Proposed Parking and Vacancy Taxes Spark Concern in Commercial Real Estate

Los Angeles City Council is moving quickly on two major tax proposals that could have significant consequences for commercial properties: a Parking Occupancy Tax (POT) increase and a new Vacancy Tax.

These proposals are advancing through the Budget & Finance Committee and could be formally placed on upcoming ballots within weeks.

BOMA/GLA is joining forces with business groups citywide to push back against these taxes.

What You Need to Know

City Hall is considering seven tax proposals as part of its revenue-raising plan—but two stand out for their potential to directly affect commercial real estate:

1. Parking Occupancy Tax Increase (could come up on June 2026 Ballot)

• The City is considering raising the POT from 10% to as high as 20%, with a first step to 15% already recommended.
• At 15%, the City estimates $70 million in new annual revenue; at 20%, that jumps to $135 million.
• The tax applies to all paid parking except residential and public meters—meaning daily parkers, monthly contract holders, visitors, hotel guests, and commuters would all pay more.

2. Vacancy Tax on Unused Properties (could come up November 2026 or later)

• Modeled loosely on Oakland’s tax, which charges $3,000–$6,000 per vacant parcel.
• LA’s version could generate anywhere between $45 million to $128 million, depending on how “vacancy” and “property” are defined.
• The Council is focusing early discussions on commercial properties, even though they represent a small relative share of parcels.
• Implementing the tax would require a large new city bureaucracy—potentially consuming 10% or more of revenue through administration.

Timeline

January 28, 2026: Deadline for Council to place measures on the June 2026 ballot.

June 17, 2026: Deadline for November 2026 ballot measures.

Broad Impact Across Sectors

Stakeholders from the parking industry, business improvement districts, hospitality, and commercial real estate—BOMA/GLA included—are already mobilizing.

As parking leaders noted in early discussions, this is not a “parking operator” issue; it's a direct tax increase on parkers, employees, companies, and building owners.

How It Impacts You

For commercial real estate professionals, these taxes would have immediate operational and financial implications:

Increased Operating Costs

Raising the Parking Occupancy Tax increases the cost of parking for tenants, employees, and visitors.

With demand still recovering post-pandemic, ownership groups may have no choice but to absorb some or all of the increase—directly reducing a building’s parking revenue and net operating income.

Pressure on Tenant Retention & Leasing

Higher parking rates can be a tipping point for companies considering downsizing or relocating—especially in submarkets already struggling with office vacancies.

Employers may be forced to shoulder parking subsidies or risk losing staff who commute by car.

Reduced Competitiveness for Downtown and High-Cost Districts

LA already has some of the highest parking costs in the country.

Adding a steep new tax on top of inflation, security costs, and soft market conditions puts further pressure on commercial corridors that rely on drive-in customers, clients, and workers.

Vacancy Tax Exposure for Under-Leased Buildings

A commercial vacancy tax—even if levied per parcel or per “unit”—creates added risk for properties navigating long lease-up cycles, capital improvements, or market constraints outside an owner’s control.

This type of penalty does not address root causes of vacancy—demand, economic conditions, permitting, safety, or homelessness—but instead increases carrying costs for property owners committed to long-term investment in the city.

Potential for Broader Future Tax Measures

Because these proposals are part of a larger revenue strategy, more taxes could follow if the City seeks ongoing funding streams.

Early success with POT or a vacancy tax may signal broader policy goals for future cycles.

Stay Connected

BOMA/GLA will continue coordinating with partners across the business community and will engage Council offices immediately.

We encourage members to stay alert on BOMA on the Frontline for action alerts and opportunities to share how these proposals would affect your properties, tenants, employees, and customers.

If you’d like updates or want to participate in our advocacy efforts, please reach out.