Tax on Vacation Rentals and Second Homes Fails in San Diego Council Committee

By Lori Weisberg / San Diego Union-Tribune / January 28-30, 2026 

A controversial plan to impose an annual tax of as much as $12,000 on thousands of San Diego short-term rentals and second homes is dead for now, after elected leaders on Wednesday declined to advance the proposed levy to the full City Council.

The 3-2 vote by the Rules Committee followed a more than five-hour, sometimes emotional hearing that drew hundreds of proponents and critics who pleaded their case, with some vacation rental hosts dissolving into tears.

Councilmember Sean Elo-Rivera, who had pushed the tax as a way to expand the city’s long-term housing inventory, had hoped the council would support his request to put the proposal before the voters in June.

The Empty Second Home and Vacation Rental Tax, as it was called, was expected to affect 11,000 homes, including 5,741 whole-home, year-round short-term rentals and 5,115 second homes that are largely empty throughout the year and aren’t being rented long term. A $4,000 surcharge also was proposed for corporate-owned rentals, as well as those with repeat code violations.

Elo-Rivera’s office had stressed that the impact would fall on only 1% of San Diegans.

Voting no were Councilmembers Raul Campillo, Kent Lee and Vivian Moreno.

“I’m here to advocate for the middle-class San Diegans who are operating small businesses and know that this tax will completely undermine their life’s work and livelihoods,” said Campillo, who had vigorously opposed the tax proposal last October when Elo-Rivera formally proposed it. He argued that the proposed tax of $8,000 on whole-home vacation rentals would have a ripple effect on the workers like house cleaners and plumbers who are hired to maintain the rentals. He also predicted that the measure would never survive an inevitable court challenge.

“I’m here to amplify the voice of San Diegans who will be impacted by this, which is to say, every San Diegan. Twenty-five thousand workers directly and indirectly will be hurt by this tax, and everyone else will pay the higher price. And I’m not willing to harm the livelihoods of middle-class San Diegans to try and get some revenue because our city has a budget problem … This should never have been framed as an us vs. them problem. For the vast majority of people, owning a short-term vacation rental is not a luxury side hustle. It’s how they get by.”

Elo-Rivera, whose office had worked on the proposal for months and more recently modified it by eliminating a per-bedroom tax of $5,000, sought to salvage his plan from the council committee dais. Because of the concerns raised around its application to short-term rentals, he suggested having it apply only to “empty” second homes and corporate-owned short-term vacation rentals.

“I heard recognition from three of us that empty vacation homes are something we could potentially get behind, and that those 5,100 homes sitting empty is a problem given the housing situation we are in,” said Elo-Rivera, who had garnered the support of major labor unions and nonprofit community groups. “I also heard some distinguishing between mom and pops who operate short-term vacation rentals and larger corporate entities.”

But he was unable to garner support, with only Council President Joe LaCava and himself voting in favor of the amended proposal.

His office said that it is too early to know whether a modified version of the tax proposal might return to the council.

“San Diegans are facing a very real housing crisis and an ongoing structural budget shortfall,” Elo-Rivera said in an emailed statement after the hearing. “I remain open and eager for my Council colleagues to bring forward serious, substantive policy proposals that address these challenges … And let me be clear: this fight does not end today. If anything, the methods used by our opposition have only strengthened my resolve to keep pushing for a San Diego where homes are for people, not just for profit, and where powerful corporations are held accountable when they undermine our communities.”

While the proposal was highly divisive from the moment it was unveiled, the decision to not advance it still came as something of a surprise, with Lee going so far as to criticize Airbnb for the campaign it led to kill it. Some speakers in favor of the proposal claimed that the mega home-sharing platform had paid some opponents to appear at the hearing and had bused them to City Hall.

Airbnb did not respond to queries from the Union-Tribune about whether those claims were true, but noted in a statement that “It’s clear to anyone watching today’s hearing that the opposition to this tax came squarely from the San Diegans impacted.”

Lee said Airbnb’s position had no bearing on his vote on Wednesday. The rental platform confirmed to the Union-Tribune recently that it had about $2.5 million from an existing political action committee it had formed, and much of that was going toward targeting the San Diego proposal.

“I couldn’t care less about defending Airbnb as they oppose this measure, and in fact, I have not appreciated their tactics and misinformation on this item,” Lee said. “And frankly, our office has refused to take meetings from them in the run-up to this vote.”

Lee’s concerns were a bit more nuanced than Campillo’s. He said he felt the goal of the original proposal had shifted slightly, from raising revenue for the cash-strapped city to restoring up to 11,000 units of housing stock. Elo-Rivera’s office had estimated that the tax would generate as much as $90 million in revenue, while the city’s Independent Budget Analyst said it might be closer to $32 million to $57 million.

“My concern is not only whether we can achieve both the revenue and the housing but also what we do achieve compared to what the public perceives they are voting for,” Lee said. “There is a risk we would have a net loss of revenue.”

Airbnb, as well as a large coalition of opponents that included public safety representatives, business and community organizations, and short-term rental hosts, cheered the outcome of Wednesday’s hearing.

“Thanks to the thousands of engaged local hosts and public safety, labor, and business leaders who have reached out to the City Council,” said Justin Wesson, senior manager of Public Policy for Airbnb. “Today Councilmembers acknowledged this tax does more harm to San Diegans than good. We are grateful to the Council’s consideration of residents’ concerns and remain committed to being part of a collaborative solution to help bolster affordability in the city.”

Council members heard from a number of vacation rental hosts who said the income from their rentals helped them pay the bills and bolster their retirement savings. In some cases, the rentals are family homes the hosts inherited.

Larry Webb, a 40-year resident of Mission Beach, said his two short-term rentals have gone a long way toward helping put his children through college and providing a reliable source of retirement income.

“Through hard work and perseverance, my wife and I started a small business, raised four children and saved and sacrificed to own the properties we have,” he said. “This unfair penalty punishes us for the decision to host an STR (short-term rental). The decision for my wife and I was made in order to pay bills and put our kids through college. It was either that or sell. This penalty will reduce our retirement income significantly.

“Please consider the unintended consequences.”

At the same time, many other speakers talked about the struggles of local residents to find affordable housing, be it rental or homes they could buy.

“The cost of renting or buying is unrealistic for the vast majority of people who call San Diego home,” said Itzel Maganda Chavez, engagement director for the grassroots community organization, Alliance San Diego. “I know this firsthand. As young San Diegans, my husband and I have struggled to find a place we can afford. As of today, we have found none, forcing us to stay in our overpriced rental until we can. Unfortunately, we have come to realize that, as it stands, we will likely never be able to buy in the beautiful city of San Diego.

“We the people did not create this problem, but the proposed ballot measure would give us a chance to do something about it.”

Elo-Rivera has acknowledged that his proposal was inspired in part by concerns raised more than two years ago about an apparent loophole in the city’s current vacation rental regulations that allows owners of multi-family properties to legally secure multiple vacation rental licenses via willing proxy hosts, as reported by the Union-Tribune.

The worst offender was an Ocean Beach property owner who was able to persuade family members, friends and acquaintances to put their names on more than 100 license applications for his huge portfolio of vacation rentals. He later lost about 40 of those licenses after the city’s enforcement team conducted an investigation into some of the hosts.

In its report to the council, the Independent Budget Analyst estimated that there are a total of 1,446 corporate-owned short-term vacation rentals and empty second homes, but it’s unknown how many of those include LLC’s that were formed for a single rental.

Elo-Rivera, in a statement late in the day, said he intends to continue pushing back against the corporate-owned housing that he says is disrupting residential neighborhoods.