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Why VRBO and Airbnb Must Pay Transient Occupancy Tax

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Vacation rentals. It is as politically charged of an issue as you are going to find in resort areas.

Since 2001, I have been in the real estate and property management business in Lake Tahoe. My clients own homes and want to use them some of the year and are willing to rent them for short-term or seasonal rentals when they are not using the property themselves. Usage, not rental income, is the main priority of my second home clients. The vacation rental guests who book through businesses like mine pay 100 percent of the transient occupancy taxes (TOT) due. Vacation rentals currently account for 55 to 60 percent of the $18 million of transient occupancy tax collected in Placer County each year.

Unfortunately, not everyone has been playing by the same rules. Many owners who rent their homes through VRBO, Airbnb, and other online travel agents have not been collecting the 10 percent transient occupancy tax and remitting it to the municipality. I have been raising this issue for several years encouraging Placer County to begin going after these owners for two main reasons: First, it is not a level playing field for anyone in the accommodations business, including hotels and motels, if one set is paying 10 percent more than the other. Second, this 10 percent occupancy tax is vitally important to help fund the transportation, capital improvements, trail expansions, and other needs in our area.

Last year, Placer County took action, after seeing the results from Truckee, and hired the same company, Host Compliance, to begin the process of tracking these owners down and compelling them to remit taxes as soon as possible. The initial findings from Host Compliance were that roughly 40 percent of the vacation rental properties in Placer County were not paying the tax. This could amount to about an additional $4 million to $6 million a year if these non-compliant properties were in fact paying the tax. The approach Placer County chose after receiving this information was to send letters in batches to these non-compliant vacation rental owners, versus taking a more aggressive approach like the City of San Francisco did with Airbnb, where vacation rental listings are not even visible online until the owner opens a TOT certificate. So far, Placer County has collected an additional $850,000 in the last year of the estimated $4 million to $6 million identified.

Besides closing the tax loophole more quickly, there is the pressing issue of vacation rental standards. In my opinion, a set of vacation rental standards needs to be adopted. When trash, noise, parking, occupancy, etc. are subjective standards, the neighborhoods suffer. Luckily, there are other destinations, including Hawaii, that have seen some positive outcomes from the adoption of such standards so we don’t need to reinvent the wheel. These new policies should be created convening the private and public stakeholders.

Virtually everyone in our community benefits economically from tourism. Where additional work lies going forward is attracting more destination visitors versus drive-up visitors, providing amenities that tourists and the community want, and all the while offsetting the impacts. Collecting more revenues and implementing common sense rules and regulations will help us retain the quality of our community and ensure a more sustainable area where people want to live and visit.

~ Brett Williams is president/broker of Agate Bay Realty, a North Lake Tahoe Resort Association board member, and president of the Western Mountain Resort Alliance. When not in meetings, he enjoys downhill and Nordic skiing, stand-up paddleboarding, live music, and mountain biking, and is always up for a good comedy.

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December 13, 2018