Angeles Cost of Living Relief Initiative,' would strip away a tax imposed on a vast array of businesses: entertainment companies, child care providers, law firms, accountants, health care businesses, nightclubs, delivery companies and many others, according to the group that submitted it. Backers said that repealing a tax long reviled by the business community would help address the city's economic woes, creating jobs, allowing businesses to stay in the city and making the economy 'more affordable for all Angelenos.' 'This initiative is the result of the business community uniting to fight the anti-job climate at City Hall,' said Nella McOsker, president and CEO of the Central City Assn., a downtown-based business group. McOsker, one of five business leaders who signed the ballot proposal, said city officials have 'ignored the pleas of small- and medium-sized businesses for years.' As a result, scores of restaurants and other establishments, including the Mayan Theater, are closing, she said. The filing of the ballot proposal immediately set off alarms at City Hall, where officials recently signed off on a plan to lay off hundreds of city workers in an attempt to balance this year's budget. The city's business tax generates more than $800 million annually for the general fund — the part of the budget that pays for police patrols, firefighters, paramedic response and other core services. 'Public safety is almost exclusively paid for by the general fund,' said City Administrative Officer Matt Szabo, in an email to The Times. 'This measure is an assault on public safety. Proponents of this measure will be directly responsible for cutting police or fire staffing in half if it passes.' McOsker, asked about L.A.'s financial woes, said the city had a $1-billion shortfall this year and still succeeded in balancing the budget. She is the daughter of City Councilmember Tim McOsker, who sits on the five-member budget committee. The proposed measure is backed by executives and board members with various groups, including the Los Angeles Area Chamber of Commerce, the Greater San Fernando Valley Chamber of Commerce and VICA, the Valley Industry and Commerce Assn. VICA president Stuart Waldman said the city's economy has faltered amid a spate of increased taxes, higher city fees and new regulations. The most recent, he said, is the ordinance hiking the minimum wage for hotel employees and workers at Los Angeles International Airport to $30 per hour by 2028, which was approved by the City Council over objections from business leaders. 'We're usually playing defense,' said Waldman, who also signed the ballot proposal. 'We've decided the time has come to play offense.' The business tax proposal is part of a larger ballot battle being waged this year between businesses and organized labor. Last month, a group of airlines and hotel industry organizations turned in about 140,000 signatures for a proposed ballot measure aimed at overturning the newly approved hotel and LAX minimum wage. L.A. County election officials are currently verifying those signatures. Unite Here Local 11, which represents hotel employees, responded with its own package of counter measures. One would require a citywide election on the construction or expansion of hotels, sports stadiums, concert halls and other venues. Another would hike the minimum wage for all workers in the city, raising it to the level of hotel and airport employees. Two other measures from Unite Here take aim at companies that pay their CEOs more than a hundred times their median employee in L.A., either by forcing them to pay higher business taxes or by placing limitations on their use of city property. The ongoing ballot battle is 'escalating in ways that are reckless and disconnected from the real work of running a city,' said Councilmember Katy Yaroslavsky, who heads the council's budget committee. Yaroslavsky, in a statement, said the fight is 'unproductive and needs to stop.' 'We just closed a billion-dollar budget gap, and basic services are already severely strained,' she said. 'You don't fix that by removing one of our largest revenue sources with no plan to replace it. We have to fix what is broken and that requires working together to offer real solutions.' Josue Marcus, spokesperson for the Los Angeles City Clerk, said proponents of the latest ballot measure would need to gather about 140,000 valid signatures for it to qualify. The next city election is in June 2026. McOsker, for her part, said she believes that state law sets a lower threshold — only 44,000 — for measures that result in the elimination of taxes. Industry leaders have long decried L.A.'s business tax, which is levied not on profits but on the gross receipts that are brought in — even where an enterprise suffers financial losses. Former Mayor Eric Garcetti argued for eliminating the tax more than a decade ago, saying it puts the city's economy at a competitive disadvantage. Once in office, he only managed to scale it back, amid concerns that an outright repeal would trigger cuts to city services. Organizers of the latest proposal said it would not rescind business taxes on the sale of cannabis or medical marijuana, which were separately approved by voters.
