City of Chico shakedown

Online rental-booking company Airbnb has been around since 2008. Another similar service, VRBO (vacation rentals by owner), has existed for more than a decade longer than that. Still, Chico’s City Hall has been in the Stone Ages when it comes to understanding the websites property owners use to list their so-called short-term rentals.

Indeed, last year, when responding to a code enforcement issue, the city attempted to put the kibosh on a Chico family’s operation at its property on the west side of town on the grounds that type of rental wasn’t permitted by existing municipal code. In that case, the family in question faced more than $8,000 in fines, along with citations.

The homeowners ended up hiring an attorney and, ultimately, in August 2017, an administrative law judge ruled in their favor—noting that the city’s code did not explicitly outlaw such rentals.

Since then, the folks at City Hall have changed course. To wit, city code has been amended insofar as to include the aforementioned type of properties in the section calling for the collection of transient occupancy taxes (TOT)—a fee historically paid by hotel, motel and bed and breakfast operators. Here in Chico, that tax amounts to 10 percent.

That about-face took place this past April. Here’s the rub: The city only recently started calling for payment of the taxes and is attempting to bill retroactively—not back to spring, but back to a year ago.

The justification is that the municipality has always been able to collect taxes on short-term lodging. Sure, that’s technically true. Hotels and the like have been paying the fees for as long as we can remember. They do so by passing on the cost to their customers.

Considering the city argued that rentals like those booked through Airbnb weren’t allowed to operate, collecting back fees seems like nothing more than a money grab. Additionally, the aforementioned code revision is essentially an admission the former language didn’t suffice.

Our take: asking these operators to pony up taxes that they only recently learned about and hadn’t budgeted for is unfair and an undue burden. Indeed, we’d go as far to call the city’s demand a shakedown.

The fix: Properly notify the public of the change and give owners the opportunity to pass the fees on to their customers. That’s the business-friendly and equitable thing to do.