Rental reprieve

Council supports appeals process for taxation on Airbnb-type units

Nancy Lathan and her husband started collecting transient occupancy taxes for their short-term rental as soon as the city announced its requirements in September. Shortly after, they were shocked to find out they owed $8,200 in retroactive taxes, with about $3,000 of that in fines.

“We’ve retired, we’ve lived on those proceeds, we have nothing to fall back on,” she told the City Council at Tuesday’s (Nov. 6) meeting. “I don’t know how we’re going to come up with the money, and, by the way, we were given 10 days to pay it.”

In the spring, the City Council updated the municipal code to include “short-term home-sharing and/or vacation rental unit[s]” of less than 31 days on a list of properties that require a business license and must pay the transient occupancy tax (TOT), like hotels. But the city decided to collect the tax retroactively, back a full year, and most residents with rentals have balked at the fees (see “Blindsided,” Newslines, Oct. 4.).

However, it looks likely that Lathan and about 200 other short-term rental owners will be granted a reprieve. During Tuesday’s meeting, the council directed City Manager Mark Orme to facilitate an appeals process.

Orme said he’d likely grant amnesty to those unaware of the city’s policy changes and tax collection regarding short-term rentals, or those given incorrect information from the city—with the caveat that he would analyze each claim on a case-by-case basis. Those interested in an appeal, which could waive fees prior to Sept. 1, should contact the city manager’s office.

The vote was 6-0, with Councilman Randall Stone disqualified because he generates Airbnb fees through his real estate business. The Finance Committee will look into the best method of tax collection, and the Internal Affairs Committee will find out how the city can best facilitate the relationship between larger short-term rentals and neighborhoods, both recommendations from Councilwoman Ann Schwab.

Eleven attendees spoke against the city’s retroactive taxes, and urged the city to work with Airbnb for collection. The city is currently contracting with HdL Companies, out of Fresno, which will be paid 15 percent of what it collects.

Last year, the city received almost $10,000 from two or three short-term rental hosts who have been paying the TOT, and the total revenue (including hotels, motels and bed and breakfasts) was $2.8 million. Because there are about 200 short-term rentals in the city, Administrative Services Director Scott Dowell estimates the city will bring in an additional $140,00 to $160,000 per year.

Also at the meeting, the sit/lie ordinance passed on its second reading, with 12 people addressing the council, split about evenly in support and dissent. The consent agenda also included a second reading regarding city parks, which will now close from 11 p.m. to 5 a.m., though it does not apply to those traveling through parks or participating in a sanctioned activity. Councilman Karl Ory voted against sit/lie and the park closure times, and Schwab and Stone against sit/lie.