City’s plan to establish new tourism district includes a tax increase on temporary lodgers

Some Airbnb hosts cried foul at a hearing on Sacramento new tourism infrastructure district last month. Local hotel owners and one city councilman essentially offered them the world’s smallest violin.

The plan to create a 218 square-mile business district was spearheaded by Visit Sacramento and the Sacramento Hotel Association. Its purpose is to finance the addition of an extravagant ballroom on the second floor the Sacramento Convention Center during the first phase of renovations. The groups believe this will bring new and larger conventions to the city. All hotels operating within the boundaries of the district will see a 1 percent increase in the transient occupancy tax they are charging. And so will all Airbnb and VRBO outfits in the same space.

Airbnb hosts appeared at the October 23 hearing to tell the council that mandate will hurt their business.

“They have not been communicated with,” Julian Self said of fellow Airbnb operators. “Some of these folks are miles away from the convention center and about as likely to have a convention attendee stay in their home as the Easter Bunny.”

John Lambeth, an attorney who worked on establishing the new tourism district, countered that all Airbnb hosts who have legal permits had indeed been contacted.

Last year, finance officials estimated that 85 percent of local Airbnb operators hadn’t obtained the required permits. The city has since hired an internet firm to track those operators down.

Dave Fletcher, an Airbnb host who said he’s been charging the correct taxes, told council members he didn’t want to charge more than the current 12 percent rate.

“We have very low rates on our room nights,” Fletcher said. “We’re individual people in a residential situation, not really a commercial situation.”

Sacramento architect David Pham also said he thought it wasn’t right to force so many Airbnb hosts into the tourism district.

Teresa Peck-Montijo was the lone Airbnb host who spoke in favor of the financing mechanism.

During public comment, hotel owner Amit Prakash contended that Airbnb owners should pay into the convention center’s renovation because they’ll undoubtedly benefit from it.

“When all the hotels are full, you have nowhere else to go, and you have to go to Airbnb,” Prakash observed.

Councilman Steve Hansen, whose district encompasses the convention center, also was decidedly unmoved by the Airbnb lobby.

“I would say that the VRBO- and Airbnb-sharing hosts got the benefit of not paying taxes for a long time, their guests were not included until very recently, and that was an unfair advantage,” Hansen said during the hearing. “We have a lot of Airbnb hosts in my district who have impacts on the neighborhood, and my particular neighbors don’t feel a lot of sympathy if the hosts have people who are paying 1 percent more.”