Could a ‘mansion tax’ help San Diego build affordable housing?

Los Angeles has a mansion tax.  The value of big homes have gone down, money for affordable housing—from the tax—does not exist.  It has been a disaster.  San Diego County obviously wants to create a DOOM LOOP for its community—they are looking to destroy the housing market with a crazy tax, just like L.A.

“At Wednesday night’s State of the County address, acting chair Terra Lawson-Remer laid out bold plans to strengthen public health and safety, take on big corporations and raise revenue to pay for it.

One proposal, a “one-time transfer fee” aimed at expensive real estate transactions, would provide funding for affordable housing. However, this proposal could have some negative impacts on the housing market, as was the case when Los Angeles tried the same thing.

Supervisor Lawson-Remer is proposing a tax on the top 1% of real estate transactions that will fund affordable housing.

That adds 1% to the cost of housing—just like L.A., San Diego prefers to force lower prices and less revenue.  Need more reason to get out of San Diego, quickly?

Could a ‘mansion tax’ help San Diego build affordable housing?

Lessons from Los Angeles as the San Diego County Board of Supervisors considers a tax on ultra-expensive real estate.

By: Jake Gotta, KGTV,  4/17/25    https://www.10news.com/news/local-news/could-a-mansion-tax-help-san-diego-build-affordable-housing

SAN DIEGO (KGTV) — At Wednesday night’s State of the County address, acting chair Terra Lawson-Remer laid out bold plans to strengthen public health and safety, take on big corporations and raise revenue to pay for it.

One proposal, a “one-time transfer fee” aimed at expensive real estate transactions, would provide funding for affordable housing. However, this proposal could have some negative impacts on the housing market, as was the case when Los Angeles tried the same thing.

Supervisor Lawson-Remer is proposing a tax on the top 1% of real estate transactions that will fund affordable housing.

The video player is currently playing an ad.

While her office says the specifics of her proposal are still to be determined, the idea of a tax on expensive real estate is not new. City of Los Angeles voters approved a similar ballot measure, Measure ULA, in 2022, that imposes a tax on property sales over $5 million.

Since it went into effect in April 2023, the measure has raised hundreds of millions of dollars for affordable housing. But Shane Phillips, a researcher at the UCLA Lewis Center for Regional Policy Studies, told ABC 10News that the measure has had some unintended consequences.

“Parcels that have very high redevelopment potential,” Phillips said. “The number, or share of sales that are over $5 million in the City of Los Angeles fell by about 50% more than it did in other LA County jurisdictions.”

In other words, fewer properties that could become large apartment or condo developments are being sold because of the measure’s costs.

“We estimate that this loss of sales is tied to a reduction in new multi-family housing being permitted of about 1,900 units per year,” Phillips said.

An unfinished high-rise development in the downtown entertainment district that has become the target of graffiti taggers who have struck dozens of floors is seen in Los Angeles on Friday, Feb. 2, 2024.

Phillips’ research also found that this impacts more than just market-rate housing, preventing low-income, affordable units from being built as well.

“Because almost all new development in Los Angeles in multi-family housing includes income-restricted units,” Phillips said. “Because they use density bonus incentives requiring it, about 170 of those units that we are no longer building would have been income-restricted units, mostly for very low-income households.”

Beyond affecting multi-family home production, the tax also makes it harder to revitalize commercial and industrial buildings and limits the collection of property tax revenue.

Property tax increases are limited by Prop 13 in California, but can be reassessed when a property changes hands.

“If we have fewer sales happening,” Phillips said. “And we actually have fewer reassessments, that means our property tax revenues are growing more slowly.”

Another report from the Lewis Center discusses these unintended consequences of Measure ULA and suggests some changes.

“The simplest reform would be to exempt from Measure ULA any property that isn’t single-family residential,” researchers say, turning it into the “mansion tax” that voters thought it was.

“The ideal outcome… is one that preserves ULA’s ability to raise revenue for affordable housing without jeopardizing new development or property tax growth,” researchers said.

Focusing a transfer tax on single-family homes – or mansions – would maintain the ability to raise money for affordable housing, researchers say, while preventing the negative impacts on the housing market that affect housing affordability city- and region-wide.