Los Angeles’ “mansion tax,” Measure ULA, was created to fund affordable housing and homelessness programs through taxes on high-value property sales, but critics say it has also slowed apartment development amid the city’s housing shortage.

A recent article by The Wall Street Journal highlighted developers who abandoned multifamily housing projects after the tax increased costs on property transfers above $5.3 million, contributing to a sharp decline in multifamily construction permits and sales of multifamily-zoned properties.

“It’s a classic cautionary tale about this sort of ballot-box legislation,” said UCLA urban planning professor Michael Manville, pointing to the unintended consequences that can arise when complex housing policy is enacted through voter initiatives.

Supporters of the measure argue that high interest rates and broader economic conditions are largely responsible for the slowdown, and they defend the tax as an important funding source for tenant protections and affordable housing. Meanwhile, policymakers are considering amendments to the tax as opponents pursue a statewide repeal effort.