The City of Vernon, CA special parcel tax on warehouses, truck terminals, freight terminals and other distribution facilities is determined as follows “The City Council hereby determines the Tax for fiscal year 2024-2025 shall be $0.03831 per square foot of taxable parcel area.” This affects companies that do not manufacture products.
Category Archives: Governmental
Governmental agency policy changes or discussions. City, county, state, federal, or judicial. Related to industrial operations or land use.
DTLA 2040 New Zoning Close to Implementation
The Los Angeles City Council’s recent adoption of the DTLA 2040 Community Plan Update (DTLA 2040) was a major milestone in a nearly decadelong process to create a long-range land use plan and guiding policy document that will advance Downtown’s vibrancy and growth through the year 2040.
Drafted by city staff with input from many stakeholders, DTLA 2040 doubles the area in Downtown where housing can be built, eliminates parking requirements and implements the city’s new zoning code for the very first time.
DTLA 2040 includes updates to the Adaptive Reuse Ordinance (ARO) to make adaptive reuse even more effective in its goal of unlocking greater opportunities for creating housing, promoting sustainable development and preserving historic buildings. DTLA 2040s updates include removing minimum and average unit size requirements and allowing buildings built as recently as 10 years prior to conversion to be eligible for the provisions of ARO. The updates also allow basements and rooftop features to be used and not count against how much can be built on a site.
New 4-5.5% ULA Transfer Tax for Properties Sold in the City of Los Angeles
Measure ULA, commonly known as the “mansion tax,” would impose a new “Homelessness and Housing Solutions Tax” on transfers of residential and commercial real property in the city of Los Angeles valued in excess of $5 million.
Under the measure, sales of residential and commercial real property valued at over $5 million but less than $10 million would be subject to an additional tax at the rate of 4%, while sales of properties valued at $10 million or more would be subject to an additional tax at the rate of 5.5%. The new tax would apply to the entirety of the sale value, not solely the amount in excess of the $5 million and $10 million thresholds, and regardless of whether the property is sold at a gain or a loss. The thresholds would be adjusted each year based on inflation. The tax would apply to property sales occurring on or after April 1, 2023.
The new tax would be in addition to the existing documentary transfer tax imposed on property sales in the city of Los Angeles, which is imposed at a combined city and county rate of 0.56%.
This tax will have a negative impact on property sales, especially industrial real estate sales given they are generally sold at a higher value than many other types of properties. The tax could possibly make properties in the City of L.A. less attractive to buy.
Who will end up paying the new real estate transfer tax? Below are the percentage of sales based on recent data for each property type.
- Single-Family Residences and Condos: 2.6%.
- Multi-Family Apartment Buildings: 6%
- Commercial (office buildings, retail, etc.): 11%
- Industrial: 19%
- Other (vacant land, utilities, etc): 1.9%
The ordinance exempts certain transfers from the ULA Tax. Transfers to non-profit entities, Community Land Trusts, and Limited-Equity Housing Cooperatives are exempt, as these are the types of transactions the City is intending to encourage.
On December 21, 2022, the Howard Jarvis Taxpayers Association and the Apartment Association of Greater Los Angeles brought suit in state court challenging the validity of the ULA Tax. Plaintiffs argue that the ULA Tax is a “specific tax” prohibited by the California Constitution on the grounds that ULA Tax revenue must be used for specific purposes. The litigation is currently pending.
Above data from An Analysis of Measure ULA, by UCLA Lewis Center.
Initiative Ordinance ULA: A 4-5.5% tax on real estate sales in L.A.
This freshly approved City of Los Angeles ordinance will impose a one-time 4% tax on property sale transactions above $5 million that would rise to 5.5% on transactions above $10 million. A $5-million sale would generate a $200,000 tax bill.
This will negatively impact the sellers of all property types including residential and commercial such as retail, office, apartments, and industrial.
New Zoning Code – City of Los Angeles
Below is a good summary by the city of its new zoning code and how they think it will be better than the current legacy code.
City Planning is modernizing Los Angeles’s Zoning Code to align with contemporary planning needs. This is the first comprehensive update to the Code since 1946 and marks a major shift from strictly Euclidean zoning—the most common form of land use regulation in the United States—to a hybrid, or modular, zoning approach.
This shift responds to the desire for zoning that focuses both on land use and buildings’ proposed mass, scale, and characteristics, allowing the Department to separate regulations governing the built environment from a property’s use. The creation of this new framework supports a wider array of options that reflect the cultural and demographic diversity of Los Angeles and its community neighborhoods.
This evolution in planning recognizes that a building’s physical character is equally as important as the uses permitted on-site. Conventional methods of zoning have traditionally focused more on prohibiting uses at a given site than on regulating the built environment. These planning methods reflected the priorities of an earlier period in Los Angeles’s history, when housing choices were limited and dominant interests sought to restrict all types of development other than single-family homes. As times have changed, so have the overall needs and priorities of our City’s communities.
The proposed modular zoning structure consists of five key modules, or “districts”: Form, Frontage, Development Standards, Use, and Density. While Form, Frontage, and Development Standards regulate the built environment, Use and Density refer to the activities allowed on a site. The new Zoning Code is organized in a clear, consistent way that is easier to navigate than its predecessor and constructed to enhance desired outcomes through objective standards.
Currently, zoning regulations are scattered throughout the Zoning Code, resulting in an ad hoc and incremental approach to zoning that hinders the Department’s ability to implement adopted plans more effectively.
The new Zoning Code is adaptable to current and future policy needs and will allow planners to implement a wide range of community visions that address the design of the public realm in balance with the local architecture and characteristics of our neighborhoods. Additionally, the new Code is easier to understand and navigate due to the unbundling of regulations for the built environment from activities allowed on a site, as well as other requirements.
Best of all, it consolidates the public benefits incentive programs into one place, including affordable housing, access to bonus FAR/height, and relief/waiver from regulations, thereby creating a predictable and adaptable incentive system.
To provide a framework for this comprehensive revision, the Processes and Procedures Ordinance, anticipated to go to a full Council vote this fall, will reside in Chapter 1A of the Los Angeles Municipal Code and establish a new home for the updated Zoning Code.