Legal Challenge to Los Angeles Measure ULA

Last week the Howard Jarvis Taxpayers Association and the Apartment Association of Greater Los Angeles filed a lawsuit seeking to invalidate the new Homelessness and Housing Solutions Tax (the “HHS Tax”) that was approved by Los Angeles voters in November.  Effective April 1, 2023, the new HHS Tax will impose an additional tax on the sale of any real property within the City of Los Angeles when the consideration or value of the real property exceeds $5 million.  An overview of the HHS Tax and its impacts can be found in our November 9, 2022 client alert. 

The complaint, filed in the Los Angeles County Superior Court, alleges that the HHS Tax is a “special tax” rather than a “general tax” because the tax increase would be specially dedicated to housing and homeless services. The Plaintiffs seek to invalidate the tax on the grounds that neither the City of Los Angeles, nor its voters, have the power to impose a transfer tax that is a “special tax” without violating the California Constitution.

It is too early to tell what impact this lawsuit will have on the validity or the implementation of the new HHS Tax.  We will keep you updated as we learn more about this lawsuit and the new HHS Tax, but please do not hesitate to contact us directly if you have any questions or would like to discuss.