A billionaire real estate developer and a Democratic congresswoman are still locked in a tight race to become the next mayor of Los Angeles, in a record-breaking campaign where political spending topped $120m.

On Wednesday morning, the margin of votes between Rick Caruso and Karen Bass was still too close to call, with the candidates virtually tied, the Associated Press reported.

Caruso was ahead by 12,000 votes on Wednesday morning local time, with nearly 80% of expected votes remaining to be counted.

Bass told supporters at her election party that the vote counting could take days, but added: “We will win, because we are going to build a new Los Angeles.” Caruso told his crowd: “We don’t know the outcome yet, but I’m happy to say that we’re starting out strong.”

In another closely watched LA race, the incumbent county sheriff, Alex Villanueva, was trailing his opponent, the former police chief of the city of Long Beach Robert Luna. Villanueva, a Democrat who took a hard turn to the right since his election in 2018, has been derided by some as the “Donald Trump of LA” due to a steady stream of controversies surrounding obstruction, abuse and misconduct cases.

Both nominally Democrats, Bass and Caruso come from starkly different backgrounds, and their down-to-the-wire contest comes at a particularly fraught time for Los Angeles.

The region’s homelessness crisis has become a humanitarian catastrophe, with LA county recording 69,000 unhoused people in this year’s annual estimate, considered an undercount, including more than 48,000 living outside.

During the campaign, Caruso made it clear he would like to roll back some criminal justice reforms in order to impose tougher penalties for theft, and suggested he would be willing to arrest unhoused people who were unwilling to move into shelters.

City government is also in crisis. Recordings leaked last month captured three councilmembers, including the council president, making bigoted and racist remarks about Black, Indigenous, Jewish, Armenian and gay people while discussing redistricting. The closed-door remarks of the three Latino councilmembers included derogatory statements about the Black toddler of another councilmember and offensive stereotypes about Oaxacans in Los Angeles.

The scandal sparked international outrage and exposed longstanding racial tensions and anti-Black racism of some lawmakers in a city that is roughly 50% Latino and 9% Black. The leaks captured the three moderate Democrats deriding progressives and crudely discussing their efforts to reduce the power of renters and their Black colleagues in the redistricting process, prompting a state investigation.

If she wins, Bass, who rose to a position of influence in Congress after decades as a community organizer in Black and Latino neighborhoods, would be Los Angeles’ first female mayor and its second Black mayor.

While Bass has a long track record of building multiracial coalitions, including in times of political crisis, she is also the candidate of the city’s Democratic establishment, and was backed by some of the Latino politicians whose leaked comments portrayed them as primarily interested in preserving their own personal power.

With an estimated net worth of $5.3bn, Caruso, who developed some of Los Angeles’ most beloved luxury malls, presented himself as an outsider businessman with the skills to clean up corruption in city government and disorder in the city streets. He outspent Bass by more than 10 to one, pouring more than $100m of his own money into an election that shattered previous campaign finance records in the city.

Caruso’s campaign ran “the best-funded and -focused Latino get-out-the-vote effort in the history of Los Angeles”, implementing a strategy that more leftwing Latino activists and academics had been urging candidates to deploy for years, political scientist Fernando Guerra said.

During the general election, Caruso’s campaign poured millions into on-the-ground paid canvassing efforts in Latino neighborhoods, Guerra said, with young Latino and Latina canvassers presenting Caruso as a champion of small businesses and as the product of an immigrant success story, whose Italian American family had roots in Boyle Heights, now a predominantly Latino neighborhood.

Caruso generated mockery and criticism during a campaign debate when he disputed a description of himself as a white man by calling himself “Italian”, and said, “That’s Latin.”