EDITORIAL: How Airbnb and other short-term rentals shortchange cities

https://www.columbiamissourian.com/opinion/guest_commentaries/editorial-...

Kansas City officials have tried and failed for years to compel the Missouri legislature to regulate emerging technologies and disruptive business models such as ride-sharing app Uber, Bird scooters and online property rental giant Airbnb.

State lawmakers’ unwillingness to allow cities to tax short-term rentals, coupled with a lack of resources needed to enforce Kansas City’s own regulations, are costing the city dearly. Missouri laws and city staffing aren’t keeping pace with this burgeoning industry, and Kansas City is losing out on needed revenue as a result.

Kansas City spent more than three years studying the home-share model and its effect on property owners and their neighbors. The city eventually developed a comprehensive ordinance regulating short-term rental listings on sites such as Airbnb.com, HomeAway.com and VRBO.com.

The policy, while not perfect, is carefully considered and crafted. But resources for enforcement are sorely lacking.

As a result, there are about 1,300 known short-term rentals operating in Kansas City without a permit.

Those scofflaws haven’t paid required fees, depriving the city of funds needed to enforce the ordinance. Unregistered hosts likely aren’t remitting sales taxes, either.

The city plans to send notices advising rule-breakers to either apply for permits or cease operations. But the city doesn’t have the resources to follow up and initiate enforcement on so many properties, said Joseph Rexwinkle, manager of the city’s Development Management Division.

“We do not have any dedicated enforcement staff for this ordinance, so the same group that is enforcing these short-term rental properties is doing this task in addition to their other tasks,” Rexwinkle said.

Compounding the city’s problems is a state law that prevents Kansas City from collecting tax revenue associated with some short-term rentals.

Currently, Kansas City cannot force individual property owners to charge guests what is known as a convention and tourism tax, a 7.5% excise that the guest would pay and the host — or a platform such as Airbnb — would collect on behalf of the host.

In Jackson County, hosts collected $12.5 million in revenue last year. Most did not pay the tourism tax, costing the city hundreds of thousands of dollars. Jackson County does not collect the tax.

Kansas City officials say taxing short-term rental properties with fewer than eight units would require clearing two hurdles: The legislature would need to pass an enabling statute, and Kansas City voters would have to approve the tax.

Collecting a tourism tax in Kansas City is simply a matter of fairness. If hotels, motels and bed-and-breakfast operations are subjected to a tourism tax and other regulations such as fire codes and requirements for commercial insurance, short-term rentals should be as well.

“Visit KC supports fair taxation across all lodging types,” Visit KC President and CEO Jason Fulvi said. The tourism agency is partially funded through the city’s hotel lodging tax. “To that end, we feel that it would be worthwhile to explore fair taxation of these properties for the benefit of the city’s and state’s economies.”

The city should continue to pursue a change in state law. In the meantime, here’s what local officials can do: enforce the current policy requiring hosts to register short-term rentals as small businesses, and collect the required fees and sales taxes from noncompliant short-term rental operators.

The city also should consider borrowing an idea from San Francisco, which created an office of short-term rentals. Airbnb and HomeAway provide the office with a monthly accounting of all registered listings, and they deactivate listings if the companies receive notice of an invalid registration.

Kansas City has taken the right approach to developing regulations for short-term rentals. But the reality is the city does not have the capacity to enforce its own policies.

Both the city and the state need to take steps to keep pace with an evolving economy. An unregulated market is not in the best interest of Kansas City or its residents.

This article was written and submitted by:

KANSAS CITY STAR

Copyright The Kansas City Star. Reprinted with permission.

About opinions in the Missourian: The Missourian’s Opinion section is a public forum for the discussion of ideas. The views presented in this piece are those of the author and do not necessarily reflect the views of the Missourian or the University of Missouri.

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PhineasSwann's picture
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09/25/2012

Read this when it came across my feed. Loved it. 

