California lawmakers are considering a measure this session that would tax short-term rentals to fund affordable housing projects, a proposal that has revived dormant tensions at the state Capitol over the rise of companies like Airbnb and Vrbo and their responsibility for the state’s constrained housing supply.

Senate Bill 584 by state Sen. Monique Limón, a Santa Barbara Democrat, would impose a 15% tax on short-term rentals — the homes and rooms that owners rent out like hotels for 30 days or less at a time — starting in 2025. This statewide surcharge, an addition to the local transient occupancy taxes that most communities already require, could generate an estimated $150 million annually to build or rehabilitate low- and middle-income housing.

“One of the things that I get asked very often by my local cities and counties is: ‘Where is the money to build the housing?’” Limón told CalMatters. “I see this bill really saying everyone has a role to play.”

The Senate could vote on the measure as soon as today; it must pass by the end of the week to continue on this year.

While legislators have made a few unsuccessful attempts to regulate vacation rentals over the past decade, these fights largely played out at the local level, where the effects of their surging popularity with travelers is more immediate.

But the prospect of a tax that rental platforms worry would put them at a disadvantage to hotels has sent them scrambling, with Airbnb rallying its hosts in recent weeks to oppose a bill it argues would “hurt the local tourism economy.”

“While the bill aims to boost housing affordability, it does so at the expense of regular Californians who are struggling to keep up with the rising costs of living,” the company wrote in an email alert last week urging hosts to reach out to lawmakers.

Limon’s proposal already faced higher hurdles as a tax measure, requiring a two-thirds vote of both houses of the Legislature. Now it must contend with a shaky economy, which has stoked apprehensions about increasing taxes among even some Democrats, including Gov. Gavin Newsom.

“It doesn’t mean that we don’t raise the difficult question of what is the solution,” Limón said.

An invitation to invest

Limón unveiled her bill in March as a way to create a steady stream of money to help local governments meet ambitious housing development targets set by the state.

The short-term rental tax would fund grants for public entities and nonprofit providers to create affordable housing projects — primarily through new construction, but also by fixing up existing buildings — that would be permanently set aside for low- and middle-income renters.

The measure, which is sponsored by the State Building and Construction Trades Council, an umbrella organization for construction worker unions, would also require certain wage and labor standards for projects.

Limón said she is not villainizing short-term rentals, but rather inviting them to be a part of fixing a statewide housing crunch they have exacerbated. If the industry has ideas, she said she’s open to alternatives to the 15% tax rate, which was suggested by a Senate committee where the bill passed earlier this month.

“This is a conversation about investment. And I think it’s unfortunate that those that are being asked to invest in solving a problem for the communities where they do work or business, see it as” a punishment, Limón said. “So if a 15% investment, you know, is not the number, then what is?”

Another vacation rental boom over the past few years, fueled by the coronavirus pandemic, has reignited debates across California about whether locals are being priced out of their communities, leading to a wave of new bans, permit caps and other restrictions.

Recent research has found a reallocation of long-term housing units into short-term rentals, leading to an upward pressure on prices. A 2020 study by a team from the National Bureau of Economic Research; California State University, Northridge; and the University of Southern California pegged the number at an annual increase of $9 in monthly rent and $1,800 in home prices in the median neighborhood. That is often driven by large-scale operators from outside of the communities; a 2017 analysis of short-term rentals in New Orleans found that nearly half of permitted units were registered to fewer than a fifth of operators.

But the industry disputes that vacation rentals comprise enough of California’s housing stock to have a significant effect on affordability.

A 2022 report by the Milken Institute, an economic think tank, noted that only about 1% of housing units in the state are short-term rentals — though it’s far higher in some popular tourist destinations — which it concluded “cannot be considered a meaningful driver of California’s housing shortage.” The report was backed by the Travel Technology Association, an industry group that includes short-term rental platforms among its members.

Falling behind the competition

Alongside opponents such as the California Chamber of Commerce and other business groups, Airbnb and Vrbo have raised concerns that Limon’s proposal would give hotels an unfair advantage over mom-and-pop vacation rental operators who rely on hosting for supplemental income. Local transient occupancy taxes, for stays at hotels and short-term rentals, can exceed 14% in some places.

