Photo by Steven Ungermann on Unsplash

LA City Council has moved forward with a proposal to introduce a tax on vacant rental units. Earlier this week, city lawyers were asked to begin drafting the measure, which could be placed on the ballot in November if it is ultimately approved by the council. 

The tax was first proposed in June 2019 by Councilmen David Ryu, Mike Bonin, Marqueece Harris-Dawson and Paul Koretz. The Los Angeles Housing + Community Investment Department (HCIDLA) was tasked with conducting a report on vacancies in the city, which they presented to the council last week.

HCIDLA’s findings suggest a citywide vacancy rate of between 6 and 7 percent, or approximately 85,000 to 100,000 empty units. The authors conclude that the majority of vacancies exist in the oversaturated high-end rental market, while vacancy rates for apartments available to low and moderate-income tenants remain razor-thin. 

“A vacancy tax would put a penalty on homes kept empty while thousands continue to sleep on our streets each night,” Ryu said in a statement

“We can’t afford to wait any longer on this issue. Every year, and every day, homelessness grows. We need every tool possible to bring more housing to market. With tents going up in the shadow of empty luxury apartments, we must be clear: Housing is for people, not investment portfolios.”

Proponents say the measure will discourage landlords from keeping units vacant until they can attract tenants at higher price points. Tax revenue — which could exceed $128 million annually, according to an analysis by Blue Sky Consulting Group — could go towards building more affordable housing, which the city desperately needs in order to meet demand.

Those against the tax view it as yet another blow to landlords who have been financially impacted by missed rent payments during the COVID-19 pandemic. Some argue that zoning laws make it difficult for developers to turn a profit on smaller-scale, affordable rental housing.

Recommendations made by Blue Sky include a rate of $5,000 per year for a vacant unit and $5,000 to $40,000 per year for a vacant parcel of land. However, the council is still mulling over the specifics of the proposed vacancy tax and they will have until July 1st to decide whether to put the measure on the November ballot.

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