Latest news with #MeasureULA
Yahoo
22-04-2025
- Business
- Yahoo
Fires, tariffs and high interest rates: L.A. housing construction plunged at start of year
Housing construction in Los Angeles plunged during the first quarter of 2025, according to a new report, a drop off that could ultimately worsen the city's affordability crisis. Developers pulled permits for 1,325 new homes in the city of L.A. during the first three months of 2025, down nearly 57% from the same period a year earlier. In a report released Tuesday, research firm Hilgard Analytics blamed the sharp decline on a variety of factors that have made it more difficult for developers to turn a profit, including high interest rates, tariffs and economic uncertainty, as well as city transfer tax Measure ULA. Hilgard principal Joshua Baum said the January wildfires likely also played a role by causing widespread business disruptions. Declines in the first quarter were reported in most areas of the city but the steepest drop offs were in council districts that cover the west and northeast portions of the San Fernando Valley, as well as South Los Angeles. Though the fire impact could be temporary, housing construction had been falling before January, with city wide permits down 23% in 2024 from 2023, according to Hilgard which analyzes data from the Los Angeles Department of Building and Safety that includes permits for new single family and multifamily buildings, but not ADUs. A sustained pull back in housing development could have big implications for a city in the throes of an affordability and budgetary crisis. In general, economists say building more homes reduces upward pressure on home prices and rents, and new development also tends to boost tax revenue. On Monday, Los Angeles Mayor Karen Bass announced plans to eliminate more than 2,700 city positions to help close a nearly $1-billion budget hole. "If we aren't building now, from a long run perspective, that says higher prices and higher rents at some point in time in the future," said Christopher Thornberg, founding partner of consultancy Beacon Economics. A decline in development isn't unique to the city. Housing developers have been starting fewer projects nationwide, as they deal with high interest rates and the more recent phenomenon of tariffs. Some developers say Measure ULA, a new Los Angeles city tax on large property sales, has made the environment worse in L.A. — compared to the rest of the county and nation — and caused even more projects to be killed. Hilgard Analytics did not examine housing construction outside the city of L.A. in its report. However, a recent analysis from researchers at UCLA and the Rand Corp. estimated housing construction is likely falling more in the city than elsewhere in L.A. county, citing a steeper reduction in the sales of properties where developers tend to build multifamily housing. Sign up for Essential California for news, features and recommendations from the L.A. Times and beyond in your inbox six days a week. This story originally appeared in Los Angeles Times.
Los Angeles Times
22-04-2025
- Business
- Los Angeles Times
Fires, tariffs and high interest rates: L.A. housing construction plunged at start of year
Housing construction in Los Angeles plunged during the first quarter of 2025, according to a new report, a drop off that could ultimately worsen the city's affordability crisis. Developers pulled permits for 1,325 new homes in the city of L.A. during the first three months of 2025, down nearly 57% from the same period a year earlier. In a report released Tuesday, research firm Hilgard Analytics blamed the sharp decline on a variety of factors that have made it more difficult for developers to turn a profit, including high interest rates, tariffs and economic uncertainty, as well as city transfer tax Measure ULA. Hilgard principal Joshua Baum said the January wildfires likely also played a role by causing widespread business disruptions. Declines in the first quarter were reported in most areas of the city but the steepest drop offs were in council districts that cover the west and northeast portions of the San Fernando Valley, as well as South Los Angeles. Though the fire impact could be temporary, housing construction had been falling before January, with city wide permits down 23% in 2024 from 2023, according to Hilgard which analyzes data from the Los Angeles Department of Building and Safety that includes permits for new single family and multifamily buildings, but not ADUs. A sustained pull back in housing development could have big implications for a city in the throes of an affordability and budgetary crisis. In general, economists say building more homes reduces upward pressure on home prices and rents, and new development also tends to boost tax revenue. On Monday, Los Angeles Mayor Karen Bass announced plans to eliminate more than 2,700 city positions to help close a nearly $1-billion budget hole. 'If we aren't building now, from a long run perspective, that says higher prices and higher rents at some point in time in the future,' said Christopher Thornberg, founding partner of consultancy Beacon Economics. A decline in development isn't unique to the city. Housing developers have been starting fewer projects nationwide, as they deal with high interest rates and the more recent phenomenon of tariffs. Some developers say Measure ULA, a new Los Angeles city tax on large property sales, has made the environment worse in L.A. — compared to the rest of the county and nation — and caused even more projects to be killed. Hilgard Analytics did not examine housing construction outside the city of L.A. in its report. However, a recent analysis from researchers at UCLA and the Rand Corp. estimated housing construction is likely falling more in the city than elsewhere in L.A. county, citing a steeper reduction in the sales of properties where developers tend to build multifamily housing.
