Just days after the Los Angeles City Council voted to move forward with plans to weaken Measure ULA locally, a new proposal in Sacramento has opened another front in the battle over the city’s largest dedicated source of affordable housing funding.
On Tuesday, supporters of United to House LA sounded the alarm over AB 736, legislation that would limit the transfer taxes cities can impose on high-value real estate transactions. According to the coalition, the bill would effectively reduce LA’s highest ULA tax rate from 5.5 percent to 1.5 percent for most commercial and multifamily properties, eliminating more than $300 million annually that would otherwise go toward affordable housing construction, tenant protections, rental assistance, and homelessness prevention programs.
The proposal arrives at a moment when Measure ULA is already facing growing political pressure. Earlier this month, City Council voted to pursue a ballot measure that would exempt newly constructed apartment and mixed-use residential buildings from the tax during their first ten years. That proposal has been promoted as a way to encourage housing production, but a recent Housing Department analysis found that the exemptions could come at a significant cost. Depending on how broadly they are structured, the city estimates they could result in hundreds fewer affordable homes built each year, thousands fewer households receiving rental assistance or eviction defense, and major reductions in funding for programs designed to keep low-income residents housed.
AB 736 would go much further. Rather than carving out a specific category of projects, the legislation would reduce the transfer taxes that cities can levy on many of the real estate transactions that currently generate ULA revenue. United to House LA estimates the resulting loss would translate into roughly 500 fewer affordable homes built annually, more than 2,000 affordable homes preserved, 1,350 fewer households receiving rental assistance, 1,700 fewer seniors and disabled residents receiving income support, and 3,000 fewer households receiving full-scope legal representation in eviction cases.
For supporters of the measure, the bill is the latest step in a years-long campaign to dismantle ULA after voters approved it in 2022. The tax was created as a dedicated funding source for affordable housing and homelessness prevention and applies only to the city’s largest real estate transactions. Since taking effect in 2023, it has generated more than $1 billion for programs ranging from emergency rental assistance and eviction defense to affordable housing production and preservation.
The political argument against ULA has increasingly centered on claims that the tax discourages development. That narrative has become so dominant that it was the subject of a recently released media analysis by University of Northern Iowa journalism professor Christopher Martin. After reviewing three years of coverage from the LA Times and LAist, Martin concluded that reporting on ULA shifted away from questions of homelessness and housing affordability and toward claims that the measure was reducing development and needed to be reformed. The report argues that those narratives persisted even after subsequent studies challenged the evidence behind them.
That debate is no longer confined to academic papers, campaign mailers, or City Hall committee meetings. In recent weeks, it has produced concrete proposals that could substantially reduce the amount of money available for affordable housing and tenant protections. At the same time, anti-tax and real estate groups continue backing a statewide ballot measure that could invalidate ULA and similar local transfer taxes altogether.
Taken together, the local exemption proposal, the statewide repeal effort, and now AB 736 represent the most significant challenge Measure ULA has faced since voters approved it nearly four years ago. While the individual proposals differ, they point in the same direction. Each would reduce the revenue available for the affordable housing and homelessness prevention programs that ULA was created to fund.