California celebrates $1B from its ‘mansion tax’, but critics only know about 10% of the money being spent

On FOX Business’ Varney & Co., Stuart Varney opens with a number that sounds like a victory lap: Los Angeles’ so-called “mansion tax” has brought in $1 billion in under three years.

Then Varney drops the part that makes people squint at the screen.

He says only about 10% of that money has been spent so far, and he throws the obvious question to FOX Business reporter Max Gorden in Los Angeles: why is so little being used?

That’s the tension at the center of Gorden’s report. Supporters say the money is “working,” just not in a way that shows up as fast, clean spending. Critics hear “not spent” and translate it as “not delivering.”

And once a tax is sold to voters as a solution to visible problems – rent stress, homelessness, housing shortages – slow results don’t just look inefficient. They look suspicious.

What Measure ULA Actually Does

Max Gorden explains that this “mansion tax” is officially Measure ULA, passed by Los Angeles voters in 2022.

It’s a real estate transfer tax applied to high-value property transactions inside L.A. city limits.

Gorden lays out the mechanics: for transactions above $5.3 million, the tax is 4%. For deals above $10.6 million, it jumps to 5.5%.

That’s not a small fee you barely notice during escrow. On an $11 million sale, you’re talking about a tax bill that can feel like an extra luxury home by itself, depending on the math and the deal.

Gorden reports the intent behind the measure was serious and broad. The money was supposed to support rental assistance, homeless services, and help ease the city’s affordable housing crisis.

In other words, it wasn’t marketed as a symbolic gesture. It was marketed as a pipeline of real money into real solutions.

The “It’s Allocated” Defense

Gorden says supporters of Measure ULA argue the spending debate is partly a matter of semantics.

They claim the money might not be “spent” yet, but it has been allocated to projects that are underway or in development.

To show what that looks like, Gorden points to a specific example: Peak Plaza, described as a 104-unit affordable housing complex.

He says money is being spent there now, and he frames it as one of nine developments currently using ULA funds.

This is where the political language starts doing gymnastics.

To regular people, “spent” means bulldozers, lumber, drywall, and keys in the door. “Allocated” can mean a plan, an award letter, a contract not finalized yet, or a project still stuck in permits.

Supporters may be technically right. But the public doesn’t vote on technicalities. They vote on results.

Why Critics Keep Harping On The “1%” Number

Even though Varney opens with “10% spent,” Gorden adds a sharper detail that critics hammer: only around 1% of the total funds have been spent on affordable housing construction, acquisition, or rehabilitation.

That’s the part that turns the discussion from “slow rollout” to “what is this actually doing?”

Gorden explains the criticism like this: yes, the tax has raised more than $1 billion, but the amount going into tangible housing work is tiny so far.

It’s also the easiest number to throw like a brick in a political argument.

“One percent” sounds like nothing. It sounds like a tax that became a slush fund or got swallowed by process. It sounds like a promise that turned into paperwork.

Gorden notes that supporters respond by saying spending so far doesn’t tell the full story, partly because projects take time and many are still in early stages.

But the longer a program stays in that “early stage” haze, the more space it gives critics to claim the whole thing is a mirage.

Joe Donlin’s Argument: Projects Take Time, And Some Were Already Stalled

Gorden brings in Joe Donlin, the United to House L.A. Coalition director, to explain why early spending can look small even when the policy is moving.

Donlin says there’s a misunderstanding: funds get allocated, but they don’t always get spent right away.

And Donlin adds a specific defense that’s worth paying attention to.

He says that in the first round of funding, the affordable housing money went into projects that already existed, but were stalled and needed additional support. In his telling, ULA helped push those stuck projects forward.

That explanation actually makes sense in a real-world way.

Cities don’t usually flip a switch and create brand-new projects overnight. They often triage what already exists – half-built plans, developments frozen by interest rates, or deals that collapsed when a funding gap appeared.

So Donlin’s argument is basically: the first wins may be invisible, but they’re real. They’re rescue missions.

Still, there’s a catch.

If you sell a tax as a transformational fix and the early years mostly go into saving projects already in trouble, voters can start asking if they paid for a new house or just paid to keep an old one from falling down.

The Critics’ Fear: The Money Might Never Fully Flow

Gorden then turns to what the critics say, and their worry isn’t just “slow spending.”

Their worry is that the structure of Measure ULA makes it hard to use effectively.

Gorden reports critics claim that the way the law is written makes ULA money difficult to blend with other funding sources.

That’s a technical problem with huge real-world consequences.

Affordable housing projects often rely on stacked funding: federal tax credits, state grants, local bonds, private financing, and nonprofit partnerships. If one pot of money can’t mix easily with the others, it can become a bottleneck instead of a boost.

So critics aren’t just alleging laziness. They’re arguing that the policy design itself may be clogging the pipeline.

And here’s my blunt takeaway: when a law is complicated enough that only specialists understand why the money can’t move, voters tend to assume the worst. They assume someone wrote it that way on purpose.

Whether that’s fair or not, it’s the political reality.

The “Stifled Market” Claim And The Chart That Fuels It

Gorden adds another criticism: that Measure ULA has stifled high-dollar real estate transactions inside the city.

He describes a chart using county assessor data showing transaction rates for properties above the tax threshold plunged in the city of L.A. (a red line), compared to similar transactions in L.A. County (a blue line), where the tax doesn’t apply.

This is the nightmare scenario for any transfer tax.

If the tax discourages transactions, the revenue stream can shrink. And if revenue shrinks while housing needs keep growing, the program starts eating its own tail.

Also, if sellers and buyers simply move deals outside the city limits – or find ways to delay sales – then the tax can punish one geography while leaving neighboring areas untouched.

And that’s how you get political resentment: “We’re paying for this, and they aren’t.”

Mott Smith’s Line: If You Raise A Billion, You Need Proof

Gorden brings in Mott Smith, a USC adjunct professor in real estate development, to voice the critics’ frustration in plain language.

Smith says if you’re going to raise a billion dollars and the tax has “horrendous negative impacts” on real estate and multi-family housing markets, there should be something to show for it.

Then Smith circles back to the same key point: by the end of the year, Measure ULA had spent less than 1% – less than $10 million – on “actual housing,” as he describes it.

Whether someone agrees with Smith or not, that quote explains why this fight isn’t going away.

Taxes are judged in a simple way: pain versus payoff.

If the pain is immediate – higher transaction costs, slower market activity, legal battles – and the payoff is delayed, muddy, or hard to see, the policy becomes politically fragile even if it’s well-intended.

The Courts Have Upheld It, But The Public Trial Keeps Going

Gorden closes with a key detail: there have been efforts to overturn Measure ULA since voters approved it, but courts have upheld it so far.

So legally, it stands.

But the public argument is still wide open, and honestly it might be harder than the court fight.

Because now you’ve got a program that can brag about a billion dollars raised, while simultaneously struggling to convince people that the money is translating into visible housing outcomes.

And when government says, “Don’t worry, it’s allocated,” people hear, “Trust us.”

That’s a hard sell in Los Angeles right now, especially when the problems this tax was meant to address – rent pressure, homelessness, housing scarcity – are the kinds of problems people can see with their own eyes every day.

In the end, Max Gorden’s reporting frames Measure ULA like a policy caught in the worst possible position: it’s big enough to create real market effects, but not yet effective enough to silence the critics with results.

And until ordinary residents can point to clear, finished projects and say, “That’s what our billion dollars did,” this debate is going to keep getting louder.