San Diego advances vacation rental tax in latest try at tourism-based budget fix

San Diego officials have taken their first big step toward implementing a tax on vacation rentals and second homes.

A city council committee advanced a proposal — in spite of fierce opposition from the Chamber of Commerce and other groups — that would put a measure on the June 2026 ballot, if it eventually receives approval from the full council.

The tax, proposed by District 9 Councilmember Sean-Elo Rivera, would charge vacant second homes and full-time vacation rentals $5,000 per room annually. Elo-Rivera’s office estimates the tax, which would apply to about 2% of homes in the city, could generate $100 million to $135 million each year to help close a persistent city budget deficit.

Councilmember Raul Campillo, the only member of the council’s Rules Committee who voted against the proposal, said the $5,000-per-bedroom did not appear to be based on math.

“Without a thorough and comprehensive analysis, the voters will not have enough information to know if they’re choosing between something that will undermine the local economy and our city revenues – or bolster it,” he said. “It’s going to weaken the local economy, undermine small businesses and hamper our (city’s) ability to deliver services.”

Council President Joe LaCava said the committee’s action was only to continue working on the proposal — including analysis from the city attorney and the city’s independent budget analyst.

He said the full council would likely vote in January on whether to place the measure on the ballot. 

Elo-Rivera said the tax would prevent out-of-town investors from displacing residents by transitioning homes into vacation rentals — making homes more affordable in the process — and force those investors to pay their fair share to fund city services. 

“Our office is committed to working with San Diegans to create a city that works for the people who live here,” he said. “Ninety-nine percent of San Diegans would not pay this tax. If you live in, or rent out, a portion of your home, you’re not paying this tax. Ninety-eight percent of San Diego homes, and 100% of homes that are lived in by San Diegans, will not be taxed.”

Elo-Rivera earlier this year led the push to increase the minimum wage for tourism workers, again arguing that San Diego was not getting enough out of its role as a tourism mecca. He likewise argued the city could extract more revenue from visitors when he pushed to charge for parking in Balboa Park and at beaches.

More than 100 people testified both for and against the ballot proposal during the lengthy committee hearing.

“This proposal represents a serious overreach of municipal authority and a troubling precedent for property rights,” said Pacific Beach activist Scott Chipman. “Imposing heavy taxes on one category of (home) ownership crosses the line from regulation to punishment.”

Michael Zucchet, general manager of the San Diego Municipal Employees Association, said the tax would let the city provide improved infrastructure and public safety, park and library services.

“It’s a revenue measure, unlike many in the past couple decades, that will not increase the cost of living for 99% of San Diegans, but will benefit 100% of San Diegans,” he said.

“I strongly support this tax,” said Gary Wonacott, former president of Mission Beach Town Council. “It’s more than about fairness. It’s about fiscal responsibility. The presence of concentrated whole-home short-term vacation rentals results in a negative cost-benefit to the city.”

Former District 1 Council member Barbara Bry also supported Elo-Rivera’s ballot proposal. 

“This is an important step in returning San Diego’s neighborhoods to San Diegans making sure that short-term vacation rentals pay their fair share of the disruption they cause,” she said. “I hope you (council) have the courage to do the right thing for our city.”