Measure ULA drives developers out of LA
"The math ain't mathing," said Chris Tourtellote, managing director at Marina Del Rey-based LaTerra Development, on developing new apartment buildings in the City of Los Angeles.
Developers in Los Angeles are feeling the pressure as a state bill, known as Measure ULA, threatens to drive them out of the city. The bill, which is eligible for a floor vote today, could relax transfer taxes and potentially harm the profits of developers.
"You build for $100 million, sell it for $105 million and pay $5.5 million in taxes," Tourtellote said. "The tax should be on your profit, not on your sale price. It makes it tough in this market."
The bill, also known as the United to House LA measure, has been met with controversy and criticism from developers who claim it will ultimately harm the city's housing market. The proposed tax on the sale price of developments could make it more difficult for developers to turn a profit and incentivize them to look for opportunities outside of Los Angeles.
Some developers have already begun to look outside of the city for new acquisitions, citing the potential tax implications of Measure ULA. "We've been looking more outside of Los Angeles just because of the tax situation," said Paul Habibi, a lecturer at the Anderson School of Management at UCLA.
While the bill is intended to generate revenue for affordable housing and homeless services, developers argue that it will have the opposite effect by driving them out of the city and reducing the number of new developments.
"It's frustrating because we're building these units to help with the housing crisis, but then we're getting hit with these taxes that make it difficult to do so," Tourtellote said.
Despite the controversy and pushback from developers, the bill is still