


Gov. Gavin Newsom (D-CA) has struggled to deliver on a key campaign promise, but the state legislature is poised to come to his aid.
The California legislature is expected to hear a bill about implementing an occupancy tax on short-term rentals to provide assistance to low- and middle-income housing construction. Senate Bill 584, sponsored by two Democratic state senators, addresses California’s affordable housing crisis, which is increasingly causing damage to the state’s economy and low-income residents.
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California has failed to increase affordable housing over the years, despite Newsom passing numerous programs to provide funding for the housing deficit. Newsom ran on the promise of assisting low-income residents with affordable housing. However, only 13% of the 3.5 million homes he pledged to build have been permitted, according to data from the Construction Industry Research Board.
The bill would put a tax of 15% on the price of short-term rentals to help fund new construction projects. Lawmakers say the lack of affordable housing is partly because people are renting out their homes, driving down the supply of available homes.
The bill would require the Laborforce Housing Financing Act of 2023 to be continuously appropriated, redirecting funding for buildings identified to serve low-income households through 2033.
The legislation’s language defines short-term rentals as intending to occupy a “home, house, a room in a home or house, or other lodging that is not a hotel, inn, motel, or bed and breakfast, in this state for a period of 30 days or less.”
California has been a hot spot for short-term rentals as the rise of companies such as Airbnb has spread throughout large cities. Cities in California dominate the list of most expensive markets for Airbnb rentals, according to data from the Chamber of Commerce.
Airbnb responded to the bill in a statement telling hosts the regulation “could severely impact” their ability to host, encouraging affiliates to email the California Senate Appropriations Committee in opposition.
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If enacted, the legislation would take effect on Jan. 1, 2025, as an urgency statute.
“In order to address the statewide affordable housing crisis in California and to prepare for the collection of a laborforce housing assessment and the process for disbursing funds for laborforce housing, it is necessary that this act take effect immediately,” the bill states.