San Diego City Council advances empty second homes tax to June ballot
San Diego City Council advances empty second homes tax to June ballot
San Diego's Empty Homes Tax: A City Council Gamble Fraught With Constitutional Peril, Enforcement Gaps, and Fiscal Uncertainty
⬛ BLUF — Bottom Line Up Front
San Diego's City Council has advanced a ballot measure that would impose annual taxes of $8,000–$15,000 on vacant second homes beginning in 2027. The measure faces serious constitutional headwinds: San Francisco's nearly identical "Empty Homes Tax" was ruled unconstitutional by a Superior Court judge in 2024 under the Ellis Act — a ruling now on appeal. Enforcement of the San Diego measure would rely on an untested self-declaration system with no existing city infrastructure, drawing comparisons to the notoriously difficult-to-enforce mechanisms attempted in Vancouver and Oakland. Projected revenues range widely — from $9.2 million to $24.2 million annually — with officials conceding that owner behavior (selling, renting, or simply evading) could dramatically reduce collections. The constitutional question, not the ballot outcome, will likely be decisive.
Background: From Political Defeat to Ballot Box
San Diego City Councilmember Sean Elo-Rivera first introduced a dual-track proposal in 2023 that combined a tax on short-term vacation rentals with a levy on vacant second homes. That measure died in committee after failing to build sufficient council support. Elo-Rivera subsequently separated the two components and returned with the vacant homes tax as a standalone measure. The revised proposal gained traction, and on March 4, 2026, the full council voted 8-1 to place the measure before voters in the June 2026 primary election.
Councilmember Raul Campillo cast the sole dissenting vote — not in opposition to the policy itself, he clarified, but because he had not received what he described as a sufficiently "robust" legal memo addressing the city's vulnerability to constitutional litigation. Council President Joe La Cava disputed Campillo's characterization, asserting that the city attorney's office had in fact provided legal briefings and that implying otherwise was "frankly, false."
The disagreement highlighted an underlying unease that pervades the entire enterprise: the legal scaffolding supporting the tax is shaky at best.
What the Tax Would Actually Do
Proposed Tax Structure (If Approved by Voters)
- 2027 — Individual owners: $8,000 per vacant second home annually
- 2028 and beyond — Individual owners: $10,000 per vacant second home annually
- 2027 — Corporate-owned empty homes: $8,000 + $4,000 surcharge = $12,000
- 2028 and beyond — Corporate-owned empty homes: $10,000 + $5,000 surcharge = $15,000
- Vacancy threshold: Unoccupied more than 180 days per year
- Scope: Second homes only — primary residences explicitly excluded
- Short-term and long-term rentals: Excluded (treated as occupied/active use)
The measure applies only to residential properties that are neither the owner's primary residence nor actively rented. Properties vacant due to hardship, military deployment, disaster damage, or the owner's placement in long-term medical care are exempt.
Owner-Occupied, Guest-Occupied, and Unoccupied: Is There a Legal Distinction?
A key definitional question — one the ballot measure does not fully resolve — is how the city would treat a home occupied not by its owner but by guests, family members, or domestic staff for portions of the year. Under the current draft, occupancy appears to be determined by whether the property is used as a primary residence by the owner, not by whether any person physically inhabits it at any given time.
This creates a legal gray zone. A second home at La Jolla Shores occupied by the owner's adult children for summer months, or visited by the owner for 90 days per year and by extended family for an additional 100 days, may or may not cross the 180-day threshold depending on how "occupancy" is defined in implementing regulations. Vancouver's Empty Homes Tax program — one of the longest-running in North America — grappled with exactly this question and ultimately defined occupancy to include occupation by the owner or a permitted occupant (tenant or authorized resident). Whether San Diego adopts a similar standard would depend on implementing ordinances written after voter approval.
Under Canadian-style frameworks, guest occupancy by non-paying visitors does not typically count toward the occupancy threshold unless the guest is a formal tenant. If San Diego follows this model, properties used exclusively for occasional personal recreation — a hallmark of San Diego's coastal second-home market — would be taxed even if they are physically occupied for weeks at a time by family or friends.
— Paul Kreuger, San Diego resident, public comment, March 4, 2026
The San Francisco Precedent: A Cautionary Constitutional Tale
Opponents of the San Diego measure have repeatedly pointed to a November 2024 ruling by San Francisco Superior Court Judge Charles Haines, who struck down that city's Proposition M — the "Empty Homes Tax" approved by San Francisco voters in November 2022 — as unconstitutional. The ruling rested primarily on California's Ellis Act (Government Code §§ 7060–7060.7), a 1985 state law that prohibits local governments from compelling landlords to remain in the rental business or to rent their properties.
