July 7, 2020

Proposed Los Angeles City Residential Vacancy Tax Pushed to 2022

Holland & Knight West Coast Real Estate and Land Use Blog
Katelyn DeMartini | Douglas A. Praw
Breaking Ground: West Coast Real Estate and Land Use Blog

The Los Angeles City Council recently considered a vacancy tax intended to reduce the number of vacant residential units. The proposed Empty Homes Tax would aim to address homelessness by penalizing residential landlords for not filling vacancies and channeling revenue into the development of affordable housing.

The city council requested the ordinance be modeled after Oakland's Vacant Property Tax, which was approved by Oakland voters in November 2018. According to a report by the Los Angeles Housing + Community Investment Department, the city has an estimated 6 to 7 percent residential vacancy rate, which would generate revenue for affordable housing efforts in the range of $120 million to $150 million. The report further notes that high-end units are disproportionately vacant compared to mid- and low-end units. In drafting the proposed measure, the city council requested an exemption for single-family properties, except those owned by corporations.

Proponents argue the ordinance will incentivize landlords to rent empty units, rather than holding out for potentially higher rents. Opponents, however, claim the proposed vacancy tax misses the mark: the number of vacancies is small, and the city council would make a larger impact on the development of affordable housing by streamlining the process and incentivizing developers to target projects at all income levels.

While the city council initially pushed for the measure's consideration on the November 2020 ballot, the council recently voted to delay the measure until 2022.

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