Study presented to LA Health Commission links Measure ULA to drop in multifamily land sales and permits; estimates 1,900 fewer units a year

Shane Phillips, project manager of the Housing Initiative at the Lewis Center for Regional Policy Studies (UCLA Luskin School of Public Affairs), presented research on July 14 indicating that Measure ULA — the city’s progressive real‑estate transfer tax — is associated with a substantial decline in sales of parcels with multifamily redevelopment potential and a corresponding drop in permits for new multifamily units.

Phillips told the Los Angeles City Health Commission that, using assessor and permit data and a difference‑in‑differences approach comparing the City of Los Angeles to similar jurisdictions in Los Angeles County, his team found an excess 52% decline in sales of parcels above the $5 million threshold after Measure ULA’s implementation in April 2023. "What this does say from my perspective is that ULA is reducing sales of parcels that have strong multifamily development potential," Phillips said.

Why it matters: the researchers estimate that the observed decline translates to roughly 1,900 fewer multifamily units permitted per year in Los Angeles among projects not receiving public subsidies; about 170 of those lost units would have been income‑restricted for extremely low income households under local programs. Fewer new units can put upward pressure on rents and prices and reduce housing options at multiple affordability levels.

Key technical points and findings

- Measure ULA basics: Phillips summarized the ordinance’s structure: prior to ULA, most transfers paid a 0.45% tax. Under Measure ULA, transfers between $5,000,000 and $10,000,000 are subject to a 4% tax and transfers above $10,000,000 are subject to a 5.5% tax. Transactions under $5,000,000 remained at 0.45%.

- Data and method: the study used parcel sales data (Commonwealth Land Title/LA County assessor), parcel zoning and multifamily‑eligible parcel identification, entitlement and permit records from the City of Los Angeles, and a comparison group of large LA‑County jurisdictions that did not adopt a similar transfer tax. The researchers linked parcel sales to later building permits to estimate lost production.

- Main results: sales of multifamily‑eligible parcels in the city fell about 50% relative to similar jurisdictions; permitting on those parcels also fell approximately 50%. Conservatively, the researchers estimate an annual shortfall of roughly 1,900 multifamily units produced by unsubsidized developers, of which about 170 would have been income‑restricted units created via existing local subsidy/bonus programs.

- Revenue tradeoffs: officials noted Measure ULA currently raises roughly $300 million a year for affordable housing and related services. Phillips said 6–8% of ULA revenues came from multifamily developments that were sold within 15 years of construction (about $29 million at the time of analysis). The researchers estimate that exempting sales of newly built multifamily projects from ULA would recover more production than the small revenue share contributed by those sales.

Recommendations presented

Phillips recommended exempting sales of multifamily buildings from Measure ULA if the sale occurs within 15 years of project completion, arguing that this change would reduce the disincentive for redevelopment and restore market feasibility for many projects while preserving most ULA revenue that funds affordable housing. He also suggested considering similar exemptions for some commercial and industrial sales given the sector’s headwinds.

Commissioner questions and context

Commissioner Shannon emphasized the city’s unmet need for deeply affordable housing and argued that market‑rate developers historically have not delivered the levels of very‑low‑income units required. She framed Measure ULA as an important revenue source for affordable housing and public costs tied to homelessness. Phillips responded that his findings do not imply Measure ULA is inherently ‘‘bad’’ but that the ordinance’s narrow base and steep rate cliffs are disproportionately discouraging multifamily development by raising acquisition and closing costs and thereby reducing what developers can afford to pay for land.

Other commissioners raised concerns about broader fiscal effects, including how lower transaction volumes can reduce future property‑tax reassessments (under Proposition 13 mechanisms) and regional competitiveness that could shift investment to neighboring jurisdictions. Phillips and colleagues noted those broader fiscal dynamics have been documented elsewhere and said the report focused on the direct link between ULA and multifamily parcel sales and permits.

What the commission did: the presentation was informational; the meeting lacked a quorum and no formal action was taken. Commissioners asked staff to follow up and indicated interest in studying potential policy changes, tradeoffs, and outreach to housing finance stakeholders.

Clarifying details and caveats

Phillips and co‑author Jason Ward emphasized that observed declines overlapped with national headwinds — rising interest rates, higher construction costs, and falling permitting across many U.S. markets — and the study uses a comparison group and multiple analytic approaches to isolate ULA’s effect above those trends. The presenters called their estimates conservative and limited to units produced by unsubsidized developers; they did not claim that ULA eliminated all affordable housing production.

Ending

Commissioners thanked the presenters and discussed next steps, including further analysis of tradeoffs between ULA revenues and lost housing production and potential policy options to preserve affordable‑housing funding while minimizing disincentives for new multifamily construction.