“SB 584 would harm California’s travelers, its vacation rental community, and the network of small businesses that depend on them,” Alyssa Stinson, California government and corporate affairs manager for Vrbo’s parent company, Expedia Group, said in a statement. The state should “find sustainable, balanced solutions to address California’s housing needs without threatening its tourism economy.”

Airbnb declined to discuss its position on the bill. In its alert to hosts, the company claimed the tax would “make vacations more expensive” and burden “everyday Californians who rely on the income from home sharing to afford everyday costs or stay in their home.”

Dan Johnson, who rents out the first floor of his San Diego home as a suite for visitors, said he was “pissed off” when he found out about the tax proposal last week from the Airbnb email and he has reached out to more than half a dozen senators asking them to vote against it.

Johnson, 62, an environmental consultant who also develops infill housing on formerly contaminated sites, said he started hosting through Airbnb and Vrbo a year and a half ago as he and his wife prepare for retirement.

“As you move away from a steady paycheck, it’s nice to have a supplemental income,” he said. “It gets a little scary, right?”

Though he supports Limon’s goal of addressing housing affordability, Johnson said he believes that short-term rental owners are being picked on to solve a problem they didn’t create because they don’t have a powerful lobby at the Capitol.

If the tax is adopted, Johnson worries that operators like him will not be able to pass the price increase along to customers if they want to remain competitive with hotels and they will be forced to reduce their rates.

“The only place this is coming from is our pocket,” he said.

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CalMatters.org is a nonprofit, nonpartisan media venture explaining California policies and politics.

State Farm made national headlines last week when it said it would stop selling new home insurance policies in California. As California’s largest single provider of bundle home insurance policies — the company had 20% of the market in 2021 — the news struck some as the beginning of a fresh emergency, with insurers abandoning a fire and flood ravaged state.

But the retraction of California’s biggest home coverage provider is only the latest development in a wildfire-fueled crisis that has smoldered beneath the surface of the state’s insurance market for years.

After the disastrous fires of 2017 and 2018, the number of Californians who were told by their insurer that their policy wouldn’t be renewed jumped up by 42% to almost 235,000 households. The two severe wildfire years wiped out decades of industry profits.

Last year, American International Group let thousands of customers know their home insurance policies would not be renewed, and Chubb, a high-end insurer, said it would continue to non-renew some of its customers.

And late last year, thousands of condo owners also found themselves among the uninsurable as the state’s regulated insurers dropped suburban homeowner association members in droves across San Diego County’s wildfire-prone shrubland.

“State Farm sort of publicly said what they were doing, but I think for the last few years, we’ve all seen insurers restricting and pulling back their business in California,” said Seren Taylor, vice president of Personal Insurance Federation of California, an industry trade group that counts State Farm as a member.

State officials emphasized that State Farm’s current policyholders will not lose coverage

“It’s important to note that current customers will not lose their insurance,” wrote Michael Soller, deputy insurance commissioner at California’s Insurance department, in an email to CalMatters. This decision will affect people who are shopping for home insurance, in that they will have one fewer provider to choose from.

State Farm in a press release blamed high construction costs that make it extra expensive to rebuild after a home is destroyed in California, growing natural disaster risk — particularly from wildfires — and “a challenging reinsurance market.”

Insurance companies frequently purchase their own insurance — known as “reinsurance” — to minimize the risk of getting hit with millions of dollars of costs all at once, as might happen during a catastrophic wildfire or a major hurricane.

Reinsurance premiums have spiked in recent years in disaster-prone states like fire-ravaged California and storm battered Florida, Louisiana and Texas. California law prohibits insurers from passing along the cost of reinsurance to customers. Industry groups are lobbying to change that.

“This is tough for legislators,” said John Norwood, a lobbyist for independent insurance brokers. “Because the solution is prices going up.”

How California regulates home insurance

High rebuild costs, increasingly severe wildfires and high prices of reinsurance are all risks that insurance companies might be willing to take on.

But only for the right price.

Increases in insurance premiums in California are approved or denied by the state’s elected insurance commissioner, Ricardo Lara. Industry groups have long argued that Lara’s office has not allowed providers to set prices commensurate with the cost of doing business in fire-prone California.

