A proposal to tax empty second homes will move to the ballot after the San Diego City Council voted 8-1 Tuesday to let voters decide in the June primary.
Councilmember Raul Campillo was the lone holdout because he said he had not received a memo that fully outlined the city’s ability to withstand a lawsuit regarding the tax.
“I cannot in good faith vote yes today when the reasonable request I made last week was not fulfilled,” Campillo said.
Campillo’s assertion drew criticism from farther down the dais.
“I’m a little disturbed that there is an implication here that the city attorney has not responded to a committee member’s request for a legal interpretation,” Council President Joe La Cava said.
“We have attorneys on this council that may have a different interpretation. I’m okay with that. But to represent to this public that we have received no legal briefings on this measure is just, frankly, false”.
To this, Campillo remarked he was not implying that the city attorney did not provide a legal briefing, rather that it was not a “robust” one.
“We should rely on the analysis not conclusions to make our decision,” Campillo said.
Many who opposed the measure asked the council to wait until there’s a verdict in San Francisco’s appeal of a court’s decision that a similar empty second homes tax is unconstitutional.
“It’s not the voters who are going to decide this measure, it’s the courts,” said resident Paul Kreuger during public comment.
Councilmember Sean Elo-Rivera directly addressed this issue in his own remarks. He said that nothing in the ballot measure changes the Ellis Act, which was part of the reasoning for the ruling in San Francisco.
The Ellis Act is a long-time state law that gives landlords the right to evict tenants to exit the rental market.
“This measure does not require anyone to rent their home. It does not compel anyone to remain in the rental business,” Elo-Rivera said.
Most of those who offered public comments favored the measure. In council chambers, some held signs that read “Homes for San Diegans.”
The measure which will appear on the June ballot will stipulate that owners of empty second homes pay a tax of $8,000 in 2027, then $10,000 in 2028 and beyond. Corporate-owned empty homes would have another $4,000 tacked on in 2027, then 5,000 in 2028.
The Office of the Independent Budget Analyst said out of the estimated 5,140 homes considered vacant, it would be an optimistic estimate that nearly 45% would be excluded from paying the tax, but perhaps as many as 70% could be excluded.
Based on the lower estimate, if 45% were exempted from the tax, the city might bring in $21.4 million from the tax in the first year and $24.2 million in the second year. If around 70% of the estimated homes are exempt from the tax, the city could bring in $9.2 million to start and $10.4 million the following year.
The IBA also made clear that these figures are extremely dependent on different factors, such as city enforcement and the behavior of the owners. They cold, for instance, sell their home, make it a short-term rental or simple dodge the tax.
Of the 5,140 homes the city estimates are vacant, 45% are concentrated in the coastal areas and downtown.The first time a similar tax was introduced in rules committee Elo-Rivera’s ballot measure packed two taxes into one proposal — a tax on short-term vacation rentals and vacant second homes. After it generated strong opposition, the council member ditched the tax on short-term vacation rentals, putting the current proposal up for consideration after other council members said they would support the tax independently.
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