"The math ain't mathing, said Chris Tourtellote, managing director at Marina Del Rey-based LaTerra Development, on developing new apartment buildings in the City of Los Angeles. That sums up the seeming political impetus for a state bill that is eligible for a floor vote today after 11 p.m., which could relax the transfer taxes as outlined in United to House LA measure, aka Measure ULA. You build for $100 million, sell it for $105 million and pay $5.5 million in taxes, he said."
"The tax should be on your profit, not on your sale price. It makes it tough in a city that already has high development impact fees and affordability requirements, and even construction costs are higher and interest rates are higher. In order to side step hefty tax bills via Measure ULA after building and then selling a new development, LaTerra is pursuing development in cities in California and elsewhere that are not subject to the mansion tax."
"California obviously already has a housing crisis, Burton said. Los Angeles has a housing crisis, and this tax is exacerbating it. We haven't been focused on L.A. because of ULA, he said. The one exception is a project that has been in the works since 2021: Cityview's 489-unit 6136 West Manchester Avenue, which received City Council approval in May. The eight-story, 489-unit project is expected to break ground in 2026 and be complete in late 2028."
Developers say Measure ULA’s transfer tax, applied to sale price rather than profit, makes Los Angeles apartment development financially difficult. High development impact fees, affordability requirements, rising construction costs, and higher interest rates compound the burden. LaTerra and Cityview report shifting or focusing development outside Los Angeles to avoid the mansion tax, targeting cities such as Burbank, San Diego, Orange County, and Riverside. Cityview maintains one approved Los Angeles project expected to break ground in 2026 and complete in 2028. Developers say L.A. development only works with favorable land, above-grade parking, and the ability to capture high rents.
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