Yahoo
18-04-2025
- Business
- Yahoo
How Kingsbarn revived $105M Skims Hollywood HQ deal
All's well that ends well in Hollywood. Kim Kardashian's voguish shapewear startup Skims is mending the seams with its new Hollywood landlord, Kingsbarn Realty Capital, after the private equity firm brought a zombie deal back to life. Kingsbarn finally rested its case against former lender, KeyBank, and co-sellers Oscar Englebert and developer J.H. Snyder to buy 1601 North Vine Street for $105 million, or $905 per square foot. Hard money lender Hankey Capital provided a $52 million loan for the acquisition and additional financing came from Israeli firm IBI Volcano, according to a spokesperson for Kingsbarn and county property records. The terms of the loans are unclear, and a spokesperson for Kingsbarn did not provide further details. Kingsbarn was prepared to fork over more than that — $1,054 per square foot — when the property first went into contract in December 2022. It was vacant at the time, since former tenant WeWork decamped in October that year. And Englebert — a friend and business partner of Jens Grede, who co-founded Skims with Kardashian and his wife, Emma Grede — was already in contract to buy a majority stake of the building from developer J.H. Snyder. Things looked promising for all three parties, as J.H. Snyder and Englebert agreed to work toward a sale with Kingsbarn. They planned to close before Los Angeles' 5.5 percent transfer tax, known as Measure ULA, went into effect in March 2023. The cost of borrowing was meanwhile on the rise, and Kingsbarn hustled to secure $97 million worth of financing from KeyBank, which signed a term sheet for the loans a month before the closing date. Then the Ohio-based lender got cold feet. KeyBank reneged its offer at some point in the following weeks, and the deal fell apart in dramatic fashion. Behind the scenes, Kardashian's $4 billion fashion startup was working on a deal of its own to lease 116,000 square feet across the entire eight-story office building, and soon found itself caught in the legal crossfire of a real estate investment gone sour. Skims' 15-year lease was paramount to underwrite Kingsbarn's debt, and Jeff Pori, the company's CEO, described the startup in a statement as 'the perfect Hollywood tenant.' But to appraise the building and underwrite the deal, KeyBank needed Kingsbarn to prove that Skims wasn't yet occupying the building, though it had signed a lease in January. And Englebert did everything possible to prevent Kingsbarn from gaining access to prove the property was still empty, the company's lawyers later claimed in court. Kingsbarn was quietly building its case as the deal unraveled. Last April, the Nevada-based company sued J.H. Snyder and Englebert for unfair business practices, hoping to recover its $2.5 million deposit toward the purchase. Englebert, who could not be reached for comment, allegedly had trouble letting go of the building and its celebrity-linked tenant. Englebert 'turned Kingsbarn down and rebuffed Kingsbarn's efforts to obtain entry to the building,' the company's lawyers claimed in the April 17 complaint filed in California Superior Court in Los Angeles County. 'Englebert did this in order to conceal the fact that Skims still, by that date, was not actively occupying and conducting business operations from at least 70 percent of the premises.' And Kingsbarn didn't stop there. Last July, the company sued its own longtime lender KeyBank for revoking the loan terms and sending the deal into a tailspin. The wheels of justice turned in Kingsbarn's favor. A Superior Court judge rejected Englebert and J.H. Snyder's attempts to get the case dismissed and placed a lien on 1601 North Vine Street, according to court filings. By December, the parties had reached a detente and reinstated the purchase and sale agreement, lowering the building's price to $105 million from $122 million. Spokespeople for J.H. Snyder and KeyBank did not respond to requests for comment and Englebert could not be reached for comment. Pori, for his part, said in a statement, 'This purchase, along with our ability to secure financing for the building, is further evidence that the office market is recovering.' Kingsbarn will place the property into a Delaware Statutory Trust and offer fractional ownership to private investors for a 1031 exchange, according to the company. Kim Kardashian's Skims leases JH Snyder-owned Hollywood building Kingsbarn snaps up Hollywood offices occupied by Kim Kardashian for $105M KeyBank sued over derailed $122M deal for Skims-leased Hollywood offices This article originally appeared on The Real Deal. Click here to read the full story. Sign in to access your portfolio
Yahoo
11-04-2025
- Business
- Yahoo
Measure ULA is reducing apartment development in the city of L.A, report says
