real estate<\/a> agent, have been renting out part of their San Diego home for the past 10 years to help cover their mortgage.<\/p>\n“We\u2019re not investors,” he notes, adding that his only goal is to try to stay in San Diego, where the median list price last month was just under $950,000, among the highest in the U.S., according to the latest monthly housing market trends report from Realtor.com.<\/p>\n
“If this $5,000-per-bedroom tax passes, we\u2019ll have to shut down\u2014and so will most small hosts like us,” says Barlow. “I worry that the owners will simply convert them to student housing and bring more noise to our neighborhood.”<\/p>\n
San Diego already has a transient occupancy tax (TOT) requirement ranging from 11.75% to 13.75%, depending on the rental property\u2019s location.\u00a0The guest pays the tax, which the host then hands over to the local government.<\/p>\n
Barlow says a typical two-bedroom short-term rental currently pays $10,500 in TOT per year. He predicts that if a host were required to pony up an additional $10,000 annually in new taxes\u2014at $5,000 per bedroom\u2014they would have no reason to stay in business, considering that the revenue margin is just under $10,000 after all the expenses.<\/p>\n
Instead of boosting the city’s deficit-riddled budget, the veteran Airbnb host says, San Diego could end up losing money while dealing a blow to the city’s tourism industry.<\/p>\n
“Less tourism also means less sales tax revenue since tourists always spend more than residents,” notes Barlow. <\/p>\n
Councilmember Campillo also believes that the tax proposal could do more harm than good across the board, but says its true effects won’t be clear unless the city conducts a comprehensive economic analysis with multiyear projections\u2014something that is not currently planned.<\/p>\n
“My inclination is that it’s going to hurt our local economy,” says Campillo. “It’s going to cause us to lose jobs. And the key fact that very few people in the public know is that 4 out of 5 short-term vacation rentals in the city of San Diego are owned by San Diegans. They’re not owned by outside corporations or investors from other cities.”<\/p>\n
Echoing Barlow and Gallagher’s arguments, Campillo predicts that the proposed levy could deprive short-term rental hosts of income and drive away visitors without adding to San Diego\u2019s housing supply in any meaningful way.\u00a0<\/p>\n
“We had dozens upon dozens of people show up to City Hall and explain that their second property is how they make ends meet in San Diego,” the politician explains. “So by hurting the 5,000 or so people who have a full-home short-term vacation rental who rely on that, we’re going to be telling San Diegans that because they don’t use their property in the way that the City Council wants them to, their livelihood doesn’t matter.”<\/p>\n
Contrary to popular belief, Campillo says, locals currently own 80% of the city’s stock of second homes, meaning that the money generated from those properties stays in San Diego\u2014but the new tax could change all that.<\/p>\n
“If a short-term vacation rental host decides to sell because the market collapses, I fear that most of those homes are going to be bought by outside investors, people from other cities,” says the councilmember. “And even if they do turn them into long-term rentals … that’s money that’s going to be sent out of the city. And ultimately, most of those homes aren’t going to be affordable anyway.”<\/p>\n
Additionally, Campillo says that based on the available data, more than half of short-term rental owners use revenue from properties to help pay their bills.<\/p>\n
“If they can’t pay their bills in San Diego, they’re also going to have to move out of San Diego,” says the councilmember. “So someone’s going to have to explain to me how this is going to make it cheaper to live in San Diego.” <\/p>\n
Gallagher agrees, saying of the proposal: “I don’t think it’s going to achieve its goals of generating a lot of revenue and freeing up a lot of houses.”<\/p>\n
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