When Measure ULA passed in 2022, it was widely marketed to voters as a “mansion tax.” The prevailing narrative suggested the measure would primarily affect luxury single-family home sales, placing a surcharge on high-end residential transactions to fund affordable housing and homelessness programs.

In practice, Measure ULA operates very differently.

Rather than targeting a specific asset class, the tax applies broadly to all real estate sales above $5.15M, including multifamily, office, retail, industrial, land, and luxury residential properties. Since taking effect in April 2023, Measure ULA has materially altered transaction dynamics across the Los Angeles real estate market, particularly for larger commercial and multifamily assets where deal sizes routinely exceed the threshold.

While much of the conversation has focused on reduced transaction volume and pricing pressure, a more pressing question for owners and investors has emerged. How is the city actually deploying Measure ULA funds, and what does that spending signal about the long-term policy environment surrounding Los Angeles real estate?

Recent reporting from CoStar provides a clearer view.

Where Measure ULA Dollars Are Being Deployed

Since implementation, Measure ULA has generated more than $830M for housing and homelessness programs, according to city data. A portion of those funds is now being deployed through the city’s Affordable Housing Accelerator Fund, which is designed to restart projects that stalled due to financing gaps.

In November, developers broke ground on 2 affordable housing projects that relied on Measure ULA funding. One is Alveare, a 303-unit downtown Los Angeles development, which received approximately $11M toward a $72M construction budget. The other is Grace Villas, a 48-unit affordable housing project in Lincoln Heights, which received $7M toward a $47M total cost.

Together, these projects are part of a group of 9 developments totaling 795 units that have moved forward with roughly $54M from the accelerator fund. City officials view these groundbreakings as evidence that Measure ULA is translating into on-the-ground housing production rather than remaining an abstract policy tool.

The city has also opened its largest affordable housing funding round to date, a $376M pool, a sharp increase from the roughly $50M typical of prior years before Measure ULA took effect.

The Economics Behind Affordable Housing Projects

Projects like Grace Villas highlight how Measure ULA funds are being used in practice. In that case, tax proceeds were layered with 9% low-income housing tax credits, project-based vouchers, and a long-term ground lease on publicly owned land.

The result is a development reserving all units for households earning 30% to 60% of area median income for at least 55 years. Measure ULA dollars are not funding projects outright, but they are increasingly serving as gap capital in financing stacks that would otherwise fail to pencil.

This structure underscores a key reality. The same transactions now facing higher exit friction are helping fund projects that would not move forward without public subsidy. That dynamic sits at the center of the current debate surrounding Measure ULA.

The Trade-Offs for the Real Estate Market

Research from UCLA’s Lewis Center suggests that Measure ULA has coincided with a meaningful decline in transaction volume. The study estimates the city lost roughly $25M per year in other tax revenue during the first 2 years of implementation due to fewer deals closing.

Developers and brokers interviewed by CoStar note that the tax has materially changed underwriting assumptions, particularly for assets where sale or refinance timing is central to the investment thesis. For larger multifamily and mixed-use projects, the additional 4% to 5.5% cost at exit can alter pricing expectations, compress returns, and limit buyer pools.

As a result, some capital has shifted to nearby cities without similar transfer taxes, while other projects have paused entirely. This tension explains why Measure ULA spending is now being scrutinized more closely by owners who are evaluating not only policy outcomes, but also market liquidity and risk.

Political Uncertainty Heading Toward 2026

Even as Measure ULA funds are being deployed, political pressure is building. The Howard Jarvis Taxpayers Association is backing a statewide ballot initiative that would cap local transfer taxes and restore a 2/3 voter approval requirement for new taxes. If passed, the measure would effectively dismantle Measure ULA and limit similar taxes statewide.

At the city level, discussions around targeted exemptions have emerged, but no material changes have been finalized. Legal analysts note that even if Measure ULA were repealed, funds already collected would likely remain with the city absent a court order.

Importantly, Measure ULA has already become embedded in Los Angeles’ affordable housing funding framework. That institutional reliance makes the path forward more complex than a simple repeal narrative.

What Owners and Investors Should Take Away

Measure ULA was not a multifamily policy, but its impact on commercial and multifamily real estate has been substantial. The city’s deployment of funds shows that the tax is now a central component of Los Angeles’ housing strategy, even as opposition grows.

For owners and investors, the key takeaway is not just where the money is going, but how Measure ULA reshapes transaction risk, exit assumptions, and long-term planning. As the market navigates toward 2026, understanding both the spending outcomes and the structural role of the tax will remain essential for making informed decisions in Los Angeles real estate.

If you would like to discuss how Measure ULA is affecting your asset, timing considerations, or broader strategy, our team is available to provide perspective and walk through the implications.