Los Angeles' "mansion tax" that funds affordable housing has likely led to a drop off in overall apartment construction, potentially worsening the city's housing situation, according to a new report released Friday. The study, from researchers at UCLA and Rand, focuses on Measure ULA — a voter-approved law that took effect in spring 2023. Though dubbed the mansion tax, the measure applies a 4% levy to nearly all property sales in the city over about $5 million, including apartment buildings, mini-malls and warehouses, and a 5.5% charge to sales above about $10 million. In doing so, the real estate industry has argued that the additional costs to the buying and selling of land have made it too difficult to earn a profit on many new housing developments, thus killing potential deals. The study released Friday supports that view, with authors basing their findings on a drop-off in sales of property where multifamily homes are typically built. In all, researchers estimated ULA is causing a reduction of at least 1,910 units per year. Because apartments in the city often are built using density bonuses that require private developers to include some income-restricted housing, there's also been a reduction of at least 168 affordable units annually, the report said. "If we are building less housing, then the city is going to become even more unaffordable," said co-author Shane Phillips, the housing initiative project manager with UCLA's Lewis Center for Regional Policy Studies. Los Angeles is not the only city where construction has fallen. Permits for new housing are down across the nation, as higher interest rates and material costs make it more difficult for developers to turn a profit. ULA supporters have pointed to those rising costs to argue the measure isn't having the negative impact its real estate industry critics claim. Report authors attempted to adjust for that dynamic by comparing land sales in the city of L.A. to other areas in the county where transfer taxes were not increased. They found land sales dropped much more in the city, and used the difference to come up with their estimate of lost units attributable to only ULA. In a statement, Joe Donlin, director of the United to House LA coalition behind the tax, said the report was based on "highly questionable assumptions" and furthered the interests of "real estate millionaires and billionaires." ULA backers have said in addition to interest rates, declining property sales may be attributed to some investors waiting it out while the real estate industry fights, so far unsuccessfully, to overturn ULA in court. They tout positive impacts the measure has brought. In all, city data show the tax has raised nearly $633 million within two years. And the ULA coalition has said the has funded rental assistance for 11,000 Angelenos, paid for eviction defense and contributed money to the construction of 795 affordable homes. ULA "has survived court challenges and referendum attempts from the real estate industry, and now, it's the largest source of affordable housing funding Los Angeles has ever seen," Donlin said. However, Rand economist Jason Ward, who also authored the report, said the measure is hurting overall housing construction in several ways by extending beyond luxury home sales. One, it reduces the number of land owners who want to sell in the first place, thus limiting opportunities to build. And many multifamily developers sell their projects to other investors after finishing construction, and would impacted by the tax again when doing so. Even if developers plan to hold on to their new apartment buildings, they have mortgages on the property, and Ward said lenders must factor in the cost of a sale if the developer falls into foreclosure. "They are going to either give you less money or give you money at a higher interest rate," said Ward, co-director of Rand's Center on Housing and Homelessness. Ward and Phillips called for changes to the measure to limit its potential negative effects. Not only do economists say that a reduction in market rate housing leads to higher rents, but the researchers argued that in the long run ULA will lead to a net loss in affordable units, as private developers of density bonus projects back away and ULA money isn't enough to back fill the hole. The 795 affordable units cited by the coalition, for example, only received a minority share of funds from ULA, with other sources making up most of the project costs. Some projects had also already started construction before receiving ULA funds and needed more cash to finish after they experienced cost overruns. Phillips and Ward said that while ULA likely sped up the construction of 795 units, those homes probably would have been built eventually as other sources were cobbled together and that more affordable units would be built without ULA. To ensure more housing is built, the report recommended exempting from ULA multifamily projects built within in the last 15 years, which the authors say would only reduce annual ULA revenue by 8% at the most. "Negative outcomes are not inevitable," the report reads, in calling for change. The UCLA-Rand analysis follows a study released last week that found declining sales it attributed to ULA have led to a $25-million annual loss in property tax revenue, which will compound in coming years. Sign up for Essential California for news, features and recommendations from the L.A. Times and beyond in your inbox six days a week. This story originally appeared in Los Angeles Times.