“We have very inexpensive home insurance in California,” compared to other states, said Michal Wara, a lawyer and climate scholar at Stanford Law School. “But the thing is, five years ago, we realized ‘oh yeah, actually in California you can burn down 50,000 houses overnight.’”

We have very inexpensive home insurance in California. But the thing is, five years ago, we realized ‘oh yeah, actually in California you can burn down 50,000 houses overnight.’
— Michael Wara of Stanford Law School

The consequences of a continued drip-drip decline of insurers from California could be far more costly in the long run, warns Dan Dunmoyer, president of the California Building Industry.

As an illustration, he points to California history. After the 1994 Northridge Earthquake dealt roughly $42 billion in damage across Southern California, many home insurers opted to stop doing new business in California entirely.

Because home insurance is a basic requirement for most home loans, the exodus of insurers caused the state real estate industry to grind to a halt, Dunmoyer recalled.

“The whole world stopped,” he said. “That’s the worst case scenario. We’re not quite there yet.”

Last resort for California homeowners

Another sword hanging over the state’s insurance industry: The possible demise of the FAIR Plan, the limited insurance plan Californians can turn to when no standard private company will cover them. It’s funded by levies on private insurance companies that do business in the state.

“A lot of other insurers have stopped selling,” said Amy Bach, executive director of United Policyholders, a consumer group. “If you talk to an agent or broker today, they’re going to tell you it can be pretty hard to find insurance” outside of the FAIR plan, Bach said.

As the risk of catastrophic wildfire ramps up across California, that risk falls disproportionately on the FAIR Plan. And if an especially severe fire season renders the plan bankrupt, the tab will fall on those insurers still doing business in the state in proportion to their share of the market, said Wara, from Stanford.

State Farm, as the largest insurer, would have to chip in the most. That’s one reason the company might have decided to not issue new policies anywhere in California rather than just limiting new policies to places with low wildfire risk. “State Farm is saying ‘we want less of that,’” Wara said.

That problem isn’t unique to California.

In Texas, the increasing severity of Gulf Coast hurricanes has driven tens of thousands of homeowners onto that state’s chartered backstop insurer leading to talk of an inevitable crisis.

In Florida, the crisis may have already arrived. This week, Florida’s insurance commissioner authorized a $1.25 billion line of credit to that state’s insurer of last resort — now the single largest insurer — in preparation for the coming storm season.

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CalMatters.org is a nonprofit, nonpartisan media venture explaining California policies and politics.

New heaters for buildings at the City College of San Francisco, solar panels and electric vehicle chargers at Riverside campuses, free textbooks for students in San Bernardino — all of these projects depend on state money that the governor wants to cut.

The cuts, proposed in Gov. Gavin Newsom’s May budget revision, are particularly controversial because they would require community colleges to effectively return nearly $800 million they received last summer.

“That’s unprecedented,” said Jose Torres, the executive vice chancellor of the San Bernardino Community College District.

Some of the cuts to maintenance funds could put students across the state at risk. At Ohlone College in Fremont, representatives from the Deaf Studies program told administrators last year that the fire alarm in their building had no visual cues. Christopher Dela Rosa, a vice president, said the college has since replaced that alarm but there isn’t enough money in the state grants to see if the other buildings have the same problem.

“I just need to prioritize which ones I can with the limited funds I have,” Dela Rosa said.

In San Bernardino, Torres has already signed contracts and committed those dollars towards certain projects.

However, his college district has yet to spend the money.

That’s typical, said one of the governor’s advisers at the Department of Finance who was not authorized to comment: “It takes time for districts to determine which projects they would fund in which order. It takes time to try and get up to contract.”

As a result, the finance staff member said, colleges should still have time to revise their plans in light of the proposed budget cuts.

Torres already made his plans public, though. One of those state-funded projects is the first thing students see when they visit the websites for either of the two community colleges in his district: Free tuition and textbooks this summer.

Torres said he isn’t willing to pull his commitment for free textbooks and summer tuition away from San Bernardino students. Instead, the community college district will draw down a quarter of its savings in the event that the governor’s budget passes and the state money falls through.

Budget cuts turn up the heat on California community colleges

These budget cuts come as a direct result of the state’s $31.5 billion budget deficit.

