Amid housing crisis, California cities seek to target vacant homes with taxes

Down the coast, Santa Cruz — where the median rent has skyrocketed to $4,000 a month — also agreed to a similar measure introduced in November.

Housing Department staffer Elizabeth Smith said the voter-led initiative proposes to tax landlords whose properties are occupied less than 120 days a year, for $3,000 to $6,000. City staff said if approved, the launch would cost $607,000, but is expected to cost $420,000 and generate up to $4 million a year.

Cyndi Dawson, campaign manager for Yes on Empty Homes, said her team believes imposing a tax on empty homes is essential to create a revenue stream for building subsidized homes.

“The community looks around and sees friends, families and co-workers pushed out by skyrocketing housing costs,” Dawson said. “If a landlord chooses to keep their unit vacant, it creates an avenue for that landlord to support this community they want to be a part of and fulfill need number one.”

While Dawson acknowledged an opposition campaign directed against the empty homes measure, called Santa Cruz Together, she said the campaign hired a tax attorney to confirm the proposed ordinance aligns with local best practices for ensure this is the “lowest load” option for owners.

Lynn Renshaw of Santa Cruz Together said her group believes the measure is “poorly written” and would expose landlords to being charged with multiple offenses because they don’t understand how to comply.

In Los Angeles, officials have struggled to ask voters the question for years, after a 2020 report showed about 85,000 to 100,000 units may be empty citywide. A new report from the ACCE Institute says the city has more than 46,000 hung units in vacant non-market housing or “more than one for every person without housing”.

A map presented to the Los Angeles City Council in 2020 shows where estimated vacancies are located in the city based on data from housing availability scans. (City of Los Angeles via Courthouse News)

While the neighboring West Hollywood City Council pushed back discussion of the same policy until next spring, last April the Los Angeles City Council asked staff to draft options for a future ballot measure. A city spokesperson said the city is still working on a draft ordinance and would not comment on a timeline for approval.

There is debate over whether this strategy will help open up housing for homeless residents, pushing landlords away from holding vacant homes. Dawson said the annual count of homeless residents shows a “huge spike” in Santa Cruz residents who have lost their longtime homes. She hopes to motivate landlords to rent their homes because they are legally obliged to accept people with housing choice vouchers (Article 8).

“It’s government guaranteed income, and the people who hold these vouchers are great tenants,” she said.

Ryan Finnigan, senior research associate at UC Berkeley’s Turner Center, said while the concept is relatively new, he doesn’t think taxing empty units will necessarily directly solve homelessness. He said that even if approved, there are not many units the tax would apply to.

“I don’t think it will move the needle in a deep way, it might not be a huge contributor to ending homelessness,” Finnigan said. But he called the concept reasonable: “Especially if we not only view housing as a profitable good, but when we view the value of housing as both of importance and relevance to the public.”

Sharon Cornu, executive director of the homeless services organization for seniors St. Mary’s in Oakland, said she believes such measures speak directly to homelessness. She supported Oakland’s passage of a 2018 empty-home tax measure, Measure W, from Vice Mayor Rebecca Kaplan. This tax of $3,000 to $6,000 depending on the type of property raised over $7 million in the first year. Oakland has the lowest median rent, $2,595, compared to market reports from other cities considering this strategy.

Cornu said St. Mary’s helped elderly clients who were housed on a stable basis until a new landlord bought their property, raised rents and evicted people. She said many properties often remain empty after such evictions.

“We believe the exemptions for affordable housing and ongoing development are important to encourage appropriate infill development,” Cornu said. “National real estate companies that buy affordable single-family homes, duplexes and private apartments have also put barriers between those in need and housing.

“These vacant homes could help get people off the streets and are a critical resource,” she said.

Association of Realtors chapters in Santa Cruz, San Francisco and North Bay did not respond to requests for comment before press time.

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Bernard P. Love