Empty-homes tax is simply empty-headed

The right to own and enjoy property is fundamental to freedom, well established in English law even before the United States Constitution cemented its position as a first principle of individual liberty.

So it's no small thing that local governments throughout California are asserting the power to declare property “underutilized” and place extra taxes on it for what they think is a social benefit.

Additionally, the California Constitution has specific limitations on how fees, taxes and other charges may be imposed. For example, propertyrelated fees must reflect the cost of the service provided and may not simply be taxes by another name.

Property owners in San Francisco have just filed a lawsuit challenging Proposition M, the “Empty Homes Tax,” approved by 54.5% of city voters in November. Beginning in January 2024, the measure would tax property owners who have at least three units that have been vacant for more than six months. Depending on the size of the unit, the annual tax would be between $2,500 and $5,000 per vacant unit for the first two years. Owners who keep units empty longer than that could eventually taxed up to $20,000 per unit.

The revenue from the tax, estimated to be $9 million in the first year, would go into a city housing fund to pay for rent subsidies and affordable housing development. But according to proponents, money was not the main objective. “The hoarding of vacant units, many of them in rent controlled buildings,” was the problem meant to be addressed, according to the Coalition on Homelessness.

San Francisco Supervisor Dean Preston, who backed Proposition M, complained that the property owners suing to block the measure are showing “a great sense of entitlement when it comes to broadly popular and essential reforms.” On Twitter, Preston wrote that property owners sought “to keep housing units vacant with no consequence.”

But the property owners actually are entitled to own and enjoy their property. It's in writing. And the government has no automatic power to enact whatever is deemed “popular” and “essential” and to impose a severe “consequence” to prevent anything else. People have rights.

This is a growing concern, as other cities have imposed similar taxes or are considering them. In November, Berkeley voters adopted a tax on residential properties that are vacant more than 182 days per year. The tax begins at $3,000 per year and goes as high as $12,000 for properties that stay vacant for years.

It's not just vacant units, but also vacant land that local governments are targeting. A lawsuit challenging Long Beach's vacant lot fee was filed last year by the Howard Jarvis Taxpayers Association, which argues that Proposition 218, the 1996 Right to Vote on Taxes Act, limited the power of local governments to impose certain fees and taxes without voter approval. Long Beach imposed the fee without bothering to place it on the ballot. The city of Santa Ana is considering a similar tax, and would be well advised to watch that case.

If property owners are not building on vacant lots or renting units in rent-controlled buildings, perhaps government officials should figure out who is responsible for the excessive permitting fees, price controls and regulations that have made it financially infeasible for property owners to use their property productively.

Nothing in the Constitution prevents governments from looking in the mirror.