The Measure ULA Citizen Oversight Committee voted Thursday to advance a package of developer tax breaks on newly constructed housing, despite growing evidence undermining the case for those concessions. The proposal passed without changes and now heads to the Los Angeles City Council.
The incentives are meant to address claims that Measure ULA, the voter-approved transfer tax that has raised more than $1.4 billion since 2023 for affordable housing, homelessness prevention, and tenant protections, is discouraging housing construction. But researchers have challenged studies blaming ULA for slowing development, while recent data show increases in multifamily property transactions, building permits, and housing starts.
The framework approved by the committee is far narrower than the sweeping exemptions originally proposed by Councilmember Nithya Raman. Her proposal would have exempted newly constructed or substantially renovated apartment buildings, commercial properties, and mixed-use developments from Measure ULA for 15 years. The compromise instead establishes a five-year pilot program offering reduced ULA tax rates or full exemptions on the first qualifying sale of newly constructed residential properties within 10 years of receiving a certificate of occupancy. The size of the tax break would depend on the affordable housing, labor protections, and anti-displacement benefits developers provide. Projects meeting the highest requirements could avoid the tax entirely.
The United to House LA coalition has accepted this more limited approach. But even these narrower concessions are difficult to justify when the research increasingly undermines the claim that ULA is discouraging housing construction.
The compromise is the latest chapter in a fight that started almost immediately after Los Angeles voters approved Measure ULA with 57.8% of the vote in November 2022. Since the tax took effect in April 2023, real estate interests have repeatedly blamed it for slowing property sales and discouraging construction. Elected officials have followed developers’ lead, pursuing proposals to exempt newly constructed housing.
But the evidence behind those claims has come under increasing scrutiny. As Mar Vista Voice previously reported, a widely cited UCLA Lewis Center study became central to the campaign to weaken ULA despite serious questions about its methodology and conclusions. A September 2025 critique by researchers affiliated with UCLA, USC, and Occidental College challenged the study’s approach, including its treatment of broader economic conditions.
In April 2026, researchers Greg Bonett and Madeline Wander reexamined the UCLA study’s data and code and found that its authors had effectively confused a decline in average project size with a decline in the number of homes being permitted. Their analysis found no meaningful monthly decline in permitted housing units in the study sample, undermining a central finding used to argue that ULA was suppressing construction.
A separate analysis by BAE Urban Economics looked at whether ULA actually made housing projects financially harder to build. It found that eliminating the tax generally made little difference to whether projects were viable. Developments that couldn’t pencil out with ULA were typically infeasible without it, while projects that were already viable generally didn’t need an exemption to move forward. The biggest effects were on developers looking to quickly flip newly constructed properties for a profit. But discouraging that kind of speculation isn’t a problem the city needs to solve by handing out tax breaks.
Recent market data also undercut the idea that ULA has brought housing development to a halt. As Mar Vista Voice reported in December 2025, residential construction permits increased 60% in the third quarter of 2025 compared with the previous year, while housing entitlements rose 52% between 2022 and 2024. Developers also submitted applications or pre-applications for more than 16,600 homes during the first six months of the city’s new housing incentive program. Residential permits then increased another 30% year over year in the fourth quarter of 2025.
None of these figures alone settles the debate over ULA’s effects. But taken together with the newer research, they raise serious questions about the case for weakening the tax. City officials have nevertheless continued proposing exemptions, leading to the compromise approved Thursday.
The proposed program offers three tiers of tax breaks:
The first tier would reduce ULA’s current rates of 4% and 5.5% to 2% and 3% for qualifying transactions. Developers would generally have to reserve 8% of units for extremely low-income households, 11% for very low-income households, or 20% for low-income households, or meet another qualifying affordability standard. Protections against the loss of existing affordable housing would also apply.
The second tier would lower the rates further, to 1% and 1.5%, for projects meeting additional requirements, including prevailing wages and replacement of demolished protected housing. Certain majority-affordable developments in high-market areas could qualify through an alternative pathway.
The third tier would provide a full exemption from ULA for projects that reserve at least half their units for households earning up to 80% of area median income and meet additional labor and anti-displacement requirements. These include prevailing wages, replacing demolished protected units at a 10-to-1 ratio, restrictions on demolishing 12 or more recently occupied rent-stabilized units, and project labor agreements for buildings over 85 feet tall.
But what counts as “affordable” deserves a closer look. Under LA’s 2026 income limits, a single person earning as much as $93,300 a year, or a family of four earning $133,250, can qualify for housing designated for households earning up to 80% of area median income. By comparison, someone working full-time at the $18.42 minimum wage earns just $38,314 a year before taxes and can afford about $958 a month in rent and utilities without spending more than 30% of their income on housing. An apartment that meets the program’s affordability requirements could still be far beyond that worker’s reach.
Some of the proposed incentives require housing for people at much lower income levels. But under the highest tier, developers could qualify for a complete ULA exemption without reserving a single unit for extremely low-income residents. That’s a significant concession for a tax intended to address the city’s housing affordability crisis.
And these tax breaks come at the expense of the very programs ULA was created to fund. Every dollar developers save under the exemptions is a dollar that won’t go toward ULA-funded housing and tenant protections. On a $30 million property sale, the current 5.5% rate would generate $1.65 million for ULA. A developer qualifying for the third tier could pay no ULA tax at all, resulting in $1.65 million in foregone revenue. To receive that exemption, the developer would have to reserve at least half the units for households earning up to 80% of area median income and meet the other requirements, even though those affordable units could still be out of reach for many of the city’s lowest-income residents.
That money could otherwise help fund affordable housing development and preservation, eviction prevention, and programs that keep people in their homes. So the question isn’t simply whether developers are offering something in exchange for a tax break. It’s whether those benefits are worth diverting money from programs already serving people struggling with housing costs.
There’s also the question of whether the incentives will actually change what gets built. Developers could receive exemptions for projects they were already planning to build, leaving the city with less revenue and no additional housing to show for it. In other cases, a tax break might make a project financially viable or persuade developers to include more affordable units and stronger protections.
The city needs to distinguish between those outcomes rather than counting every project receiving a tax break as a success. LAHD proposes evaluating the pilot based on its effects on housing construction, property transactions, and ULA-funded programs before deciding whether to continue, modify, or end it. That’s especially important given how much of the original case against ULA has been called into question.
The committee also approved a separate package of technical amendments to Measure ULA, addressing issues including nonprofit ownership structures, affordability covenants, and certain property transfers. Both packages passed without amendments and now advance to the City Council, which will decide whether to adopt them.
The Council will now decide whether to approve the incentives, and with them, a reduction in revenue voters specifically dedicated to affordable housing and tenant protections. The committee’s approval does not resolve the central question of whether those concessions are necessary. With research challenging the claims used to justify developer exemptions, the burden should be on proponents to demonstrate that the tax breaks will produce housing that otherwise would not be built, rather than simply rewarding projects that would have moved forward anyway.