Foundation Report: The Fight Goes On To Have L.A. “Mansion Tax” Declared Invalid

The HJTA legal team is continuing to battle against an illegal tax on real estate transfers valued at $5 million or more in the city of L.A.

“HJTA is fighting for Los Angeles taxpayers and the future integrity of property taxation under Proposition 13,” said Director of Legal Affairs Laura Dougherty.

Ostensibly enacted by city voters in November of 2022, Measure ULA imposed a 4% tax on sales and transfers of real property valued at over $5 million and a 5.5% tax on those over $10 million. The funds are earmarked for housing and homelessness services, making this a special tax and a transfer tax, something courts have agreed for decades is prohibited by Proposition 13. This will extract hundreds of millions of dollars from property owners, and the effects on tenants and consumers will be devastating. The law did not permit a temporary injunction.

In HJTA & Apartment Association of Greater Los Angeles (AAGLA) v. City of Los Angeles and All Persons Interested in Measure ULA, HJTA asked the court to invalidate Measure ULA. This transfer tax is specifically prohibited not only by Proposition 13 but also by the Los Angeles City Charter. It is based on exploiting ambiguous language in the state Supreme Court’s 2017 decision, California Cannabis Coalition v. City of Upland. Measure ULA is simply invalid legislation.

In October, the Los Angeles Superior Court sided with the City, finding Measure ULA valid. HJTA filed a Notice of Appeal. As usual with nearly all HJTA cases raising important questions of constitutional law, the Second District Court of Appeal will review this case de novo, meaning that it does not have to give deference to the superior court’s decision or reasoning.

“We are waiting for a briefing schedule at the Court of Appeal,” Dougherty said. “We are in general agreement with the City that we should keep a regular briefing schedule, but ask for prompt oral argument thereafter, as we have statutory calendar preference in this case. In short, our case shouldn’t have to sit for years as they sometimes do. I expect oral argument late this year.”