San Diego’s City Council Rules Committee has voted against advancing a proposed ballot measure that would have imposed an annual tax on empty second homes and short-term vacation rentals. The measure, aimed at increasing housing availability and generating revenue, failed by a 3-2 vote after extensive public testimony and debate.
Key Takeaways
- The proposed tax aimed to generate between $17 million and $27 million annually.
- Opponents argued the tax would harm small businesses and tourism revenue.
- Supporters believed it would help alleviate the city’s housing shortage.
The Proposal and Its Goals
Councilman Sean Elo-Rivera spearheaded the proposal, which would have levied an $8,000 annual tax on empty second homes and short-term vacation rentals. An additional $4,000 surcharge was proposed for corporate-owned properties, and another $4,000 for repeat code violators. The intent, according to Elo-Rivera, was not primarily about revenue generation but about returning housing stock to the market for San Diegans.
Preliminary estimates suggested the tax could generate between $17 million and $27 million. However, city staff also noted that if a significant portion of these properties were removed from the market (either sold or converted to long-term rentals), the city could lose revenue from transient occupancy taxes, potentially leading to a break-even scenario.
Public Testimony and Committee Debate
Nearly 200 individuals and representatives from various organizations spoke during the committee meeting. Supporters, including members of labor groups and progressive business organizations, argued that the tax would help address the city’s housing affordability crisis by discouraging homes from sitting vacant or being used solely for tourist accommodation. They emphasized the need for housing to be available for local residents, workers, and students.
Conversely, opponents, including representatives from the San Diego Regional Chamber of Commerce and short-term rental hosts, voiced strong opposition. They contended that the tax would negatively impact small businesses, tourism, and the livelihoods of individuals who rely on rental income. Concerns were also raised about potential legal challenges and the risk of losing significant tourism tax revenue that supports city services like police, fire, and parks.
Reasons for Rejection
Councilmembers Raul Campillo, Kent Lee, and Vivian Moreno voted against advancing the measure. Councilmember Moreno expressed concerns about the proposal disproportionately affecting San Diegans who own short-term rental properties and urged fiscal responsibility. Councilmember Campillo highlighted potential negative impacts on small business owners and questioned the city’s potential revenue gains versus losses. Council President Pro Tem Kent Lee noted the shifting purpose of the measure and the uncertainty of its outcomes.
Council President Joe LaCava joined Elo-Rivera in voting for the measure, encouraging thoughtful consideration of city proposals. Despite a last-minute amendment by Elo-Rivera to focus solely on corporate and absentee owners, the measure failed to gain sufficient support to move forward to the full City Council. The committee’s decision means the proposal will not be placed on the ballot for voters to decide.
Sources
- San Diego vacation home/short term rental ballot measure plan dies in committee – NBC 7 San Diego, NBC 7 San Diego.
- Committee kills Elo-Rivera proposal to tax short-term vacation rentals, Times of San Diego.
- San Diego rules committee rejects ‘Empty Second Homes and Vacation Rental’ tax, cbs8.com.
- San Diego councilman floats taxes on short-term rentals, vacation second homes – NBC 7 San Diego, NBC 7 San Diego.
- Why it Matters: Proposal to tax empty second homes and vacation rentals fails, KPBS.