Why this matters
How to fix San Diego’s housing shortage is a problem that has dogged city leaders for years.
San Diego officials took the first step to put a new tax on vacation home operators up for a vote next year.
After more than two hours of back and forth public debate, a City Council committee voted 3-1 Wednesday to start working out the details of a proposed “Vacation Home Operation Tax” that would apply to vacant second homes and full-time vacation rentals, potentially generating up to $135 million in new revenue for the city’s coffers. Councilmember Raul Campillo voted no, while Councilmember Vivian Moreno was absent.
The proposal will come back for discussion early next year, and the full City Council would have to approve the proposal by early March for it to make the June 2026 ballot.
Councilmember Sean Elo-Rivera, who brought the ballot proposal forward, said the goal is to preserve fairness and housing for San Diegans.
“We’d like to stop investors, especially foreign and out-of-state investors, and short-term rentals from pushing working families out of their neighborhoods,” Elo-Rivera said during the meeting. “Ninety-nine percent of San Diegans would not pay this tax.”
This comes at a time when San Diego, like many other cities across the state, is grappling with a housing and affordability crisis that experts say is driven largely by underproduction. San Diego is falling short of new housing construction for all income levels, and half of the city’s current housing supply consists of rental units that are nearly full, which drives up rents.
The city already regulates short-term vacation rentals and caps the number licenses it issues for whole-home rentals at 1% of the city’s total housing supply — or 30% for rentals in Mission Beach.
Elo-Rivera said the proposal aims to accomplish four goals: make housing more affordable, protect San Diegans from displacement, protect neighborhoods and make vacation property investors pay their fair share.
The tax would apply to about 10,000 properties, half of which are vacant second homes and the other half are short-term rentals, city records show. The proposal calls for $5,000 per bedroom annually.
“We believe this tiered tax makes sense as each bedroom represents a bedroom a San Diegan could be living in, but that is not currently available for their use, while the home is being used as a short-term rental or is not being used at all,” said Maya Rosas, deputy chief of staff for Elo-Rivera. “Our proposed vacation home tax would impact those who can afford to own a second home or investment home in some of the most expensive neighborhoods in San Diego.”
The city’s independent budget analyst said a few factors could impact revenues generated, including property owners who choose to leave the short-term rental business altogether to avoid the new tax. That would impact taxes already collected from guests, known as the transient occupancy tax.
More than 100 business owners, short-term rental hosts and residents attended the meeting to support or oppose the proposed tax.
Zach Schlegel, a representative with a homeless service provider known as PATH, said the ongoing funding source is critical, especially as federal cuts continue to impact San Diegans.
“For instance,” he said, “we are expecting that the emergency housing vouchers will be running out of funding at the end of next year and that’ll be at least 500 families here in San Diego that will be on the streets as a result of that federal action.”
Tyler Andre, a small business owner, activist and veteran, said the proposal is “fair and simple.”
“If somebody owns a home that they do not live in or that they are renting out short-term, they’re going to be taxed based off the number of bedrooms, which is equivalent to the number of San Diego residents that could be living there,” he said. “This tax revenue will go to essential city services for everyone.”
On the other hand, vacation home owners and hosts described the proposal as an attack on their livelihoods, a threat to property rights — “a cornerstone of personal liberty,” one resident said — and an action that only serves to pit citizens against citizens by sewing class division. Several said they could not afford to live in San Diego without the income they collect from short-term rentals.
One man, a union carpenter named Jorge, said he rents out a two-bedroom home that he built for his daughter.
“I built this two-bedroom with these hands,” he said, and the city is saying “that I have to pay $10,000 extra a year for something I worked my ass off for, for my daughter’s future? I’m against it.”
After dozens of people spoke, Elo-Rivera took some time to respond directly to some of those who opposed the measure because they rely on short-term income to make ends meet.
“The problem isn’t you,” he said. “It’s an economy that has made it harder for ordinary people to stay afloat while the wealthy and well-connected profit off the rest of us.”
Elo-Rivera pointed to last year’s Airbnb earnings — year-over-year growth into billions of dollars — and said people are being used as pawns in a much larger game.
“It’s a system that’s working exactly as it’s designed,” Elo-Rivera added, “to let billion-dollar corporations thrive while working families like the ones in this room fight over the scraps of a shrinking housing market.”
Councilmember Campillo, who voted no on the proposal, put on his own presentation that raised concerns about increasing costs for short-term stays and decreasing tax revenues from property owners who choose to leave the vacation rental market, ultimately impacting the city’s ability to deliver the same services that the proposal aims to boost.
“I think it’s more likely to drive down the quality of our life than improve it,” Campillo said.
Type of Content
News: Based on facts, either observed and verified directly by the reporter, or reported and verified from knowledgeable sources.