Judge Haines found that while Proposition M did not explicitly require anyone to rent their home, its financial penalties effectively coerced property owners into doing so, constituting an indirect violation of the Ellis Act's guarantee that owners may withdraw from the rental market without punitive consequence. The ruling also raised questions under the California Constitution's Article XIII C (the "Taxpayer Protection Act," as amended by Proposition 26 in 2010), which requires that special taxes — those earmarked for specific purposes — receive two-thirds voter approval rather than a simple majority.
San Francisco appealed the ruling to the California First District Court of Appeal, where the case remained pending as of early 2026. A decision is expected to have statewide implications, potentially foreclosing or enabling similar local measures from Los Angeles to Sacramento.
Councilmember Elo-Rivera sought to distinguish the San Diego measure from San Francisco's Proposition M, arguing that San Diego's version "does not require anyone to rent their home" and "does not compel anyone to remain in the rental business." Legal scholars contacted by The Epoch Times were not uniformly persuaded. The Ellis Act defense depends less on explicit mandates than on whether the practical effect of the tax is coercive — a fact-intensive analysis courts apply on a case-by-case basis.
"The distinction Elo-Rivera is drawing is a real one, but courts look at practical effect, not just stated intent. If the tax is large enough — and $10,000 per year is not trivial — a court could find that it effectively compels rental activity to avoid the penalty. That's the Ellis Act question."
— Legal analysis, California property rights scholarship, 2024
Additional Constitutional Vulnerabilities
Takings Clause concerns. Under the Fifth Amendment to the U.S. Constitution, made applicable to states via the Fourteenth Amendment, government action that effectively forces a property owner to alter the use of their property may constitute a regulatory taking requiring just compensation. While the U.S. Supreme Court's Penn Central Transportation Co. v. New York City (1978) three-factor test generally disfavors takings claims against tax measures, property rights advocates have argued that vacancy taxes targeting a specific use — non-rental holding — may warrant heightened scrutiny, particularly after the Court's decision in Cedar Point Nursery v. Hassid (2021), which reaffirmed strong protections against government-mandated intrusions into private property.
Equal protection questions. The measure imposes a $4,000–$5,000 surcharge on corporate-owned vacant properties that does not apply to identically situated individual owners. While tax classifications typically receive rational basis review, challengers could argue the corporate surcharge lacks a rational basis distinguishing corporate from individual non-rental holding behavior.
Proposition 26 classification. If courts determine that the vacant homes tax is a "special tax" — particularly if revenues are directed to a specific fund such as affordable housing — the measure may require a two-thirds supermajority rather than a simple majority for voter ratification. Drafters appear to have structured the measure as a general tax to avoid this requirement, but litigation on this point is likely.
Enforcement: The Machinery That Does Not Yet Exist
Perhaps the most underexamined aspect of the proposed tax is the fundamental question of how it would actually be enforced and collected. Unlike property taxes, which are assessed against land values using established county assessor rolls and collected through a long-standing lien and forfeiture system, a vacancy tax requires the city to determine whether a specific property was occupied — a question of human behavior, not land value.
The Self-Declaration Model and Its Limitations
Most vacancy tax programs worldwide, including those in Vancouver, British Columbia (since 2017); Victoria, Australia (since 2018); and Washington, D.C. (since 2011, with tiered rates), rely primarily on owner self-declaration. Property owners annually certify their property's occupancy status; properties that are not certified as occupied, or whose certification is challenged, are assessed the vacancy tax.
The structural vulnerability of self-declaration is well-documented. Vancouver's Empty Homes Tax — administered by the City of Vancouver under the Vancouver Charter — experienced a 25–30 percent audit dispute rate in its early years, and city auditors found a meaningful percentage of self-declarations inaccurate or fraudulent. The city developed a multi-layer audit system involving:
- Utility consumption data cross-referencing (electricity, water, gas usage consistent with occupancy)
- Canada Post mail delivery verification
- Third-party property inspector site visits
- Landlord-tenant registry cross-checks
- Aerial and satellite imagery analysis of parking patterns and activity
San Diego currently possesses none of this infrastructure. The city has no vacancy registry, no landlord registration database (unlike Los Angeles, which maintains one under its Rent Stabilization Ordinance), and no cross-agency data-sharing agreement that would allow utility consumption to be used for tax enforcement. Building such a system from scratch would require significant capital investment and multi-year lead time — precisely the implementation challenge that has bedeviled Oakland's Measure W.
Oakland's Measure W: A Cautionary Parallel
Oakland voters approved Measure W, the "Vacant Property Tax," in November 2018 with 70 percent support. The measure imposed a $3,000–$6,000 annual tax on vacant parcels and buildings. Nearly six years later, the program remains plagued by implementation failures. The City Auditor's 2022 report found that Oakland had collected only a fraction of projected revenues due to high exemption claim rates, inadequate enforcement staff, and the absence of a reliable mechanism to verify vacancy claims. Revenues consistently fell 60–80 percent below projections.
