Property Transfer Tax Exemption for Victims of January 2025 Fire Disaster

IMPARTIAL SUMMARY BY SHARON M. TSO, CHIEF LEGISLATIVE ANALYST The City of Los Angeles imposes a documentary transfer tax of 0.45 percent on the sale or transfer of real property. In 2022, voters approved the Homelessness and Housing Solutions Tax (Proposition ULA), an additional special documentary transfer tax on the sale or transfer of real property. Proposition ULA established a four percent tax on the sale or transfer of real property over $5 million and a 5.5 percent tax on sales or transfers at $10 million or more. The property sale thresholds subject to the tax are adjusted annually based on the Chained Consumer Price Index and are currently at $5.4 million and $10.9 million. Government entities, qualified affordable housing organizations, and certain non-profit organizations are exempt from the tax. Revenue from the Proposition ULA tax is used for affordable housing and tenant assistance programs. The Affordable Housing Program funds the production and rehabilitation of affordable housing. The Homelessness Prevention Program funds various tenant assistance activities, such as financial support or legal support in eviction cases. No more than eight percent of the revenue can be used for program administration, reporting, compliance, and implementation. On January 7, 2025, the Palisades Fire began. According to data from the Los Angeles Department of Building and Safety, the Palisades Fire led to the damage and destruction of approximately 5,620 structures, of which an estimated 5,495 were residential structures. If any of these properties are sold or transferred for over $5 million (as adjusted for inflation), the transaction would be subject to the Proposition ULA tax. This measure would exempt the sale or transfer of residential properties over $5 million (as adjusted for inflation) that were damaged or destroyed by the Palisades Fire from the Proposition ULA tax. Damage or destruction would be verified by the Department of Building and Safety. If a damaged or destroyed residential property is sold or transferred between January 7, 2025 and January 6, 2030 by the owner of record on the date the Palisades Fire began, the sale or transfer would qualify for a one-time refund or exemption from the Proposition ULA tax. The Director of Finance would be authorized to issue refunds on eligible claims for any Proposition ULA tax paid prior to the effective date of this measure. This measure would provide financial relief for property owners affected by the Palisades Fire. This measure may lead to a reduction in Proposition ULA tax revenues, which would result in a decrease of funding for affordable housing and tenant assistance programs. This measure will become effective if approved by a majority of voters.

FINANCIAL IMPACT STATEMENT BY MATTHEW W. SZABO, CITY ADMINISTRATIVE OFFICER This measure grants a one-time exemption from the Proposition United to House LA (ULA) documentary transfer tax to residential properties damaged or destroyed in the 2025 Palisades Fire and sold between January 7, 2025 and January 6, 2030. This exemption will not impact the City’s General Fund, but will reduce revenue to the House LA Fund, which finances affordable housing production and homelessness prevention programs. The estimated reduction in ULA revenue is between $35 million and $66 million through January 2030. This estimate is based on the average ULA tax paid per eligible transaction in the Palisades, the number of rebuilt homes listed for sale as of July 2026, and post-fire sales of vacant parcels. The upper estimate assumes the average number of transactions doubles. Actual revenue losses will depend on total eligible residential properties sold before the exemption expires.

ARGUMENT IN FAVOR OF PROPOSITION TE Los Angeles voters approved Measure ULA to address the homelessness and housing crisis. It was never intended to penalize survivors who lost everything in a declared disaster. When a fire, earthquake, or other disaster destroys a home or entire community, victims often have no choice but to sell their property to pay expenses, relocate, restore belongings, or recover financially. Requiring them to pay the ULA real estate tax when they have already lost everything - through no fault of their own - only makes a devastating situation worse. After navigating unimaginable difficulties with insurance companies, skyrocketing rebuilding costs, and uncertain timelines, many fire survivors face an impossible choice: take on costs they cannot afford to rebuild, or sell the property they lost. They should not be further penalized by the ULA tax for circumstances beyond their control. Providing tax relief to disaster victims is about fairness, compassion, and common sense. It preserves the core purpose of ULA, while recognizing that survivors of catastrophic losses deserve support and flexibility. This measure does not repeal ULA or create a loophole for investors or speculators. Rather, this narrowly-tailored measure provides a limited, one-time exemption for owners of residential properties, including multi-family buildings, damaged or destroyed in the January 7, 2025 fires. As Los Angeles has experienced firsthand, disasters can strike any neighborhood. When a disaster is declared, our response should be to help people recover, not impose additional financial burdens at the worst possible moment. Supporting disaster victims is not a partisan issue. It is a statement that Los Angeles stands with its residents in their greatest time of need. A YES vote preserves the intent of ULA while removing financial barriers to disaster recovery. PERSONS SIGNING ARGUMENT IN FAVOR OF PROPOSITION TE TRACI PARK KAREN BASS Councilmember, 11th District Mayor City of Los Angeles City of Los Angeles MARQUEECE HARRIS-DAWSON MONICA RODRIGUEZ Council President, 8th District Councilmember, 7th District City of Los Angeles City of Los Angeles BEN ALLEN JACQUI ERWIN State Senator Assemblymember State of California State of California NICK MELVOIN LA/OC BUILDING & CONSTRUCTION Schoolboard Member TRADES COUNCIL Los Angeles Unified School District Ernesto Medrano Executive Secretary WESTERN STATES REGIONAL COUNCIL OF PACIFIC PALISADES COMMUNITY CARPENTERS COUNCIL Favian Guillen Allison Holdorff Polhill Executive Secretary Treasurer President NO ARGUMENT AGAINST THIS MEASURE WAS SUBMITTED. Arguments printed are the opinions of the authors and are not checked for accuracy by any City agency. In addition, the title beneath a signer’s name is for identification purposes only and does not indicate that the individual is signing on behalf of the organization.