Sonoma County moves to better track Airbnb, vacation rentals (w/video)
Faced with up to $1.3 million in lost revenue, Sonoma County is looking to emulate the efforts of larger cities such as San Francisco and Portland, Ore., to capture hotel bed taxes from vacation rentals and bookings through services such as Airbnb.
San Francisco-based Airbnb — and other companies like it — have grown rapidly. The boutique online rental site allows homeowners to list private homes or rooms available for rent by out-of-town guests seeking temporary stays on the cheap. But Sonoma County and many cities say the largely unregulated marketplace is squeezing their coffers because many homeowners do not report transactions to tax officials.
In Sonoma County, the problem facing government officials is twofold. Officials don’t know exactly how many people are renting out rooms online, and the vast majority of property owners leasing their space aren’t paying bed taxes, which is required by county ordinance.
An audit presented at Tuesday’s Board of Supervisors meeting identified 267 properties listed on Airbnb, clustered mostly in tourist destinations along the Russian River and in popular wine regions surrounding Healdsburg and in the Sonoma Valley. But there are likely hundreds more unregistered or listed on other websites, potentially leaving millions of dollars in revenue unclaimed, county officials said. Revenues from the so-called Transient Occupancy Taxes go to the county’s general fund, but they pay for advertising and promotional activities, among other things.
Property owners who rent out their space temporarily — whether it’s a room on Airbnb or a house listed as a more traditional vacation rental — are required to register with the county tax collector’s office and pay a quarterly bed tax. The audit of tax revenues, however, reported that there are likely hundreds of owners operating illegally in unincorporated areas, and the county is losing between $500,000 and $1.3 million a year in general fund revenue.
“This is an extremely conservative estimate,” said David Sundstrom, the county auditor-controller-treasurer-tax collector, whose office conducted the audit. “When you don’t know where they are, that becomes a very big problem.”
Supervisors on Tuesday called on county planning officials and the tax collector’s office to track how many people are renting rooms through online marketplaces, and identify how many property owners are renting out their houses for vacation rentals.
In 2010, supervisors decided that existing rentals with up to six guest rooms, and including two structures, will require a basic $150 zoning permit. Discussions at the time spelled out rules for new rentals beginning in 2011. A zoning permit was limited to five guest rooms, and included up to two structures. Airbnb and other rental websites like it that rent individual rooms do not require a permit. All tourism-related rentals, however, are required to register with the county and pay bed taxes quarterly.
“We need to understand the scale and scope of the problem,” said Board Chairman David Rabbitt. “Are we talking about a few bad apples or are we talking about a broken system?”
To try to capture some of that lost revenue, the county has drafted a letter to Airbnb to request a similar tax-collecting arrangement to one that began Oct. 1 in San Francisco. The letter asks that Airbnb collect bed taxes on guest stays in unincorporated parts of the county and send revenue back to the county. Officials are also seeking more complete information about how many people are operating tourist rentals so they can compile registrations in a new database. Complaints would also be tracked.