Community colleges will still receive over $9 billion in state funds this year, if the governor’s budget is enacted. That includes a percentage increase in per student funding based on inflation and more money to build affordable housing for students.

But something had to give to make up for the state’s budget deficit.

The Department of Finance proposed cutting two major investments from last year: a one-time grant to support maintenance and green energy projects, and another one-time grant to help colleges recover from the COVID-19 pandemic. In both cases, the dollars arrived last summer, but colleges have years to spend them.

Many community colleges put the state’s dollars toward small-scale maintenance issues, such as replacing old heating and AC units or making routine repairs to roofs and streets.

These improvements are often low on the priority list and are frequently deferred, but if colleges wait too long, the consequences can be drastic nonetheless: At the City College of San Francisco, aging heaters gave out this winter, leaving students and professors to resort to hand-warmers.

The San Francisco City College board has since moved to fix the broken heaters with emergency funds, but other buildings with aging HVAC infrastructure, like the library, will depend on the state’s money for regular repairs.

In Riverside, community college leaders had planned to fix the AC units in its aging cosmetology school, but the project may not materialize if the budget passes in its current form.

The Riverside Community College District also used $5 million of the state’s grants for a renewable energy initiative that would offset 60% of the district’s power through solar panels and EV chargers. The project has taken years to finance and months of planning by administrators and a contractor, all of which will stop if the state needs the money back.

Alternatives to cut

Lizette Navarette, interim deputy chancellor for the community college system, said that there are roughly 5,000 such maintenance and construction projects that have either already used these funds or plan to. Most of those projects are in the planning phase, but CalMatters identified at least one school, Ohlone College, that has already spent half of the $3.6 million it received for maintenance costs.

“We recognize that tough decisions had to be made,” Navarette said. She wasn’t surprised that the budget included significant cuts but said the state should explore other options to reduce costs.

Instead, she asked the governor’s budget team if they could defer payment to a later year when the state’s financial outlook is brighter.

A student studies in the library at San Bernadino Valley College on May 30, 2023. Photo by Lauren Justice for CalMatters

That option comes with its own liabilities. The state already owes roughly $11 billion in deferred payments across its agencies, which might take more than a decade to pay off, said the staff member at the Department of Finance. “The state very likely will face more budget problems over the next few years,” said a recent report from the Legislative Analyst’s Office.

Alternatively, Navarette has asked the state to consider giving colleges more flexibility about which programs to cut, which in turn gives colleges more agency to decide which promises to keep.

Both the State Assembly and State Senate have been receptive to her requests, she said, though the governor makes the ultimate decision.

Even if the community colleges keep all the state dollars that they received, it still would not solve the colleges’ maintenance problems. The state’s investments last year — the largest in history for deferred maintenance, Navarette said — were estimated to account for roughly half of what colleges needed.

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CalMatters.org is a nonprofit, nonpartisan media venture explaining California policies and politics.

Martina Scarfia
Friday, March 20, 1998 - Sunday, May 14, 2023

Martina died as she lived: pursuing her passions. Martina was well known for putting all of her heart into fulfilling her dreams and using her talents and gifts to the full. Although most of you now reading this have heard of her tragic surfing incident, not all of you had the opportunity to know Martina, to enjoy her talents, or to benefit from her gifts.

Martina was a gifted writer, from serious drama to absolute hilarity. She was a compassionate and self-sacrificing caregiver. She had a beautiful singing voice with an impressive range and control. Martina learned sign language at the age of 16 to help the deaf spiritually. Martina was known by many friends and family for her discernment, wisdom, and comprehensive understanding of the “hallway of consequences”. She was a friend to those who struggled with friendship. She was also well known as an enthusiastic “adrenaline junkie” who, in her short life, traveled to three different continents. Her favorite spot in the world was the Cliffs of Moher on the west coast of Ireland, which she has chosen as her resting place until Paradise.

Martina was passionate about being a licensed doula, an organ donor, and an animal lover — especially snakes and her dogs. By the age of 13, she had made up her mind to become a nurse with the ultimate aim of disaster relief. She was accepted into nursing school and began the RN program at College of the Redwoods in the fall of 2021. While attending nursing school Martina continued her full-time, volunteer ministry which she had begun in 2019. Although having serious educational challenges due to significant ADHD, she graduated from nursing school with honors on May 13, 2023, having also completed a Preceptor program in the ED.

