Two things generally have proven themselves unpopular in San Diego: new public fees and short-term vacation rentals.
Those two inclinations will again crash into each other this week as a San Diego City Council committee takes up the proposal to tax certain owners of those rentals thousands of dollars for their operations.
The cash-strapped city — Mayor Todd Gloria, after last year’s bruising budget battle, placed the city’s upcoming budget deficit at almost $90 million — has opted for new and increased fees to bridge gaps, but voters would need to weigh in for the “Empty Second Homes and Vacation Rental Tax,” as it’s known, to take effect.
The proposal, first considered by the Rules Committee in October, has been revised, with the tax rising to $8,000, and the focus narrowed to a charge per property, not individual rooms. The initial plan was for a $5,000 tax per bedroom per residence marketed not as a full-time home, but as a rental through agencies or online services such as Airbnb.
The committee, chaired by Council President Joe LaCava, will decide Wednesday whether to move the revamped proposal on for review by the full city council. Should the council approve, the plan would be placed on the June primary ballot.
One vote in favor is crystal clear — that of Councilmember Sean Elo-Rivera, who proposed the plan last year.
His full-court press for the tax last week included no less than four news conferences in which local residents, students, veterans and military and union members outlined why they back the plan, for reasons ranging from housing access and affordability to restoring their neighborhoods.
Elo-Rivera, despite the deficit, argues that the tax really isn’t about addressing the city’s budget problems, but finding a way to create a deterrent for homeowners who prefer catering to tourists rather than locals or those who let a second home remain vacant most of the year.
“What we’re trying to do is disincentivize homes from being used as mini-hotels instead of houses, and disincentivize homes from sitting empty instead of being a place where families can grow up,” he said.
In addition to the direct tax of $8,000 per vacation rental or empty home, the plan includes a $4,000 surcharge for corporate, rather than individual, owners. It does not, however, target those who post and rent rooms in a home where they also live.
Tracy Dezenzo, a member of the Ocean Beach Planning Board, appeared at one of Elo-Rivera’s news conferences, held near Dog Beach, within view of a building in her community that has been completely converted to short-term rentals.
“Neighborhoods,” she said, “are not meant to be resorts.” She takes issue with opponents of the proposal who say individual homeowners renting out rooms would be hurt by the tax. She called that “fearmongering” and deflection.
“Owning multiple homes and renting them out for two or three times more than what a long-term rent would be isn’t being middle class,” she said. “It isn’t being mom and pop. It’s profiteering, and calling themselves mom and pops is definitely disingenuous.”
The San Diego Regional Chamber of Commerce does point to the same people as Elo-Rivera in challenging the proposed tax. The councilman argues that short-term vacation rentals hurt the working class, retirees and veterans, while the chamber has countered that the tax would hurt those same people if they “rely on a rental home to help make ends meet.”
The organization remains opposed to the plan, regardless of the revisions. President and chief executive officer Chris Cate calls it “a policy that ultimately makes San Diego’s affordability challenges worse, not better.”
“This proposal does nothing to realistically address housing costs for San Diegans. It doesn’t create a single new housing unit, and there is no requirement that the money collected be used for housing at all,” he said in a statement.
Elo-Rivera estimated last year that his proposal would apply to roughly 2% of all housing units in the city and generate from $90 million to upwards of $130 million for the city budget. With the revised plan, that figure has been adjusted down to “up to $90 million,” according to a report released by the councilmember’s office ahead of the committee meeting.
The city, as of Jan. 16, said that there have been 8,246 licenses issued for short-term residential occupancy. The proposal would apply to more than 5,700 of those licenses.
In the October meeting, LaCava made it clear that he’s focused on budget solutions. “We need more revenue to provide the services our communities are asking for,” he said.
He noted a series of items he wanted to see cleared up regarding the potential tax. They include establishing how much the city receives in transient occupancy taxes from short-term vacation rentals, how much that figure could drop if units are pulled from the market and how likely it would it be for the tax to prompt owners to sell homes they maintain as vacation rentals.
The city’s Independent Budget Analyst is expected to issue a report on the plan ahead of Wednesday’s meeting.
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