00:00Today, I'm going to tell you about a couple of ballot initiatives in Los Angeles that could
00:04change the local real estate market in a massive way. The LA City Council has placed several
00:09measures on the ballot that will amend Measure ULA, otherwise known as the mansion tax. Voters
00:15passed the mansion tax in 2022 thinking that what they were doing was taxing high-end real estate
00:21transactions that benefit wealthy people and then using the money to build homes for or otherwise
00:26advocate for housing for poor people. But in practice, the policy was an almost complete flop.
00:31First of all, once you tax something, you get less of it. So when the tax started kicking in,
00:36real estate transactions on the high end started shutting down. In addition, the tax doesn't just
00:41apply to big mansions. It also applies to commercial buildings and it applies to apartment buildings.
00:46So people stopped building apartment buildings. And in fact, a recent RAND study showed that
00:52apartment construction had fallen by 30% in the few years since Measure ULA, the mansion tax,
00:58was passed. As a result of all this slowing down, the tax brought in fewer dollars than was originally
01:05advertised and there was less to spend. And when it was spent, it wasn't spent directly on housing. A
01:09lot of it was given to tenant advocacy organizations and things like that. But it was not actually spent
01:14to increase housing in LA. Rents have gone up and housing construction has gone down. Measure ULA has been
01:21a failure. So there are a couple of amendments that voters are going to have the chance to vote on.
01:26One of them would restrict Measure ULA so it does not apply to new apartment construction.
01:31Another would exempt Pacific Palisades, the area that was destroyed by the Palisades fire,
01:36from Measure ULA to jumpstart the real estate market there and help with reconstruction and
01:41rebuilding. It remains to be seen whether voters go for these amendments or whether they just want
01:46Measure ULA to be shut down entirely. And there's a state ballot initiative by the Howard Jarvis
01:50Taxpayers Association that could limit local real estate taxes and end Measure ULA for good.
01:55We'll see if that passes instead.
