Tax Is Proposed on Landlords of Small Properties

Tens of thousands of San Diego landlords would for the first time pay a “business tax,” under a proposal endorsed by a council committee Monday, that one City Council member estimates could raise $4 million annually for the cash-starved city.

The suggestion, approved by the council’s Transportation and Land Use committee, is aimed at owners of single-family homes and small buildings with as many as five apartments. The city already assesses a $30 annual tax on landlords who lease six or more apartments.

Councilwoman Judy McCarty, who predicted the council could raise the business tax to perhaps $75 when it conducts budget deliberations this spring, asked the committee to approve the measure and said expanding the tax to all landlords would bring the city badly needed revenue.

“They’ve been in business for years without paying a business tax,” McCarty said. “Now they’re going to have to pay a business tax. I think they’ll understand.”

The city’s Planning Department has no statistics on the number of small apartment buildings in San Diego, but estimates that at least 60,000 single-family homes are occupied by renters. That is more than the 50,000 businesses now being taxed by the city.

The Planning Department, which opposed the plan, predicted it would cost at least $300,000 to collect the new taxes. Seeking information on the cost and potential yield of the new levy, the committee sent the plan to City Manager John Lockwood’s office for a report before it is referred to the full City Council.

The new tax proposal came out of a wide-ranging committee discussion Monday on how the city can regulate “mini-dorms”--single-family homes occupied by large numbers of college students, primarily near San Diego State University--that for years have been the target of neighbors’ complaints.

Seeking to control longstanding noise and parking problems, the committee approved a plan to require property owners to obtain permits before renting single-family homes in a zone around the College area. If approved by the full council, landlords would be required to list the number of occupants in the home--which would be limited to a maximum imposed by the city--as well as the number of cars allowed there.

City planning official Joan Harper said the permit, for which landlords would pay a fee, would help city officials enforce occupancy and parking codes in the so-called Single Family Rental Overlay Zone surrounding SDSU.

The plan was endorsed by council members Abbe Wolfsheimer, Ron Roberts, Wes Pratt and Linda Bernhardt, and opposed by Councilman Bob Filner.

The committee delayed a proposal to directly challenge a 1980 California Supreme Court decision by defining the composition of a family--and thus who may live in a single-family home.

A vehement Wolfsheimer proposed limiting the unrelated adults who could live together in a single-family home to four, but the committee sent the issue to City Atty. John Witt’s office for more study. The proposal would have purposely flouted the Supreme Court’s decision, setting up a possible test case.

“When Rose Bird did the (Supreme Court) case, she made a sloppy mess of jurisprudence,” Wolfsheimer said. “Her case lives on, and we are suffering.

“Now is the time to ask (the current Supreme Court) to overrule this disaster,” added Wolfsheimer, whose district contains controversial “go homes,” six one-person suites clustered around a single, common kitchen. “They will do that.”

Filner was again the only opponent of the proposal, suggesting that it would harm efforts by students, senior citizens and “immigrants” to afford single-family housing by moving in together.

“I’m just not prepared to arbitrarily say that so many people can or cannot live here,” Filner said.

Doug Case, past president of the College Area Community Council, endorsed the residency permit concept, but opposed the family definition on similar grounds.