As Vacancy Tax Heads To Voters, LA Limps Through Housing Crisis

Los Angeles’ housing crunch is by now probably as famous as its year-round good weather.

The high cost of living drives people away from the LA area, and those who stick around are paying a concerningly large portion of their income toward housing. Numerous studies have shown the connection between the high cost of housing and the rising number of Angelenos who are homeless.

One possible solution has gained public traction in the last year or so: a vacancy tax. In September 2019, the Los Angeles City Council formally took up the idea, referred to as the Empty Homes Penalty. But as soon as the idea was presented, it became clear that it was incredibly divisive.

“This measure simply says, if you want to have a housing unit in this city, while we are in this crisis, and you insist on keeping it vacant, you’re going to participate in helping us solve the problem,” Council Member Marqueece Harris-Dawson told the Los Angeles Times at the time.

But organizations representing property owners and developers feel strongly that the city's focus on the issue is misplaced and should instead concentrate on creating new affordable housing.

“It’s kind of insane that the Los Angeles City Council is focusing on a handful of vacancies rather than passing ordinances and approving construction of new properties,” Stuart Waldman, president of the Valley Industry and Commerce Association, told Bisnow. “Let’s focus where the problem is, not where the problem is not.”

The question at the crux of the debate is how many vacant residential units there actually are in Los Angeles. Experts and advocates agree that solid numbers are needed but disagree about which numbers should be used. 

A report that was commissioned by the council and delivered by the city’s Housing and Community Investment Department in June estimated that the city’s vacancy rate for housing was around 6% to 7%, equivalent to roughly 85,000 to 100,000 units.

A later report from researchers from the UCLA School of Law and two nonprofits, Strategic Actions for a Just Economy and the Alliance of Californians for Community Empowerment, found that there were tens of thousands of units potentially sitting empty. The authors of that report later removed it from the internet after receiving criticism for its methodology, LAist reported.

“It has come to our attention that there is more recent data to draw on the 10 luxury buildings we sampled in LA,” a spokesperson for the authors told LAist. 

The report has been re-released with updated data. Its authors say they addressed the areas of criticism and that the new data confirmed what they found the first time around. The re-released report, using data from the U.S. Census Bureau and the Los Angeles Department of Water and Power, estimates that Los Angeles has roughly 93,000 vacant units.

“We went back and did more research. It confirmed what we found the first time around,” said Ralph Jean, a spokesperson for SAJE who added that his hope is that the report continues the momentum for a vacancy tax and keeps it on people's minds.

The numbers are key, but equally important to this discussion is adjusting the numbers for the reason a unit is empty at any given time, said John Loper, an associate professor of real estate at the University of California’s Price School of Public Policy. 

The details of why a property is vacant is important, he said, because in LA, an older building could remain vacant because the landlord is waiting to redevelop the property or because it is someone’s part-time residence. Truly long-term vacant properties aren’t plentiful, he said.  

“That’s why I’ve never understood why the vacancy tax on residential made sense, because there’s really very few units that are vacant,” Loper said. 

The city council decided in June to aim to put the measure on the 2022 ballot. In preparation, city lawmakers have asked various city departments to compile an array of data: information on the number and type of vacant units in Los Angeles broken down according to commercial, single-family residential, apartments and condominiums, according to the last motion on the matter.