You might find this letter to a state online newspaper of interest: 

https://vtdigger.org/2019/06/26/darren-drevik-airbnb-and-the-vermont-brand/ 

Airbnb and the Vermont brand

Editor’s note: This commentary is by Darren Drevik, who is the co-owner of a bed & breakfast in Montgomery, and lists his property on several short-term rental websites.

Bryan Stascavage’s defense in his commentary of short-term rentals in Vermont is a strong statement for what has become a major industry in the state. But in attempting to respond to “factual and analytical inaccuracies” in a recent complaint about the industry by Julia Cook, he injects quite a few inaccuracies of his own.

He starts out by conceding one of the challenges state inspectors face with short-term rentals: That many of the property owners are absentee landlords, living out of state. While he notes that he provides his renters with safety instructions, he misleadingly claims “all my colleagues do the same.” They do not, and with short-term rentals uninspected, it’s impossible to ascribe any safety efforts to any of the short-term rentals in Vermont. And therein lies one of the major dangers that this fast-growing business represents.

The Vermont brand is a major economic driver for tourism. It’s a brand that has built for decades on the back of traditional hospitality businesses, including hotels, inns and bed and breakfasts across the state that collect meals and rooms taxes. Stascavage misleadingly claims that “all STR properties pay the rooms and meals tax.” That is patently untrue. There are at least 15 in my town that have boasted that they have been able to avoid paying any room taxes for their rentals. Until last year, there was no way the state could collect these taxes from any under-the-radar unlicensed rentals. Even the agreement signed between Airbnb and the Vermont Department of Taxes last year is fatally flawed: The state has given away its power to audit what Airbnb claims it owes, and rentals through other platforms such as VRBO, HomeAway and others still can cheat Vermont taxpayers because of the ineffective “honor system.”

In trying to avoid accountability for the health and safety of Vermont visitors, Stascavage invokes “low density” as a reason short-term rentals shouldn’t be inspected and required to provide Vermont visitors a safe place to stay, with smoke and carbon monoxide detectors, fire safety certification and health checkoffs. “There is no equivalency between a hotel and a home,” claims Stascavage. Given the rising number of Airbnb fatalities worldwide, I assure you when the first Vermont tourist loses their life in an uninspected Airbnb, “low density” or false claims of “no equivalency” will be of no comfort to them. Nor will it protect the Vermont brand from the inevitable bad publicity and damage. Hotels and family-owned inns aren’t demanding a level playing field on regulations to drive short-term rentals out of business — they’re demanding it because they don’t want to see their historic investment in the Vermont brand destroyed by those who have taken a free ride and are willing to jeopardize it for quick bucks.

Cook’s call for regulation, licensing and inspections won’t drive travelers away from Vermont as Stascavage claims. In contrast, knowing that our private homes, cabins, inns, B&Bs, and hotels are all inspected for safety will be a major point of differentiation that will make Vermont even more enticing.

Unaddressed are the issues of how the growth of short-term rentals has decimated affordable housing in the state, and how they do damage to many residential communities when “bad apple” guests settle in. Short-term rentals are becoming a major problem in many communities, and zoning boards are having to step in because the Vermont Legislature has abdicated its duty to deal with the problem.

I see this issue through a unique lens: I own a traditional B&B, but I also am part of the Airbnb community. Hotels, inns and B&B’s don’t want to drive short-term rentals out of business. It’s not an us-vs.-them issue. But if short-term rentals are going to play in the hospitality space, they have to abide by the same rules that all businesses and lodging establishments play by. To argue otherwise is to say the laws shouldn’t apply to you; that you are above them. And short-term rentals are certainly not that.

 

gillumhouse's picture
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05/22/2008

I am FINALLY getting some traction with my Councilon the issue of regulating short-term rentals before they come in - asin require registration/license and owner/agent (innkeeper or responsible person) on-site to control situations, and inspections. TheMayor, who was the one as a Councilman put down my first attempt, actually said he sees what I am getting at. I pointed out the taxes I am referring to are not the sales tax, but the ad valorum real estate tax difference between a residence and a business AND the B & O tax collections. Not there yet,but it is a start.

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