When is your property not really your property? If you don’t pay your property taxes, you’ll soon discover a lien has been placed on your property by the county assessor, so in a sense, your property is only yours if you pay your property taxes. Now, what if you decide to rent out your property? By becoming a housing provider, a whole new nightmarish world is created whereby control over your property is severely limited by law: who you must rent to, the amount you charge, when you can change the amount of rent, how many roommates the renter can bring in, and most important when you can terminate the agreement and get the renter to vacate. And let’s not forget the outrageous amounts mandated by San Francisco law that must be paid to tenants if you decide to get out of the rental business period. Just when you thought respect for property rights couldn’t get any lower in San Francisco, the statists have another trick up their sleeve—a vacancy tax. If you own your property and—sin of sins—decide not to live in it or rent it out, under a vacancy tax, you would now have to pay an additional tax over and above the regular property tax. Theoretically, this is not a case of “takings,” but you’d have to pay through the nose if you chose to leave it vacant.
Just last month, Supervisor Aaron Peskin requested the City Attorney “to explore legislation that would allow The City & County of San Francisco to impose a vacancy tax on property owners to help mitigate the impacts of the widespread practice of warehousing valuable residential and commercial units.” He stated that he has gotten reports and complaints from constituents about “the overwhelming number of vacancies both commercial and residential that continue to contribute to our housing crisis as well as the displacement and struggles of small businesses.” The issue of vacant units of housing came up at City Hall last month when the Planning Commission was discussing a report on The City’s housing supply. One commissioner noted that vacant units appear to be on the rise, adding to the perennial “housing crisis.” According to SPUR’s 2014 data research, there are 30,000 vacant units in The City, of which 8,900 are in the process of being rented; 2,400 units are in the process of being sold; 9,100 units are used for vacation or seasonal use; and 9,700 units don’t fall in any of the above categories.
If you think that a vacancy tax for not using your property is another harebrained dream of San Francisco politicians to “lead the nation” yet again that can’t possibly become law, think again. Vancouver, British Columbia recently enacted a vacancy tax which has set our local politicians’ hearts aflutter. They consider it a successful model and are keeping a close eye on how it works out in Vancouver. The vacancy tax applies to all residential properties in Greater Vancouver which are occupied for less than 180 days of the year, and the annual tax is calculated at a rate of 1% of the assessed value. Since Vancouver strangely enough is also in the midst of a “housing crisis” and houses priced at $1 million or more are not unusual, a vacancy tax of $10,000 or more each year is likely for many homeowners, and the redistributed collections are set to go to “affordable housing” in the city. The exemptions to the tax are limited to cases where the owner is in long-term medical care, is doing major renovations on the property, is unable to rent due to building-specific restrictions, or has expired. The government is sending out declaration forms to all property owners this December, which they are required by law to fill out, and the new tax will be collected next February. The bureaucrats are not in any mood for hanky panky and are promising severe penalties and fines to those property owners who don’t comply or lie on the declaration forms. Inspections and enforcement are going to be major facets of this tax.
Aside from the constitutionality of such an outrageous tax, enforcement will obviously be a major challenge for The Vacancy Police (and we’re glad about that). Short of turning the city into a complete police state, how would you know just who lives in a residence, when they come and go, and how many nights per year someone is sleeping there? (We heard many of these same privacy concerns when the Airbnb measure was on the ballot a few years ago.) Privacy might become a thing of the past. Of course, neighborhood snoops are always a good source of surveillance, but we prefer them for keeping the neighborhood safe, not helping the government with tax extraction and spying on its own citizens. Perhaps the bureaucrats may even offer a reward for snitching on your neighbors.
Since when is it the business of government to dictate what you do or don’t do with your property? Folks might have perfectly legitimate reasons for not wanting to rent out their property—most of which have to do with the headaches associated with complying with government rent boards and all their onerous mandates and regulations. Or folks might have no compelling reason why they don’t want to go into the rental business—it doesn’t matter because it’s their business, not the government’s. We have no doubt that there are thousands of units in San Francisco that are rentable but property owners have chosen to keep them off the market, and we don’t blame them one single bit. They are shrugging. It’s one thing when a property owner decides to become a housing provider; it’s understood that there are many ridiculous rules which the housing provider is now subject to, and by deciding to enter the business, he or she will have to comply or face the law. However, with this latest proposal, the government is now going after even those who simply want to be left alone and are willing to forego the extra income that could have been earned (and pay a chunk to other tax collectors). This is a huge step away from freedom towards collectivism. It’s part of the creeping trend to consider all personal property to be “resources” available to all. Note Peskin’s wording when he said “warehousing valuable residential and commercial units.” Valuable to whom?
We hope the Vancouver property owners fight this latest encroachment on personal choice with everything they’ve got—in the courts, noncompliance, and of course all the many creative ways that people dream up to get around busybody laws. Local governments are getting increasingly bold—and desperate—when all their interventions make things worse, not better, for the average person, so they have to step on more toes to “do something.” We hope the Vancouver law is a total disaster since it is not an isolated anomaly. The mayor of Toronto, Canada’s largest city, is also considering a vacancy tax, and Peskin is trigger-ready to propose such a tax for San Francisco. When “for the good of all” becomes more important than individual rights, absolutely no one is safe from the government’s grasp.