Ninth Circuit to Hear Challenge to L.A.'s Failing 'Mansion Tax'

The U.S. Court of Appeals for the Ninth Circuit has agreed to hear a challenge to Measure ULA, a November 2022 referendum in Los Angeles to tax high-end property sales to fund affordable housing that has fallen short of its goals.

As Breitbart News reported in early 2023, Measure ULA, requires the city “to collect a 4% tax on sales over $5 million, and a 5.5% tax on sales of property worth $10 million or more.” It was supposed to bring in $900 million annually.

Thus far, Measure ULA has only raised $252.9 million, according to the city controller, therealdeal.com reports. One problem: wealthy homeowners rushed to sell before the tax took effect last April. High interested rates have also hurt.

There are currently several legal challenges to Measure ULA. The Howard Jarvis Taxpayers’ Association (HJTA) says  it is unconstitutional, because it expands the city’s taxation powers in a way that violates California’a Proposition 13.

A Los Angeles County judge tossed a lawsuit by the HJTA last year, but the HJTA is appealing. There is also a ballot measure for the statewide ballot 2024 that would require a two-thirds majority for tax increases, which would put Measure ULA, which won with 57.7%, to a vote again. That measure is currently before the state’s supreme court.

The federal civil rights case, filed by Newcastle Courtyards, was dismissed by a district court for lack of jurisdiction over state taxes. Newcastle argues that proponents of Measure ULA misrepresented it as a tax on millionaires and billionaires, disregarding the fact that those selling their high-end properties might actually be in dire financial circumstances.

The case is Newcastle Courtyards LLC et al. v. City of Los Angeles, Case No. 2:2023-cv-00104.