LA 'mansion tax' to raise money for protecting tenants behind on rent, city says

The Los Angeles City Council Tuesday approved guidelines and an expenditure plan for money raised by the Measure ULA "mansion tax," with the plan aimed at funding tenant protections and increasing affordable housing.

The council voted 10-0 to approve Mayor Karen Bass' proposed funding plan, which increases the amount earmarked for tenant protection measures. In a statement, Bass said the council approval comes at a "critical time" when tenants across the city are facing eviction.

Council members Marqueece Harris-Dawson, Monica Rodriguez, Imelda Padilla were absent during the vote. Council members Paul Krekorian and Curren Price recused themselves, citing a potential conflict of interest.

Tenant protections for back-rent accrued during the coronavirus pandemic between March 2020 to September 2021 ended on Aug. 1, and many Angelenos may face eviction as they work to pay any missing rent. According to the guidelines, programs and services will be geared toward Angelenos who need to pay that back rent.

For rent that accrued from October 2021 to Jan. 31, tenants have until February 2024 to pay up.

"In order to successfully confront this homelessness crisis, we have to ensure that we are doing all we can to prevent Angelenos from falling into homelessness in the first place," Bass said in a statement Tuesday afternoon. "I want to thank Council member (Nithya) Raman and the rest of the City Council for taking this important action. Now, we must turn to ensuring that these resources reach those who need them most."

Prior to the vote, Raman, who chairs the Housing and Homelessness Committee, urged her colleagues to approve the expenditure plan.

"With over 44,000 Angelenos without a permanent home in the city of Los Angeles and with evictions surging, the need for these funds has never been more pronounced," Raman told her fellow council members.

She also expressed her gratitude for United to House L.A. Coalition, the L.A. Housing Department, and the leadership of Bass and council members Bob Blumenfield and Eunisses Hernandez for helping "us get to the finish line and approving the inaugural $150 million expenditure plan for the implementation of Measure ULA."

Measure ULA, also known as the "mansion tax," is a 4% sales tax on properties exceeding $5 million, and 5.5% sales tax on properties exceeding $10 million. The revenue from the sales tax is collected and earmarked for renter protections, including protections for low-income seniors at risk of homelessness, rental assistance programs and building more affordable housing units.

With the council's approval, the Housing Department is planning to implement the short-term emergency assistance program to prevent as many potential evictions as possible in mid-September. The department will introduce an online portal to assist mom-and-pop landlords in October.

"I am pleased to see that the first $150 million from this significant new revenue stream is now on its way to doing the work the voters intended," Council President Paul Krekorian said in a statement. "Among other things, these funds will assist rent-burdened families and seniors, and expedite construction of affordable multifamily housing on city-owned land. This is exactly what was promised when Angelenos voted for Measure ULA, and now that promise is being fulfilled."

Blumenfield, who chairs the Budget, Finance and Innovation Committee, said the plan will "swiftly put real dollars to work helping L.A.'s most vulnerable and we can't wait a moment longer."

The councilman said the city so far has received about $55 million in tax revenue since the city enacted Measure ULA in April, far below the hundreds of millions of dollars the city expected to receive from the tax.

City officials proposed to spend $150 million in anticipated Measure ULA dollars in response to pending litigation that is threatening to prevent the tax, as well as the slow pace of revenue being generated by the levy.

"Regardless of pending litigation, it's imperative to move forward with a mechanism to start spending the $150 million we committed during the budget process because lives are literally on the line," Blumenfield said.

On Tuesday morning, the Valley Industry & Commerce Association issued a statement expressing strong opposition to the council's proposal to "front- fund" $150 million to Measure ULA programs and implementation, citing concerns about the measure's impacts on the "economic vitality of the San Fernando Valley and greater Los Angeles area."

"This proposal is a masterclass in mismanaging taxpayer money. The City Council seems more interested in creating bureaucratic nightmares and legal quagmires than actually helping those who need it," Stuart Waldman, president of VICA, said in a statement.

"Renters and housing providers are left out in the cold. It's as if they're playing a twisted game of priorities while everyone else's livelihoods hang in the balance," he added.

Blumenfield explained to his colleagues that the funds will be coming out of the city's general fund, however, the city will be reimbursed by money owed by the federal government.

Hernandez noted that when L.A. voters "overwhelmingly" passed Measure ULA in November 2022, they voted in "favor of funding permanent supportive housing, creating programs and resources for tenants who are at-risk of homelessness, and building the deeply affordable housing stock that our city desperately needs to address our housing and homelessness crisis."

According to the mayor's office, the Measure ULA expenditure plan includes the following allotment:

-- $18.4 million for a short-term emergency assistance program that will allow eligible low-income tenant households to apply for up to six months owed back rent due to a one time economic hardship. Priority eligibility shall be established for lower-income households;

-- $23 million for the eviction defense/prevention program, to continue and expand the Stay Housed LA (SHLA) program, a partnership with the county, legal service providers and community organizations, that provides tenant households at risk of eviction, with legal support, "know your rights" education, and in limited cases, rental assistance through settlements with their landlords;

-- $5.5 million for a Tenant Outreach and Education program and campaign to provide broad and targeted tenant education outreach services, including workshops, legal clinics, paid and earned media, and targeted social media;

-- $11.2 million for a Protections from Tenant Harassment program. Funds will be allocated for infrastructure, technology, and community outreach, to educate tenants, as well as landlords, about their rights and obligations, and to enforce protections against tenant harassment. The city adopted the Tenant Anti-Harassment Ordinance (effective Aug. 6, 2021) to protect tenants from harassment by landlords;

-- $23 million to provide rental subsidies and move-in assistance to low-income seniors and people with disabilities, who are currently experiencing or at imminent risk of homelessness; and

-- $56.8 million for Multifamily Affordable Housing development to increase affordable housing units in the city with an initiative called "Accelerator Plus." The program will fund "shovel-ready" affordable housing projects that are ready to quickly start or complete construction with an additional loan of no more than $12 million to close a financing gap.