San Jose should be commended for shelving the ridiculous idea of taxing vacant homes. The housing crisis needs serious solutions and wasting staff time on such a frivolous item does not make any sense.
San Jose voters passed Measure E on March 3, 2020. It enacted a real property transfer tax, which is imposed on property transfers of $2 million or more. The beauty of this tax is that it is levied during the transaction process and does not require city staff time.
The estimated tax for 2020-21 and 2021-22 was $40 million, a remarkably low early estimate as the final number was north of $140 million. I acknowledge this number will not maintain at its current rate, as interest rates are rising and transactions are slowing down. The Measure E tax will still provide a significant amount of available dollars toward affordable housing each year. Dedicating staff toward allocating these dollars for worthwhile affordable housing projects is a more efficient use of time.
To enact a vacant homes tax, San Jose would need to create a registry of all residential homes in San Jose. Then, city workers would have to determine if they are vacant.
Would you ask the property owner and rely on their word or send out workers to verify over 676,737 residential units? The next question would then turn to: What kind of unit is it? Single family home, apartment, duplex? What if the unit is being renovated? What if the unit is on the market for sale? The questions go on and a vacant home tax would not yield anywhere near the Measure E dollars.
While the Measure E tax is churning away and bringing in millions of dollars, some misguided advocates would rather have the city chasing after vacant homes. LendingTree pulled data from the U.S. Census Bureau’s 2017 American Community Survey to conduct its study and found San Jose had one of the lowest vacancy rates at 4.26%. Here is the link to the information.
The fact of the matter is clear: vacant homes are not fueling rising home prices, lack of production across all income levels is the key problem. Let the city focus its time on proven methods of making a dent in the housing crisis. Onward and upward.
San José Spotlight columnist Bob Staedler is a principal at Silicon Valley Synergy, a San Jose-based land use and development consulting firm. His columns appear every first Monday of the month. Contact Bob at [email protected] or follow @BobStaedler on Twitter.