How would a Measure ULA exemption for new multifamily construction in West LA affect apartment development and values?
Would carving new apartment construction out of Measure ULA actually restart stalled projects in West LA, or would it simply reprice land and shift value between buyers and sellers? The answer depends less on political rhetoric and more on underwriting math, exit assumptions, and how capital evaluates risk in a high basis submarket.
“If Los Angeles exempts newly constructed multifamily from Measure ULA, it’s not just a tax tweak. It’s a structural signal to capital,” said Oron Maher, Broker-Director at Maher Commercial Realty. “Transfer taxes directly affect exit pricing assumptions, and when you remove that friction for new product, you change residual land values, underwriting models, and ultimately the feasibility of projects in submarkets like West LA where basis is already high.” Maher, a licensed real estate broker and California attorney, has consistently argued that transaction taxes shape behavior far more than policymakers assume.
The Los Angeles City Council is set to vote on whether to place a Measure ULA amendment on the November 3 ballot that would eliminate the transfer tax for newly constructed multifamily housing. Earlier this month, the Council voted 9 to 5 to instruct staff to move forward with drafting the ballot measure. Based on prior votes, the proposal is likely to reach voters. A separate statewide effort that would have eliminated Measure ULA entirely has been withdrawn or substantially reduced, which makes this targeted exemption the most realistic structural change currently in play.
The core issue is supply and demand, filtered through a legal and structural lens. Measure ULA functions as a transfer tax at the point of sale above certain thresholds. In a multifamily context, that tax becomes embedded in exit pricing assumptions. Developers and their capital partners discount future sale proceeds to account for the tax, which compresses residual land value. In West LA, where land trades at elevated levels and construction costs remain stubbornly high, even modest adjustments to exit proceeds can determine whether a deal clears its return hurdles.
If newly constructed multifamily is exempted, the removal of that future tax liability directly increases projected net sale proceeds. That increase flows backward through the pro forma. Developers can justify paying more for land, accepting slightly lower going in yields, or pursuing projects that previously failed to meet internal rate of return thresholds. The result is not theoretical. It is arithmetic. A higher residual land value can unlock sites that have sat idle because sellers and buyers could not reconcile pricing in a post ULA environment.
However, the structural details matter. The ballot language will determine whether the exemption applies permanently, whether it is limited by project size, and whether there are timing requirements tied to issuance of certificates of occupancy or sale dates. If the exemption is narrowly drafted or subject to sunset provisions, capital may treat it as temporary relief rather than a durable shift. In that case, some of the economic benefit could be capitalized into land pricing without materially expanding long term supply.
In West LA, the stakes are amplified by the submarket’s cost structure. Land acquisition costs are high. Construction costs for mid rise and high density product remain elevated. Rent growth, while resilient, is not infinite. Under current conditions, developers must thread a narrow needle between achievable rents and total development cost. A transfer tax exemption at exit widens that needle. It does not eliminate entitlement risk, financing constraints, or operating expense pressures, but it meaningfully adjusts the back end of the capital stack.
From a capital allocation perspective, an exemption sends a broader signal. Investors compare markets across Southern California and beyond. When a city reduces transactional friction on new supply, it improves relative competitiveness. West LA competes for equity with other coastal submarkets that do not impose comparable transfer taxes. A clear exemption could tilt marginal dollars back toward new apartment construction in this specific geography.
For existing owners, the implications are nuanced. If new supply becomes more feasible, long term competitive pressure increases. Yet in the near to intermediate term, the exemption could also raise comparable sales for newly built product, which may support valuations across the quality spectrum. Whether that valuation support extends to older assets will depend on how much new construction actually breaks ground and how quickly it delivers units into the market.
For landowners, the change could be immediate. If buyers underwrite higher exit proceeds, they can justify higher land bids. The question is whether sellers will demand the full benefit of the exemption upfront. If they do, much of the policy gain will shift to current landholders rather than translating into lower rents or materially higher production. That is why the drafting and timing provisions of the ballot measure are so consequential.
Maher Commercial Realty advises West LA multifamily owners and developers on acquisitions, dispositions, and underwriting strategy with a focus on how policy variables alter pricing and feasibility. In a market where small structural changes can shift millions of dollars in residual value, disciplined analysis is not optional.
If voters approve a broadly drafted and durable exemption, expect stalled West LA multifamily sites with entitled density and high basis to re enter the development pipeline first, as those projects stand to benefit most immediately from improved exit math.
This analysis is based on reporting originally published by The Real Deal.
LA City Council to vote on putting ULA break for multifamily on ballot