Martina is survived by her parents Larry and Anita Scarfia and her dogs Clara ‘Oswin’ Oswald and ‘Raven’ Roberta Jones. She is also survived by her biological siblings Asia Scarfia-Ward, Shauna Johnson, and Aaron Scarfia; her brother-in-law Randy Ward; her siblings of the heart Chenoa Cantua, Amanda Betts, Kara Roberts, and Don Roberts; and her grandparents Howard and Martha Hughes, as well as numerous aunts, uncles, nephews, nieces, and cousins — both biological and of the heart.

A Memorial Service is being held for her Saturday, June 10 at 3 p.m. at the Mckinleyville Middle School Gym, 2285 Central Ave, McKinleyville. All are invited. Martina’s beloved friend, Alyssa Lea, has set up a GoFundMe that will assist with Martina’s end-of-life wishes. The GoFundMe will also be used to help establish the Martina Scarfia Scholarship for Nursing, as her legacy to assist other promising nursing students with personal challenges. Please use this link if you wish to donate to this fund.

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NOTE: Much more on the Nikki Alcaraz/Steven Stratton case — a national panic of which this reporter was not aware — at this Google News search.

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Press release from the Eureka Police Department:

On May 30, 2023 at approximately 7:15 a.m., Officers from the Eureka Police Department (EPD) were dispatched to the 100 block of 4th Street on a report of a missing person, Nikki Michelle Alcaraz, who had been spotted at this location on May 29, 2023.

It has been reported that Nikki Alcaraz had been on a road trip from Tennessee to California with her boyfriend, Steven Stratton. On May 9, 2023, an alleged domestic violence act occurred between Alcaraz and Stratton in New Mexico. The investigating agency released both Alcaraz and Stratton after investigating the incident. Several days later, both Alcaraz and Stratton left the area together and had not been seen since. This led to a missing person report being filed on Alcaraz in New Mexico.

EPD officers investigated the sighting in Eureka and were able to confirm that both Alcaraz and Stratton were still together and had been at the location.

On May 30, 2023 at approximately 2:25 p.m., a citizen phoned EPD and advised they had seen the vehicle associated with Alcaraz and Stratton traveling south on Broadway. Officers were dispatched to the vicinity and located the vehicle parked at Pacific Plaza. Both Alcaraz and Stratton were contacted inside the vehicle. Alcaraz and Stratton cooperated with officers. Alcaraz told officers that she was okay and didn’t need any assistance. A check on Stratton revealed he had an outstanding warrant for his arrest out of Tennessee with full extradition. Stratton’s warrant was for failure to appear on a theft related offense. Stratton was taken into custody without incident and transported and booked at the Humboldt County Correctional Facility.

Alcaraz was provided information on local resources and released from the scene. The reporting agency in New Mexico was notified of the contact with Alcaraz.

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ADDITIONAL READING:

• All the Kinetics Statues!
• Burglary in Trinidad
• ‘Jacks row fast
• Errant red-footed booby touches down in Trinidad

UPDATE, JUNE 7: Cassandra Ilene Miller has been located safe in Folsom, CA, by the California Highway Patrol. 

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Press release from the Humboldt County Sheriff’s Office:

The Humboldt County Sheriff’s Office needs the public’s help to locate missing person Cassandra (Cassy) Ilene Miller, age 33, of Loleta.

Miller was reported missing by a family member on May 17, 2023. She was last seen on May 10 at about 4 p.m. in the area of U.S. Highway 101 Southbound near exit 694, Loleta Drive.

Cassandra Miller is described as an American Indian female, approximately 5 feet 4 inches tall, 210 pounds, with dirty-blonde hair, blue eyes and no teeth. She was last seen wearing a black Bear River Rancheria sweatshirt.

Miller is known to live a transient lifestyle and frequents the Loleta area. She suffers from medical conditions which may put her at increased risk.

Anyone with information for the Sheriff’s Office regarding Miller’s possible whereabouts should call the Humboldt County Sheriff’s Office at (707) 445-7251, reference case number 202302289.