BY BRADEN CARTWRIGHT
Daily Post Staff Writer
Palo Alto City Council is interested in taxing vacant homes to raise money that the city could spend on affordable housing.
Councilman Greer Stone brought up the idea on Monday, pointing to Berkeley where property owners are taxed $3,000 for keeping a home vacant for more than half the year.
Apartment owners are taxed $6,000 per vacant unit, and the tax doubles in consecutive years to raise $3.9 million to $5.9 million each year for the city.
Palo Alto has about 2,000 vacant “ghost homes” that could be taxed, Stone said on Monday (March 17).
“A tax is a good way to disincentivize people from having their vacant homes and put more housing in the housing stock,” he said. “If it’s unsuccessful, we at least have money for affordable housing,” Councilman Keith Reckdahl said. “So it’s a win either way.”
Mayor Ed Lauing said a bond measure for affordable housing should also be on the table.
City Manager Ed Shikada said he could add a vacancy tax to the city’s list of objectives, but he would need to take another project off the list.
Funds depleted
The city’s affordable housing funds have been depleted by three projects that will be finished this year and another six projects that are in the pipeline, Councilman Pat Burt said.
Those projects include an 88-unit homeless shelter east of Highway 101, 50 apartments for disabled residents at Mitchell Park and 110 apartments for teachers next to the Palo Alto Courthouse.
“Those are really tremendous achievements and historic — and grossly inadequate compared to the state mandate,” Burt said.
The state required Palo Alto to plan for 2,452 homes for lower-income residents by 2031, or the city risks losing control over local land-use decisions.
Palo Alto voters approved Measure K in 2022, a business tax with one-third of the revenue set aside for affordable housing and homeless services. The business tax is expected to bring in $6.5 million in the next fiscal year, Finance Director Lauren Lai said in a report for council in January.
Other measures
Santa Clara County voters in 2016 approved Measure A, which authorized $950 million in bonds for affordable housing that’s nearly depleted.
Last year the Bay Area Housing Finance Authority considered putting a regional bond measure on the ballot but pulled out at the last minute after a lawsuit and unfavorable polling. Now the agency is pursuing a sales tax for public transportation in November 2026.
Berkeley passed Measure M in November 2022 with a 65% “yes” vote. Opponents said the tax would result in higher rents for tenants and would cost as much money to administer as it brings in.
Supporters said the measure targets corporate landlords and owners of large or multiple properties, and includes exemptions to avoid burdening small property owners.
In the same election, San Francisco voters approved a vacant homes tax that was scheduled to take effect next month. But landlords and realtors sued the city, and a judge halted the tax in October. The city is appealing the judge’s decision.
Previous attempt to target vacancy
Palo Alto has tried to restrict vacancies before at the Edgewood Plaza shopping center, where Sand Hill Property Company agreed to have a grocery store as part of a development in 2012.
The city fined the company up to $5,000 per day until a judge ordered the city to return $318,250, plus interest. The Market at Edgewood opened in December 2017.
Home owners have good reasons to leave their homes vacant, primarily from existing government regulations. California landlord tenant laws make it very expensive and time consuming to evict deadbeats. Landlords just endured several years of inability to evict deadbeats at all, due to Covid. The law demands that the property be maintained in good condition, which is expensive, imposes many duties on landlords, and taxes any profits you manage to eek out. The more that government beats up landlords, the less incentive there is to rent out property.
California has gone crazy! The governments are trying to eliminate private property rights.
It is no business of the government whether a property is vacant or not.
A judge recently (November 2024) struck down the “Empty Homes Tax” passed in San Francisco.
Palo Alto should keep in mind why residents are leaving their homes vacant as well as understanding there are limits on financial penalties for those who choose to travel from their abode throughout the year.
Proposals like this one are why conservatives are making progress and winning voters across the state.
How will the city know if a home is vacant? Code enforcement takes years to accomplish simple tasks, so that wouldn’t work. Maybe police would drive around and check to see if homes on the suspected vacancy list have had any recent signs of occupancy? Or here’s an idea council will like–create an office of home vacancy with a highly-paid group of city inspectors to ferret out those “in ghost homes.” Yeah, a bigger city bureaucracy!
Palo Alto becoming communist taxing empty houses and apartments to build housing for special interests groups??? Greer Stone wants us to be like Berkeley? Liberal policies have ruined the quality of life unless your rich.