San Diego's Office of the Independent Budget Analyst (IBA) acknowledged similar uncertainty in its fiscal analysis of the proposed measure, projecting annual revenues ranging from $9.2 million (if 70 percent of estimated vacant properties qualify for exemptions) to $24.2 million (if only 45 percent are exempt). The IBA noted explicitly that these figures are "extremely dependent" on enforcement capacity and owner behavior — including the possibility that owners will simply sell, convert to short-term rentals, or evade the tax entirely.
| Scenario | Exemption Rate | Year 1 Revenue | Year 2 Revenue |
|---|---|---|---|
| Optimistic | ~45% exempt | $21.4 million | $24.2 million |
| Conservative | ~70% exempt | $9.2 million | $10.4 million |
| Source: San Diego Office of the Independent Budget Analyst, 2026. Figures assume approximately 5,140 estimated vacant properties citywide. | |||
Geographic Concentration and Assessment Challenges
The IBA found that approximately 45 percent of the estimated 5,140 qualifying vacant properties are concentrated in coastal neighborhoods and downtown San Diego — areas characterized by high-value second homes, seasonal use patterns, and, in many cases, sophisticated ownership structures including trusts, LLCs, and family partnerships. These ownership structures complicate both identification and collection: a property held in a Delaware LLC with a registered agent address may not readily reveal its beneficial owner's residency status or primary address.
For collection and lien purposes, cities typically attach unpaid vacancy taxes as liens against the property — a mechanism that ensures eventual collection when the property is sold, refinanced, or transferred, even if the owner evades annual payment. Whether San Diego's implementing ordinance would adopt this mechanism — standard in Vancouver and Oakland — has not been specified in the ballot measure language.
The Broader Policy Debate: Does Taxing Vacancy Actually Increase Housing Supply?
Proponents of the measure argue that it will incentivize owners of vacant properties to either sell or rent, increasing housing supply in a city where the median home price exceeded $900,000 in 2025 and vacancy rates in desirable neighborhoods remain well below the national average. Signs reading "Homes for San Diegans" appeared in council chambers during the public comment period.
The empirical evidence from comparable programs is, however, mixed. Vancouver's Empty Homes Tax, now supplemented by British Columbia's provincial Speculation and Vacancy Tax (since 2018), has been studied extensively. A 2022 analysis by the University of British Columbia's Sauder School of Business found that the combined Vancouver and provincial taxes did increase rental supply by a statistically significant but modest margin in taxed areas — approximately 1–2 percent of the overall rental stock — while having minimal measurable impact on housing affordability for median-income renters.
Critics of vacancy taxes argue that the supply of genuinely vacant second homes held off the rental market is too small a fraction of overall housing inventory to materially affect prices. The 5,140 units the San Diego IBA estimates as potentially vacant represent roughly 0.6 percent of San Diego's estimated 830,000 total housing units — a figure that, even if fully converted to rental or for-sale inventory, would have a statistically negligible impact on a market facing a housing deficit estimated at tens of thousands of units.
"Vacancy taxes are emotionally satisfying and politically popular, but their supply impact is almost always overstated. The hard work of housing production — zoning reform, permitting acceleration, infrastructure investment — is where the real leverage lies."
— Housing policy analysis, Urban Land Institute, 2023
What Happens Next
The measure will appear before San Diego voters in the June 2026 primary election. If approved, implementing ordinances would need to be drafted and adopted before the tax's effective date of 2027 — a compressed timeline that will require the city to simultaneously build an enforcement infrastructure, establish an appeals process, and defend anticipated legal challenges.
The most consequential external variable remains the California appellate courts. A ruling in San Francisco's appeal of the Haines decision — expected sometime in 2026 — could either validate the legal framework for vacancy taxes statewide or strike them down wholesale, rendering the San Diego measure moot regardless of voter approval.
As resident Paul Kreuger observed during public comment: "It's not the voters who are going to decide this measure — it's the courts." That assessment may prove to be the most accurate analysis offered during the entire council proceeding.
Verified Sources and Formal Citations
URL: https://timesofsandiego.com/politics/2026/03/04/san-diego-city-council-advances-empty-second-homes-tax-to-june-ballot/
URL: https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=7060.&lawCode=GOV
URL: https://www.courts.ca.gov/courts/sfsuper.htm
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URL: https://www.sandiego.gov/iba
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URL: https://supreme.justia.com/cases/federal/us/594/20-107/
URL: https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CONS§ionNum=SEC.%201.&article=XIII%20C
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URL: https://www.sro.vic.gov.au/vacant-residential-land-tax
URL: https://otr.cfo.dc.gov/page/real-property-vacant-and-blighted
URL: https://www.sandiego.gov/city-clerk/officialdocs/legisdocs/council
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