The Los Angeles City Council voted to delay its proposed vacancy tax until the 2022 election, following a special meeting on Wednesday to discuss the proposed measure which would tax unoccupied multifamily units.
The original agenda item called to have the measure placed on this year’s ballot, despite having no fiscal impact statement submitted by the City Attorney, City Administrative Officer or Chief Legislative Analyst.
The push to 2022 is a win for business organizations such as the Valley Industry and Commerce Association and Greater San Fernando Valley Chamber of Commerce, which considered the measure rushed and in need of further study.
“There is no way to describe what the Council was thinking with the proposed vacancy tax other than it would have been rushed and short-sighted,” VICA President Stuart Waldman said in a statement. “The reports were limited and did not fully answer these main questions – how much housing is vacant? And if it is vacant, why? Without clear-cut answers, this tax would have been nothing more than a shot in the dark. Thankfully, the City Council understood this and will delay discussions on placing the vacancy tax on a ballot until 2022. This gives us ample time to iron out the kinks and create a more feasible policy.”
“The report conducted by (the Housing and Community Investment Department of Los Angeles) is deeply limited in its analysis,” VICA said in a statement. “A policy proposal of this magnitude should not be rushed to the ballot without thorough public input and discussion of its details.”
The report referenced by VICA looked at an “Empty Homes Penalty” as a way to address homelessness. The report estimated that the city has a housing vacancy rate of 6 percent to 7 percent, or about 85,000 to 100,000 units. If the tax program garnered an estimated $3,000 penalty per unit, it would generate $150 million a year.
It also noted that higher-end dwellings “are disproportionately vacant while mid- and low-end units have especially low vacancy rates.”
Councilmember Mike Bonin, representing District 11 and one of the original movers for the measure, said during Wednesday’s discussion that the measure, as written with amendments, would not help with the city’s affordable housing and homelessness crisis.
The council’s measure is modeled after similar taxes in Oakland and Vancouver.
“A relatively harmless loophole for the City of Oakland effectively guts the purpose and intent of a vacancy tax here,” said Bonin. “In Oakland, for instance, if you have a 40- to 50-unit building and 40 of those units are vacant and one of them is occupied, none of them are counted as vacant; that is a big loophole. As a result ... the fiscal value of this for the City of L.A. may be as low as $4 million.”
Just to get the measure on the ballot for this year would have cost $12 million, VICA said.