What Proposition 43 Means for Commercial Real Estate and Measure ULA
A major statewide effort to reform local taxes has taken a turn, and it could have long-term impacts on commercial real estate in Los Angeles.
The Howard Jarvis Taxpayers Association withdrew its original Local Taxpayer Protection Act from the November 2026 ballot after reaching a last-minute agreement with Governor Gavin Newsom and legislative leaders.
The original initiative would have made significant changes to local taxation. Among other provisions, it would have capped charter-city real estate transfer taxes, required a two-thirds vote to approve future citizen-sponsored special taxes, and potentially invalidated existing taxes that did not meet these requirements (including Measure ULA).
Instead, voters will now consider Proposition 43 in November.
What is Proposition 43?
Proposition 43 would require future local special taxes proposed through the initiative process to receive approval from two-thirds of voters beginning in 2027.
However, there are important limitations:
- It does not apply to taxes that already exist.
- It does not cap local real estate transfer taxes.
- It does not repeal, reduce, or change Measure ULA.
In short, Proposition 43 could make it more difficult to create new taxes similar to Measure ULA in the future, but it does not provide relief from the taxes currently in place.
What This Means for Measure ULA
For commercial real estate owners, the immediate impact is clear: Measure ULA remains fully in effect.
Beginning July 1, 2026, the tax continues to apply at:
4% on property sales above $5.4 million
5.5% on property sales above $10.9 million
Additionally, on July 1, the Los Angeles City Council voted unanimously to remove a proposed ballot measure that would have temporarily exempted newly constructed multifamily and mixed-use residential projects from ULA for their first ten years.
As a result, there will be no Measure ULA reform measure before voters this November.
How it Impacts You
Measure ULA continues to create challenges for commercial property transactions, investment decisions, refinancing, and redevelopment opportunities throughout Los Angeles.
Many in the commercial real estate industry had hoped the original statewide initiative would provide a pathway toward broader reform or repeal.
With that option now off the table, property owners and investors are left with the current system remaining unchanged.
At the same time, supporters of Measure ULA preserved the existing tax structure and revenue stream without needing to pursue additional compromises or reforms.
Stay Connected
Proposition 43 remains important because it could make future ULA-style taxes significantly more difficult to approve. However, it does not address the existing challenges created by Measure ULA.
For our members, attention will likely return to local efforts focused on potential commercial real estate exemptions, rate reductions, or broader reforms to Measure ULA in the years ahead.
As Los Angeles continues to work through issues related to housing production, economic development, and downtown recovery, the future of Measure ULA will remain an important issue for the commercial real estate industry.
Stay connected to BOMA on the Frontline for updates.
