TRD: “Two years too late”: Palisades carveout from Measure ULA

• Measure TE, granting a five-year exemption from the Measure ULA property transfer tax for Pacific Palisades residents whose homes were damaged or destroyed in the 2025 fire, appears likely to pass.
• Real estate professionals note that the carveout applies to a limited number of transactions and does not broadly resolve market challenges caused by the tax.
• Industry leaders argue that a more comprehensive reform or total repeal of the property transfer tax is necessary to properly address ongoing concerns across Los Angeles real estate.

A limited bid to reform the controversial Measure ULA in Los Angeles is likely headed for passage, giving relief to some Palisades Fire victims looking to sell their homes.

As of Friday morning, Measure TE has maintained a lead since Tuesday with 62.3 percent of voters, or 549,094, saying “yes” to a one-time, five-year exemption from the tax on property sales by Pacific Palisades residents whose homes were damaged or destroyed in 2025’s fire. The carveout is retroactive from Jan. 7, 2025 and is good through Jan. 6, 2030. It’s expected to trim somewhere between $35 million to $66 million from the pool of  ULA-generated revenue, according to city estimates.

To qualify for the exemption, a seller will have to have owned the residential property at the time of the fire.

ULA currently applies a 4 percent tax on all real estate deals priced between $5.4 million and less than $10.9 million. A 5.5 percent tax applies to any trades of $10.9 million or more. The thresholds are updated each year based on the chained consumer price index.

Some are tempering any excitement over the carveout.

“When I first saw [the measure] I thought, ‘Wow, amazing. The city’s actually doing something for us.’ But when I looked into it a little more, what I realized is it affects a small number of people,” said Carolwood Estates’ Nichole Shanfeld.

Of the 566 transactions closed since the fire, eight traded for above the ULA threshold, Shanfeld pointed out.

“Anyone that can recapture their loss, should — whether it’s eight people or 1,000 people — but I don’t think that it’s going to materially change anything in a way that would benefit the overall market in the Palisades,” she said.

There’s also the impact on values to the broader Palisades market to consider for sellers whose homes weren’t damaged, said Westside Estate Agency founder Stephen Shapiro. Measure TE doesn’t address that concern, he said.

“I’m in a situation in the Palisades where there’s very little high-end sales taking place and that’s because the lack of interest in the community, so even though my house didn’t burn down, I’m still affected,” said Shapiro, who has listed his home in the Los Angeles neighborhood.

Shapiro said he along with other industry players took a meeting with a city official last year to discuss how ULA could be modified to address industry concerns. They hit a wall, said Shapiro, who declined to disclose the City Hall representative’s identity.

“I’m a businessman and from a business perspective there’s so many things that are ill thought out with that program that nobody looked at and nobody chose to talk to anybody,” Shapiro said. “They’re living in a world of pandering for votes.”

Damage done

For many in real estate, the exemption was much needed in the fire-ravaged Los Angeles neighborhood but doesn’t go far enough in addressing concerns beyond the Palisades.

Since ULA’s 2022 passage, commercial and residential real estate have said the tax has stymied deal flow and development.

“[Measure TE’s] two years too late, but, sure, OK great. Thanks a lot for nothing,” the Beverly Hills Estates co-founder and President Branden Williams said sarcastically of the ballot measure.

Christie’s International Real Estate Southern California founder and CEO Aaron Kirman said the measure is a “good start, but relief shouldn’t stop at the Palisades” and called ULA a “failed tax.”

At the time ULA initially went on the ballot, it was estimated the tax could raise anywhere from $600 million to $1.1 billion annually to help fund housing and homelessness programs. To date, the tax, which went into effect in April 2023, has raised $1.4 billion, according to Los Angeles Housing Department data through September.

Now, a patchwork of solutions may further complicate the issue.

“Carving out one neighborhood at a time just patches the problem. It doesn’t fix it,” Kirman said. “What Los Angeles really needs is to repeal or completely reform ULA, so it stops choking off sales and construction across the whole city.”