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REVIEW AND DISCUSS FINDINGS TO CONSIDER APPROVING A VACANT COMMERCIAL PROPERTY TAX AND DIRECTING STAFF TO PROCEED WITH PREPARING A 2026 BALLOT MEASURE AND PROGRAM DEVELOPMENT
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RECOMMENDATION
It is recommended that City Council:
1. Review and discuss findings to consider approving a Vacant Commercial Property Tax;
2. Direct staff to proceed with preparing a 2026 ballot measure and program development;
3. Authorize or appropriate any budgetary actions related to the preparation of a 2026 ballot measure for a Vacant Commercial Property Tax.
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Summary
There is growing evidence that unimproved and unmaintained vacant commercial buildings throughout the city contribute to blight and pose an attractive nuisance for loiterers and unhoused individuals. These conditions often lead to public health and safety risks, as evidenced by numerous fires, code enforcement calls, and police responses involving vacant commercial structures each year in Stockton.
On July 29, 2025, the City Council approved changes to the Stockton Municipal Code, now requiring a commercial property owner to register a vacant commercial building or lot within 30 days of vacancy (Ordinance No. 2025-07-29-1602) (Attachment A). The adopted ordinance aims to encourage commercial property owners to maintain and keep in good repair their vacant buildings and empty lots. A potential companion policy to SMC Chapter 15.32 (Attachment B) could be the establishment of a Vacant Property Tax (“VPT”) for commercial buildings. A key distinction of the proposed ballot measure is that vacant lots would not be included as part of the VPT.
The purpose of the VPT is to incentivize the productive use or redevelopment of vacant buildings, reduce the risk of future blight and fires, improve neighborhood safety, and potentially generate revenue for community priorities such as blight abatement, homeless services, and redevelopment efforts
DISCUSSION
Background
Vacant properties are a challenge for many cities. Research shows they depress nearby property values, reduce neighborhood economic vitality, and require disproportionate public resources for monitoring, enforcement, and emergency response.
In Stockton, vacant buildings have been linked to:
• Fire incidents: Stockton Fire Department responds to dozens of fires annually in vacant or abandoned commercial structures, many of which are tied to trespassing or unsafe conditions.
• Law enforcement impacts: Stockton Police Department frequently responds to calls involving loitering, trespassing, or other criminal activity in or around vacant buildings.
• Economic costs: Neglected properties discourage nearby investment, hinder revitalization efforts, and can stall redevelopment of commercial corridors.
Because many property owners live outside Stockton, they may not feel the direct impacts of vacancy, which can make voluntary compliance less effective.
Comparable VPT Initiatives in Other Cities
• Oakland: Measure W, 2018 (Attachment C): Annual tax of $3,000-$6,000 on parcels deemed vacant (defined as in use less than 50 days/year). Generated over $7 million annually, funding homeless services, code enforcement, and blight abatement. Oakland has since modified exemptions to address concerns from nonprofits and low-income property owners.
• Sacramento: Early polling suggested residents view vacant properties as a visible contributor to blight and are open to taxation as a tool. However, following later polling in 2024, Sacramento decided not to move forward with the VPT.
Potential Benefits for Stockton
• Blight Reduction: Creates a financial disincentive for owners to let properties sit idle.
• Revenue Generation: Funds could support code enforcement, fire prevention, homeless outreach, or corridor revitalization.
• Incentive for Development: Encourages owners to rehabilitate, lease, or sell properties rather than leave them unused.
• Equity: Levels the playing field for responsible property owners who currently bear higher costs of maintaining safe, active properties.
Potential Concerns
• Legal Challenges: Any new tax would need to comply with Proposition 13 and Proposition 218. Special taxes require a two-thirds majority vote.
• Administrative Requirements: Requires defining 'vacant,' tracking property use, and establishing exemptions (e.g., nonprofit, government, pending permits, natural disaster).
• Budgetary Costs: Significant upfront costs to develop ballot, design and implement VPT, and cover ongoing administration.
• Economic Impacts: Some small owners may lack resources to immediately rehabilitate or lease properties; exemptions and hardship provisions may be needed.
• Ballot Timing: The earliest feasible election would be the November 2026 General Election.
A key distinction of the proposed ballot measure is that, unlike the approved Ordinance No. 2025-07-29-1602, vacant lots would not be included as part of the Vacant Property Tax. Until all levy improvements are done, the City will not have adequate flood protection, making the taxing of vacant lots problematic.
Present Situation
The purpose of this agenda item is to discuss and seek direction from the Council and to determine if staff should commit resources to this effort, since it could be an extensive and arduous process.
The intent of the Vacant Property Tax is to encourage vacant property owners to maintain their property in such condition as to not be an economic detriment or safety hazard to the surrounding area, or to encourage development and forward progress of vacant commercial properties within the City.
If directed to proceed, staff anticipates the need for a two-phase approach with consultants to ensure the successful development and administration of a VPT:
1. Ballot Measure and Ordinance Creation - A consultant with expertise in tax law, municipal finance, and voter initiatives would be needed to draft the ordinance language, prepare ballot measure text, ensure compliance with Proposition 13 and Proposition 218, and support legal defensibility. This consultant would also provide unbiased technical support during stakeholder outreach and the public information process, which could include community surveys, focus groups, and/or stakeholder meetings.
2. Implementation and Program Management - If the measure is approved by voters, a consultant would be required to design and implement the operational framework of the program. This includes creating vacancy tracking systems, developing reporting and compliance procedures, identifying exemptions, integrating the tax into existing billing systems, and training staff. The program management consultant ensures the City has a workable, transparent, and enforceable system in place to administer the new tax.
A VPT would need to be brought to Stockton voters. The initiative cannot be placed on the ballot until the General Election in November 2026. The process for placing the initiative on the ballot is as follows:
January / February 2026 Stakeholder Outreach
May 2026 City Council Approval of Ballot Measure
June 2026 Last Council Meeting date to call election/argument authors
August 2026 San Joaquin County Consideration
November 3, 2026 General Election
As a Special Tax, the measure would need to pass by a two-thirds vote of the registered voters. As of the last report by the Registrar of Voters to the Secretary of State, a two-thirds majority would require 90,285 votes in the affirmative.
If the measure passes, the following is a potential schedule for implementation:
• RFQ for Implementation Consultant - March 2026
• Election - November 2026
• Implementation Consultant Selection - January 2027
• Go Live with Program - June 2027
FINANCIAL SUMMARY
Estimated Costs
Initial: $1 million includes start up election costs and ballot measure
Consultant: $70,000 - $100,000 per year
Internal Staffing: $800,000 per year
Total Costs: $1 million per year + $1 million start up
Potential Revenue: $ 2.5- $ 4.5 million per year
Funding for initial costs of this program was not budgeted in the FY25/26 Adopted Annual Budget. The City has sufficient funds in Known Contingency Reserves to cover the initial costs with ongoing costs in the future being funded by program revenues. Should Council approve moving forward with a 2026 ballot measure for a Vacant Commercial Property Tax, approval to authorize or appropriate budgetary actions would also be needed.
Attachment A - Ordinance 2025-07-29-1602
Attachment B - SMC Chapter 15.34 - Vacant Property Registry
Attachment C - City of Oakland - Measure W Ordinance