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Bay Area mayors want to tax second homes to pay for homeless relief

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“An ongoing source of state funding, leveraged by local resources and partners and matched by local governments, is essential,” says a joint letter from the mayors

Two miniature houses against a black background. Via Shutterstock

San Francisco-based Assemblymember David Chiu wants to tax often-vacant second homes and vacation homes in California to help pay for the cost of homelessness—and the mayors of the Bay Area’s three largest cities are onboard.

Backed by nine California mayors, Chiu’s office released a statement today for Assembly Bill 1905, a plan that would quash a major tax break for second (or more) homes in the state.

Among city leaders supporting Chiu’s bill are SF Mayor London Breed, Oakland Mayor Libby Schaaf, and San Jose Mayor Sam Liccardo. Sacramento Mayor Darrell Steinberg, and Stockton Mayor Michael Tubbs. The mayors of Los Angeles, Riverside, San Pablo, and Santa Ana also signed onto the plan.

Critical to the appeal of Chiu’s effort is that it would establish a permanent fund to finance homeless relief programs in California, something that the state lacks; the state currently spends emergency funds on homeless issues.

Under present California law, homeowners can deduct interest on a mortgage from their tax debt up to $1 million every year. Chiu wants to limit that deduction to just $750,000 on one home only and divert the new revenue toward the homeless fund.

Many second homes, vacation homes, and short-term rentals are classified as vacant housing by the U.S. census, who dub them “occasional use” properties. In 2018 San Francisco had 8,523 such homes—more than the number of unsheltered homeless residents in the city that same year.

Chiu hopes taxing mostly empty properties to assist people—people who are very pointedly not living in those empty homes—will prove a winner politically. “In the city and county of San Francisco, for every one person they are able to house, three more fall into homelessness,” according to the text of the bill.

According to the National Homeless Information Project, SF houses considerably more homeless residents than those who live on the streets, but the problem remains grave nevertheless.

The legislation as it’s written doesn’t distinguish between homes that are left fallow much of the year and those used as rentals, which could provoke criticism from landlord lobbies.

The California Globe also pointed out in January that in many vacant homes in rural areas remain empty because there’s not enough demand for houses in such remote locations.

In addition to Chiu’s bill, East Bay Assemblymembers Rob Bonta and Buffy Wicks recently floated a bill that would push $2 billion annually to create a permanent state homeless fund. Wicks called it “one of the biggest budget requests in the history of California.”