Wednesday, the Rules Committee for the San Diego City Council will consider Councilmember Sean Elo-Rivera’s push for a tax on empty second homes and vacation rentals. He and his supporters have polled the issue and asked whether voters supported an up-to $5,000 per bedroom annual tax on vacation rentals.
The business community and AirBnB seem to see it as an existential threat.
First, the argument for: As announced at Politifest, Elo-Rivera wants the city to start seeing tourism differently: not as a precious industry that needs to be coddled and nurtured but instead like oil in Norway: An incredibly valuable resource that the city should extract more social benefits from.
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“The city needs resources to provide residents the things they want and need,” he said. “That conversation should begin with those with most means who do not live here.”
He said we have not even captured the cost of serving tourists, pointing out, for example, that most of the rescues lifeguards must perform every summer are to save visitors. And he’s aiming at vacation rentals in particular because of their impact on neighborhoods.
“We have neighborhoods that are not neighborhoods because speculators and investors see every home in them with dollar signs and have detached themselves from the impacts of what they’re doing to them,” he said.
The tax would bring in money the city could use for its essential services and it would provide incentives for owners to put the homes back onto the market.
The argument against: The Chamber of Commerce started sending text messages to voters this week asking them to call members of the City Council to oppose the tax.
“We, the chamber, are tired of the targeted attacks on industries, particularly tourism,” said Chris Cate, the CEO of the San Diego Regional Chamber of Commerce. He said short-term vacation rentals have always been a part of San Diego’s tourism industry and the city spent years finding the right balance between taxing them and regulating them and allowing them to thrive.
AirBnB’s public policy senior manager Justin Wesson also released a written statement:
“More than 81 percent of Airbnb hosts in San Diego are local residents, and more than half say the income earned through hosting has helped them stay in their home. Airbnb supports meaningful solutions that help generate and protect local revenue across the state, but a hefty tax that significantly raises costs for residents who occasionally share their home to make extra money is not the right approach. We welcome the opportunity to work with City Council on legislative efforts that would actually help bolster affordability in the city.”
Elo-Rivera took issue with the idea that this was an attack on the tourism industry in general. Vacation rentals are a small slice of the industry and the public does not feel like they pay their fair share.
“If anything narrow like this we do is going to be received as an attack on the tourism industry as a whole, that is a posture that will force everyday San Diegans to unfairly bear the burden of that industry extracting tremendous wealth and not giving back to San Diego,” Elo-Rivera said.
AirBnB’s implied threat: The company did a poll recently asking voters if they supported the 2022 ballot Measure B, which allowed the city to begin collecting a fee for trash collection. This year, the City Council and mayor implemented the fee at a much higher rate than they said it would be when Measure B passed.
The implication is that AirBnB and others may strike back try to put a measure on the ballot repealing the trash fee, which would blow a massive hole in the city’s budget.
The suggestion that could happen made Elo-Rivera irate. Repealing the fee would lead to the closure of parks and libraries, massive layoffs at the city and the browning out of fire stations and more.
“Anyone who suggests this should be completely ashamed of themselves should be a pariah in any serous San Diego circle and not be considered a member of the problem-solving community,” he said.
A June vote: He hopes the measure would make it on the June primary ballot. You may remember a movement to ensure major ballot decisions do not go on primary ballots because they should be weighed by the most voters possible. It became Measure L in 2016.
“Special interests and political insiders attempt to exert more influence during the primary when decisions can be made by small fraction of registered voters,” said then City Council President Sheri Lightner.
Elo-Rivera pointed out that was for ballot initiatives from signatures not for Council actions.
He said he has the support of the advocates of Measure L, most prominently Alliance San Diego.
“It’s not a community concern,” he said. And they need the money. “We are doing it for the very practical purpose that the problems we’re solving for need to be solved as soon as possible.”
Totally Unrelated: AirBnB Investing in San Diego Politics
AirBnB recently announced it was spending $15 million to support friendly political candidates in California. It also donated $1 million to the California Democratic Party.
The company told me that a big part of it is coming to San Diego.
“San Diego is a top focus of our broader California political strategy in 2026, and we plan to significantly back candidates who champion home sharing and tourism for the community,” said Wesson, in a written statement.
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Homeowners pay property taxes. How does this not run afoul of prop 13?
Airbnb owners pay property tax, on top of the the TOT tax (10-16%) and income tax – so more than your average San Diegan but not enough for Elmo. Here’s a better plan , tax Elmo’s pay at 90% so he doesn’t have time to screw up SD with inane ideas like Ask Street and the Trash scam.
I live in OB and my neighborhood has been destroyed by short-term rentals. I now live among hotels and an endless parade of people and their roller bags. You can’t have a neighborhood without neighbors. With sky-high rents the argument that owners will be left impoverished is an obvious lie. Home sharing? Entire apartment buildings have been cleared for short-term rentals, nobody is sharing their home.
Excepts From The San Francisco Judge’s Ruling In Favor of Plaintiffs
Lawsuit Against San Francisco’s Empty Homes Tax
IT IS HEREBY ADJUDGED, ORDERED, AND DECREED THAT:
“1. Judgement is hereby granted in favor of Plaintiffs……….”
2. Defendants and Real party in Interest……are prohibited from enforcing or administering Proposition M”
“Conclusions Of Law”
“1. Plaintiffs have standing to bring this action, and their action is not premature or barred by the “pay first, litigate later” rule. because the vacancy tax is challenged herein is not yet “due” No payment will be required until April of 2026 at the earliest. (See PUMF No. 4); Proposition M, S.F. Bus. & Tax Reg Par. 2953 (Imposition of Tax”) (Plaintiffs’ Appx. 49); request for Judicial Notice in Support of Defendant’s Motion for Summary judgement/Adjudication, filed May 24, 2024, Ex. H (Oxford. 224-23), P 7 (Par. 6.9-1(k)(1); Defendants opposition to Plaintiffs’ Motion for summary Judgement/Adjudication, filed July 26, 2024, p.15 lines 1-3; see also Order Overruling Defendants’ Demurrer to the first Amended Complaint, filed Jan. 5 2024.
2. The Proposition M vacancy tax violates the Takings Clause of the Fifth amendment as alleged in the First Cause of Action in the First Amended Complaint.
3. The Proposition M vacancy tax is also preempted by the Ellis Act, Govt. Code Par. 7060(a), as alleged in the Second cause of Action in the First Amended Complaint.
4. Proposition M violates property owners’ fundamental liberty interests in familiar living arrangements protected by due process and equal protection clause, insofar as it taxes (actually, penalizes) units that are rented to family members of the owner while exempting units rented to strangers. As alleged in the Third and Forth Causes of Action in the First Amended Complaint.
5. Proposition M violates property owners’ constitutional right to privacy under the California Constitution, insofar as it seeks to compel them to share the property on which they reside with others, against their will, as alleged in the Fifth Cause of in the First Amended Complaint.”