Los Angeles Times
11-04-2025
- Business
- Los Angeles Times
Measure ULA is reducing apartment development in the city of L.A, report says
Los Angeles' 'mansion tax' that funds affordable housing has likely led to a drop off in overall apartment construction, potentially worsening the city's housing situation, according to a new report released Friday. The study, from researchers at UCLA and Rand, focuses on Measure ULA — a voter-approved law that took effect in spring 2023. Though dubbed the mansion tax, the measure applies a 4% levy to nearly all property sales in the city over about $5 million, including apartment buildings, mini-malls and warehouses, and a 5.5% charge to sales above about $10 million. In doing so, the real estate industry has argued that the additional costs to the buying and selling of land have made it too difficult to earn a profit on many new housing developments, thus killing potential deals. The study released Friday supports that view, with authors basing their findings on a drop-off in sales of property where multifamily homes are typically built. In all, researchers estimated ULA is causing a reduction of at least 1,910 units per year. Because apartments in the city often are built using density bonuses that require private developers to include some income-restricted housing, there's also been a reduction of at least 168 affordable units annually, the report said. 'If we are building less housing, then the city is going to become even more unaffordable,' said co-author Shane Phillips, the housing initiative project manager with UCLA's Lewis Center for Regional Policy Studies. Los Angeles is not the only city where construction has fallen. Permits for new housing are down across the nation, as higher interest rates and material costs make it more difficult for developers to turn a profit. ULA supporters have pointed to those rising costs to argue the measure isn't having the negative impact its real estate industry critics claim. Report authors attempted to adjust for that dynamic by comparing land sales in the city of L.A. to other areas in the county where transfer taxes were not increased. They found land sales dropped much more in the city, and used the difference to come up with their estimate of lost units attributable to only ULA. In a statement, Joe Donlin, director of the United to House LA coalition behind the tax, said the report was based on 'highly questionable assumptions' and furthered the interests of 'real estate millionaires and billionaires.' ULA backers have said in addition to interest rates, declining property sales may be attributed to some investors waiting it out while the real estate industry fights, so far unsuccessfully, to overturn ULA in court. They tout positive impacts the measure has brought. In all, city data show the tax has raised nearly $633 million within two years. And the ULA coalition has said the has funded rental assistance for 11,000 Angelenos, paid for eviction defense and contributed money to the construction of 795 affordable homes. ULA 'has survived court challenges and referendum attempts from the real estate industry, and now, it's the largest source of affordable housing funding Los Angeles has ever seen,' Donlin said. However, Rand economist Jason Ward, who also authored the report, said the measure is hurting overall housing construction in several ways by extending beyond luxury home sales. One, it reduces the number of land owners who want to sell in the first place, thus limiting opportunities to build. And many multifamily developers sell their projects to other investors after finishing construction, and would impacted by the tax again when doing so. Even if developers plan to hold on to their new apartment buildings, they have mortgages on the property, and Ward said lenders must factor in the cost of a sale if the developer falls into foreclosure. 'They are going to either give you less money or give you money at a higher interest rate,' said Ward, co-director of Rand's Center on Housing and Homelessness. Ward and Phillips called for changes to the measure to limit its potential negative effects. Not only do economists say that a reduction in market rate housing leads to higher rents, but the researchers argued that in the long run ULA will lead to a net loss in affordable units, as private developers of density bonus projects back away and ULA money isn't enough to back fill the hole. The 795 affordable units cited by the coalition, for example, only received a minority share of funds from ULA, with other sources making up most of the project costs. Some projects had also already started construction before receiving ULA funds and needed more cash to finish after they experienced cost overruns. Phillips and Ward said that while ULA likely sped up the construction of 795 units, those homes probably would have been built eventually as other sources were cobbled together and that more affordable units would be built without ULA. To ensure more housing is built, the report recommended exempting from ULA multifamily projects built within in the last 15 years, which the authors say would only reduce annual ULA revenue by 8% at the most. 'Negative outcomes are not inevitable,' the report reads, in calling for change. The UCLA-Rand analysis follows a study released last week that found declining sales it attributed to ULA have led to a $25-million annual loss in property tax revenue, which will compound in coming years.
