Are Property Rights Dead In California? – Pacific Research Institute

Are Property Rights Dead In California?

According to one San Francisco supervisor, there are tens of thousands of vacant housing units in the city. “How do we activate them?” he asks.

It’s a good question, with an answer that’s likely to unsettle the dwindling number in California who still respect property rights.

Dean Preston, the first Democratic Socialist to be elected to the San Francisco Board of Supervisors in more than 40 years, has asked his colleagues to hold committee hearings on vacancies in May, “and for the budget analyst to issue a report on the issue,” the San Francisco Examiner reports.

It’s not hard to correctly guess what Preston is thinking. The Examiner said that in announcing his request for hearings, he mentioned Vancouver had “passed an ‘empty-homes tax’ on units not occupied for a majority of the year.” That ordinance says “properties deemed empty will be subject to a tax of 1.25% of the property’s 2020 assessed taxable value.” It will increase to 3% this year. The objective is to restrict owners’ choices. Under a vacancy tax – a concept that is not unfamiliar to San Francisco’s supervisors – property owners can either rent out their homes, or pay what is ostensibly a fine.

In other words, if owners utilize their property in ways that displease the government, they will be punished.

Don’t mistake Preston’s flirtation with an empty-homes tax for a desperate effort to solve San Francisco’s housing crisis. It’s simply part of an extremist agenda. On the same day he called for hearings, Preston said “we will continue to press forward with creative, anti-capitalist solutions to make housing a human right. Social housing is a key part of that strategy.”

Should supervisors eventually hold hearings, San Francisco homeowners should hope the sessions aren’t merely a cover for ramming through a tax they already plan to enact. Not only would the ordinance violate property rights, as policy, it simply won’t work. Vancouver’s experience is instructive.

First, Vancouver found only about a 10th of the number of empty homes it expected to tax could be classified as taxable properties. Second, rent did not become more affordable. In 2018, the year after the empty-homes tax was first levied, advertised single-bed rental prices increased 6.5%.

Across the Bay, Oakland has set the progressive bar for San Francisco. A vacancy tax that includes residences, ground-floor commercial units, and open lots, approved by voters (Measure W), and on the books since 2019, was first imposed in Oakland for the 2020-2021 tax year. Though it’s too soon to judge its impact, it wouldn’t at all be premature to point out there’s no reason to think the tax will work better in Oakland than it has in Vancouver.

Meanwhile, the “new Democrat-dominated” (8-1) San Diego City Council is “proposing several bold ideas to tackle the city’s affordable housing crisis,” one of them a vacancy tax, the Union-Tribune reports. Council members “say solving the housing crisis has become more important with the city’s greater focus on social equity.”

The Los Angeles City Council is also following the script. It initially wanted to place a vacancy tax based on Oakland’s model on the November 2020 ballot, but last year decided to wait until 2022 before taking it to the voters. It’s not unthinkable that the Los Angeles measure will pass, and the San Diego City Council will approve a vacancy tax with only a single dissenting vote. “Social equity” is the currency of the day in North America’s biggest cities while property rights are increasingly being regarded as an anachronism.

For instance in Vancouver, “despite the fact that the (empty-homes tax) represents a severe encroachment on property rights, the push back from homeowners in ‘the world’s sixth most livable city’ seems to be slim to none,” say the barristers of the Pazder Law Corporation, a firm based in British Columbia.

In a question that should also be asked south of the border, Pazder wants to know:“Why should any Canadian citizen or permanent resident of Canada who lawfully owns a property be told by the government that they can’t leave it vacant?”

Apparently, there’s little resistance because “Canadians have been conditioned to automatic, knee jerk acceptance of all new taxes – it’s in their DNA.”

Yeah, that sounds like many of today’s Californians.

Kerry Jackson is a fellow with the Center for California Reform at the Pacific Research Institute.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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