In a near-unanimous decision, the San Diego City Council agreed Tuesday to let voters decide whether a hefty tax should be imposed on thousands of second homes that are sitting empty most of the year.
The proposal, which will appear on the June ballot, is a divisive one and drew scores of people on both sides of the issue eager to voice their feelings on a tax that council members believe will be a key step forward in expanding the supply of rental and for-sale housing in San Diego.
The “empty homes tax,” as it is being called, would impose an initial annual tax of $8,000 on more than 5,000 homes unoccupied for more than half a year — plus a $4,000 surcharge for corporate-owned dwellings. In subsequent years, the tax would rise to $10,000, with the surcharge increasing to $5,000.
It is the brainchild of Councilmember Sean Elo-Rivera, who just a month ago failed to win support from his colleagues for a far broader measure that would have also taxed whole-home short-term rentals.
“The desire to have a damn chance to live in the city is so strong and we need to encourage that,” Elo-Rivera said. “No one is asking for free housing. They want a chance to live in the city they love and that they work in. We heard it from teachers, we heard it from firefighters, we heard it from students, we heard it from recent grads. And that’s why homes shouldn’t be sitting empty during a housing crisis.”
Council President Joe LaCava acknowledged that for a problem as huge as housing affordability, the second homes tax is not a magical solution, but it will still help bring hundreds, if not thousands of homes back onto the market for San Diegans, he said.
“The empty homes initiative is not a silver bullet, in itself, to solve these challenges,” he said. “We know there isn’t one solution to make everything better. But let me be clear, every action we can take, small and targeted, big and bold, is important. This measure has the potential to move us in the right direction by generating new revenue to fund city services, turning empty houses into homes for San Diego, or some combination of the two.”
The lone dissenting vote came from Councilmember Raul Campillo, who signaled during a Rules Committee meeting last week that his final decision on advancing the measure would be based on advice he sought from the city attorney’s office on San Diego’s ability to legally defend a second-home tax should it be ratified by voters. The legal memo he requested at that meeting, he said, never arrived, and so he remained uncomfortable moving forward with a vote to place the measure on the ballot.
An empty homes tax has been adopted in other states and jurisdictions, including Berkeley and San Francisco. Not long after San Francisco voters passed the tax in 2022, a coalition of real estate interests sued the city, and in October 2024, a Superior Court judge struck down the law, ruling that it was unconstitutional and was pre-empted by state law. The city has appealed the ruling.
“I weigh the potential legal viability and risk, together with the net public benefit, on the decisions I make, no matter how compelling or urgent the motivation is, and certainly there is an urgent and compelling motivation,” he said. “I’m hesitant to vote for this today, because I have not received the information I need to be confident in that decision. And confidence in our decisions is something the public truly lacks these days.”
Both Elo-Rivera and LaCava stressed that the measure has had extensive legal review, including the advice of an outside legal firm. While Campillo may not have received the legal memo he requested, LaCava empasized that legal analysis was provided to the council since the Rules Committee meeting.
“I’m very concerned about the idea that is being represented in this chambers, that the city attorney has done nothing since committee,” LaCava said. “They have done things in the best action that a city attorney should provide in terms of informing council members of the legal basis for a measure. You may disagree with them … I’m OK with that. But to represent to this public that we have received no legal briefings on this measure, it’s just, frankly, false.”
If approved by the voters, the ballot measure would be effective Jan. 1 of next year, with the first tax payment due April 1, 2028, for homes deemed to be empty for 183 days or more in 2027.
The majority of speakers at Tuesday’s more than two-hour-long hearing were in support of the measure, but there were still dozens of people who urged the council to not place the tax measure on the ballot.
George Ching, government affairs director at the Pacific Southwest Association of Realtors, said the measure would create a legal burden for homeowners to prove they live in their own home.
“Even if they are exempt, they are going to have to file paperwork to prove they are exempt,” Ching said. “That creates an opportunity for errors and appeals.”
Karen Barton, a San Diego District 2 resident, said her neighbor owns two homes in the same neighborhood with three children at home. She said the second home, a condo, was used by her neighbor’s grandparents to help take care of their grandchildren.
“She uses that second home 120 days a year,” Barton said. “Is this the family you deem too rich or in need of double taxation?”
The office of the Independent Budget Analyst estimates that there are 5,140 largely unoccupied second homes that are not claimed as a primary residence. That figure is based on the number of homes whose owners sought a second home/vacation home exemption from paying the Rental Unit Business Tax because they do not use their properties as a primary residence or as a short- or long-term rental but instead keep them uninhabited for more than 182 days out of the year. The IBA estimates that of the total unit count, 43 residences are owned by corporations.
Should the measure become law, it’s more realistic, though, to assume that anywhere from 1,790 to 2,812 empty homes would be subject to the tax, the IBA said. That estimate takes into consideration properties that would fall under a number of exemptions provided for in the measure, as well as those instances where owners opt to sell their properties or convert them to short- and long-term rentals.
Noah Yee Yick, a research and policy advocate for the Center on Policy Initiatives, said the city needs to find ways to fund the budget that don’t go after things the public uses, like cutting library hours and other services, and because of that, he supports the measure.
“There are thousands of San Diegans who struggle to keep a roof over their heads,” he said, “while homes across our city sit empty, owned by people wealthy enough to leave them vacant.”
While the measure would generate much-needed revenue for the city’s general fund, Elo-Rivera has said a number of times that his biggest hope is that the tax acts as an incentive to persuade the owners of second homes to either rent them out or sell them.
According to the Independent Budget Analyst, the tax measure could yield $9.2 million to $21.4 million in the first year and $10.4 million to $24.2 million in the second year, which is considerably less than the $51 million originally calculated by Elo-Rivera’s office.
To ensure there is no possible ambiguity in the language of the measure, the tax measure specifically includes language stating that it does not apply to the rental of entire homes on a short-term basis.
The measure also includes provisions for some limited exemptions, such as disaster periods when a home is uninhabitable, circumstances where the owner is in long-term care, a family member is living in the home, financial hardship and qualifying military service, and where the owner of four or fewer housing units lives in one of them. Also exempted would be newly built homes that remain vacant while being offered for sale and instances where an owner can show evidence of a rental lease for more than 182 days in the previous calendar year.