Sacramento is exploring a vacancy tax on empty lots, storefronts and possibly even homes

Sacramento city leaders are exploring a vacancy tax to prod the owners of empty lots, storefronts and possibly even homes to clean up or lease out their properties. 

Officials say the effort could help revitalize stretches of the city where stores or homes have sat empty for years, including blighted commercial corridors like K Street in downtown where restaurants, bars and cafes shuttered early in the pandemic and remain closed today. 

“It feels kind of sad on K Street,” said City Council member Katie Valenzuela, who led a vacancy tax discussion at the council’s law and legislation committee last week. “It’s not just because the stores are empty but because of the lack of energy.” 

There are currently 3,600 vacant, privately-owned parcels in Sacramento, according to the city. 

The city of Sacramento is exploring a vacancy tax that could target the owners of empty lots and commercial storefronts like those on K Street in downtown. Voters would ultimately decide on any tax proposal.Chris Nichols / CapRadio

The committee is in the early stages of crafting a possible vacancy tax ordinance, which the full council could eventually vote to place on a future ballot, giving voters the final say. The council can independently approve fees to cover the cost of a service, but cannot impose taxes created with the primary purpose of raising revenue. 

Committee members have yet to decide the amount of the tax or how the revenue should be spent and there is no estimate for when the council could decide on the ordinance. Valenzuela said some revenue uses could include funding homeless services, emergency rental assistance and small business assistance grants. 

While Valenzuela said she supports a possible tax on vacant homes, other committee members said residential properties should be largely exempted from any charge. 

“I don’t like the idea of an empty homes tax,” said Council member Lisa Kaplan, citing a lawsuit San Francisco faces for imposing a similar vacant home tax. 

Louis Mirante, an affordable housing advocate, urged city leaders to avoid taxing the owners of vacant residential lots. He said lowering development fees would be a more effective way to spur owners to build on those parcels. 

“I heavily encourage the city council to look at other non-tax ways of driving investment into downtown because that tax is very likely to be counterproductive,” Mirante told the committee. 

Sacramento Mayor Darrell Steinberg said he’s open to discussing plans for a vacancy tax once they reach the council. 

“Anything that incentivizes the positive development of vacant and especially blighted properties and disincentivizes keeping them vacant and blighted, I think we ought to consider,” the mayor said.

The city of Sacramento is exploring a vacancy tax that could target the owners of empty lots and commercial storefronts like those on K Street in downtown. Voters would ultimately decide on any tax proposal.Chris Nichols / CapRadio

Voters in several Bay Area cities have recently passed vacancy taxes, with the goal of transforming empty buildings and lots into homes to ease the region’s severe lack of affordable housing and its homelessness crisis. 

Valenzuela said Sacramento could address its own housing shortage by passing a similar levy, saying she wants “housing units to be as occupied as possible.” She and other committee members said they support creating exemptions to the tax. 

They said those might include homes that sit vacant for only a few months rather than a year or longer. They could also include businesses whose owners agree to open their stores as community meeting places or allow local artists to showcase their work in their otherwise empty windows.

“The goal is not to be punitive at all,” Valenzuela added. 

For people who live and work downtown, efforts to bring new life to K Street could make a big difference. 

“I’d like to see some new restaurants or maybe a pool hall,” said Alex Youngs, who works as a security guard. 

“It just seems like it’s dead down here,” added Youngs, surrounded by empty storefronts on the commercial corridor. “They need something more lively.” 

The committee has asked city staff to further research a vacancy tax and its implications. Those findings will be discussed at a future meeting.