HJTA’s lawsuit to have Measure ULA declared invalid is now before the California Court of Appeal, Second Appellate District, Division 4. It is case number B334071.
Measure ULA was a citizens’ initiative on the November 2022 ballot in the city of Los Angeles. It was presented to voters as a “mansion tax” to address homelessness. In fact, it is a tax on the sale of all real estate with a value above $5 million, not only mansions. The tax is 4% of the sale price of the property if the value is between $5 million and $10 million. Above $10 million, the tax rate jumps to 5.5%.
State law does not allow cities such as Los Angeles to levy real estate transfer taxes for a special purpose, only for a general purpose. Because Measure ULA was a citizens’ initiative, however, it was assumed to go through the “Upland” loophole, created by a 2017 state Supreme Court decision that suggested the rules that limited a city council did not apply to a citizens’ initiative.
However, the Howard Jarvis Taxpayers Association’s team of experienced lawyers challenged the validity of Measure ULA based on a provision in the Los Angeles City Charter. Section 450 (a) states that initiative ordinances are limited to ordinances that “the Council itself might adopt.”
Because the Los Angeles City Council is prohibited from adopting a transfer tax for a special purpose, a local citizens’ initiative enacting a special-purpose transfer tax is equally barred.
That’s the argument HJTA made in Los Angeles Superior Court, but the ruling there relied on the “Upland” loophole to override everything else.
HJTA believes the lower court’s decision was wrong, and now the case is at the Court of Appeal. Oral argument is scheduled for September 11. If HJTA prevails in having the Measure ULA tax declared invalid, Los Angeles property owners who paid the tax would be entitled to a refund.