Laguna Beach Looks to Use Short-Term Rental Tax for Affordable Housing

Houses dot the hillside overlooking Laguna Beach, Calif., on Oct. 15, 2020. John Fredricks/The Epoch Times

LAGUNA BEACH, Calif.—The City of Laguna Beach is considering using some of the city’s tax revenue from short-term rental operations to create more affordable housing.

City councilors unanimously agreed at the April 26 council meeting to continue exploring the idea of reallocating 12 percent of the city’s Transient Occupancy Tax collected from short-term rental units to a new affordable housing project.

“Affordable housing is important to keep the diversity and fabric of Laguna Beach intact so that [living in the city] doesn’t become completely unaffordable,” Councilman George Weiss, who proposed the housing fund, told The Epoch Times.

Based on the proposed plan, Laguna Beach would extract about a half-million dollars annually from the transient occupancy tax, which currently goes into the city’s General Fund.

Weiss said the affordable housing projects the council has in mind wouldn’t target people of a particular range of income or age, but rather those who work in Laguna Beach but had to move from the city due to the rent increases in recent years, such as city employees, hospitality workers, and senior citizens.

According to rental platform Zumper.com, the average monthly rent for a one-bedroom apartment in Laguna Beach is around $3000 as of May 2—a 13 percent increase compared to the previous year.

In two city-sponsored resident surveys, approximately three-fourths of the sampled support Laguna Beach’s plan to create a permanent source of funding for affordable housing, according to the council meeting agenda (pdf).

Besides considering extracting the transient occupancy tax, city officials agreed to identify sources from independent groups or non-profits to contribute another 50 percent of the cost of an affordable housing project.

“If we can get private funds in association with public funds, then we can control the destiny of that [affordable] housing,” Weiss said.

The affordable housing proposal remains in the incubator, leaving some questions unanswered, such as where developers can break ground and how many units would be available.

If the tax reallocation of half a million a year is approved later by the council, it would still take about 5–10 years for an affordable housing project to come to fruition, Weiss said.

The council is set to take up the issue again at the next meeting on May 10.