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os Angeles' mansion tax, aimed at redistributing wealth to fund affordable housing and homelessness prevention, has unexpectedly burdened nonprofit homebuilders with millions in fees. Two nonprofits have collectively paid $6.1 million in mansion tax fees over the past year, jeopardizing their ability to provide affordable housing.

    The Measure ULA real estate transfer tax, approved by voters last year, charges a 4% fee on property sales above $5.1 million and 5.5% on sales above $10.3 million. The tax was intended to generate up to $1.1 billion annually for affordable housing initiatives. However, as of October 31, it had only collected $439 million.

    Nonprofit organizations like the Motion Picture & Television Fund and Los Angeles Jewish Health have been caught off guard by the tax. When the fund sold $30 million worth of land, it was forced to pay $1.65 million in mansion tax fees, despite its mission aligning with ULA's goal of addressing LA's housing crisis.

    The issue lies in the exemption process, which only applies if the nonprofit is the buyer in a transaction. If the nonprofit sells property to a luxury developer, as in the case of the Motion Picture & Television Fund, it doesn't qualify for an exemption. Los Angeles Jewish Health faced a similar situation when it sold a senior living complex for $81 million, resulting in a $4.455 million tax bill.

    The nonprofits are now seeking relief from the city council to recover some or all of the fees. However, the process is unclear, and the organizations fear that their plans to develop affordable housing may be at risk due to the unexpected tax burden.