With hotel-tax revenues on a happy upswing, Palo Alto officials are preparing to take aim at one source of competition for local hotels: Airbnb and other services that allow visitors to rent rooms directly from homeowners.
A new memo from Vice Mayor Liz Kniss and council members Karen Holman, Larry Klein and Gail Price, is calling for the city to hold a meeting to discuss regulation of short-term rentals in residential neighborhoods. The memo calls for the council to consider whether the city’s zoning regulations should allow such rentals and whether the city should be collecting transient-occupancy taxes (also known as hotel taxes) from these rentals.
The memo notes that other cities are finding problems with the Airbnb model, including “impact on the availability and cost for housing (San Francisco) and potential traffic and parking impacts in the neighborhood.”
Safety is another concern, the council members say.
“Without some form of registration, as a hotel would have, or some means of notification, residents have no way of knowing who is taking up residence, albeit on a short term basis, next door to them,” the memo states.
The council will consider the memo at its Dec. 15 meeting and is expected to schedule a meeting early next year to discuss potential regulations. The memo specifies that a study session on the topic should be held no later than March 31.
The proposal comes at a time when the city’s hotel-tax revenues are experiencing a period of heavy growth. Hotel tax revenues jumped from $10.8 million in fiscal year 2013 to $12.25 in fiscal year 2014, a 13.5 percent increase. The numbers are expected to grow further in the coming years with new hotel coming on line and with the city’s tax rate going up from 12 percent to 14 percent.
The memo notes that Palo Alto now has about 300 to 400 Airbnb listings per night, a number roughly equivalent to San Jose. With San Jose (which has a hotel-tax rate of 10 percent) reportedly losing an estimated $150,000 per year in taxes because of Airbnb services, the council members estimate that with Palo Alto’s higher rate, its equivalent number is $210,000.
“San Jose, San Francisco and a few other larger cities have been negotiating agreements with Airbnb and other similar businesses on taxation and other matters,” the memo states. “Our situation may be different than these larger cities in some respects, but we believe it’s time for us to review what has been done and consider what additional steps Palo Alto should take.”
“Safety is another concern, the council members say.” What a bunch of hogwash. It’s just another way of fleecing homeowners and visitors.
I lived in Palo Alto for 20 years and I still had no idea who was living next to me anyway, who cares? This is ridiculous. All about the money.
I disagree – Airbnb needs to be regulated – for one thing, it makes for a transitory neighborhood, which formerly was residential. Entire homes are rented out this way, not just “rooms.” One really has to decide if an area/city/municipality is suited to Airbnb type schemes. I say no for Palo Alto.
Safety is one concern. Traffic is another.
Also – are these people profiting off Airbnb (residence owners, apartment owners, whatever) reporting this income from Airbnb on their income tax returns? Huh, I wonder.
Short-term rental of a home on our street has been a negative for existing homeowners/residents.
Skirting existing hotel taxes, etc. is yet another negative to the Airbnb scheme.
I notice that the article seems to point to the eagerness of the city to reap in more taxes. I would rather the city focus on how short term rentals and high density rentals in single family homes affect the neighborhood.
We have an AirBnB on our street that rents out to one or two people at a time. This does not bother neighbors at all. We have another neighbor whose house is becoming very full, renting out two to three per bedroom, plus renting out sofas. Some are there longer for several months but this is still very transitory. Some seem to be there short term — but how do you prove that?
A bigger problem is renting out to many people with many cars in a house that was intended for a single family.
> The memo notes that other cities are finding problems with the Airbnb model,
> including “impact on the availability and cost for housing (San Francisco) and
> potential traffic and parking impacts in the neighborhood.”
And just what proof can Liz Kniss, et. al., provide to prove these sorts of claims?
The AirBnB web-site should provide a list of homes, apts., etc., that are available for rent. Has anyone actually looked at the number of these units vs the housing stock in each city that claims this is a problem? It’s very hard to believe that anyone has done anything that even remotely resembles a little research.
This is another attempt to squash small businesses. The City wasted about ten million dollars on the Mitchell Park fiasco (that we know of). Yet, this Council has yet to show any disapproval, or want to know why?
Leave AirBnB alone until a real problem can be demonstrated. The amount of tax generated is virtually zero, compared to the hotels.
Air bnb is Not competition for hotels. Funny how article says hotel revenues are booming, then state the belief that air bnb is competition. People who are in a strictly residential area and have lots of people coming and going and too many cars, I fell do have a right to be heard. I do not believe the 400 air bnb places in Palo alto. People who are not in residence at their rentals and/or those who are evicting tenants to rent to air bnb guests are also a problem (has anybody proven the latter is happening in Palo alto?) are really causing problems for air bnb hosts who are in residence, who do not make that much money after taxes, and who provide guest orientation, transportation, breakfast, and a warm welcome to (mostly) young people with not all that much Money and who would not stay in Palo alto otherwise and who spend their money in Palo alto because if air bnb. Gennady take note.
To “anonymous” and anyone else who thinks this area is “residential” and posted: “I disagree – Airbnb needs to be regulated – for one thing, it makes for a transitory neighborhood, which formerly was residential. Entire homes are rented out this way, not just “rooms.”
This area (at least Midtown anyway) has already become “residential” anyway, before Airbnb came into the picture. Just on my street, there are six rental houses (out of about eighteen)! That’s 30 percent. Folks have moved and are renting their homes at a very high rate. Lucrative. In addition, large corporations and foreign companies are buying homes and using them as corporate housing for executives who are rotation here (I know of two one block over). So the flavor of this area has already become transient. Neighbors come and go. Honestly, I hate it. It’s not what we ever wanted. We want a stable community of neighbors who care to know each other. But I’m just saying Airbnb won’t have much of an impact on a community that in 25 years has already become a more transient, less know-they-neighbor, community.
To Anonymous, all Airbnb revenues are reported by the company to the IRS. As a host, you get a tax form (1099 I think). So, yes, the hosts (as Airbnb calls them) do pay income taxes. I agree with those on this list who suspect that the safety and traffic concerns are really just a smoke screen for a money grab by the city government. If you live here you already pay for that privilege. Let residents who need to supplement their inclose do it.
If it quacks like duck, it is a duck. If someone want to rent out accommodations on a short-term basis just like hotel commerce, then it is a hotel function and subject to the TOT.
Many city governments and AirBNB are already in full legal agreement about this fact of life. I think the city study session is essential. And I think the city staff and council will realize that they have a fundamental legal and fiduciary responsibility to enforce the existing laws. AirBNB does not need a free pass from the current or any future City Council. Selection enforcement of regulations, zoning and laws must not be the hallmark of our world class city.
There should be limit on the number of days you can rent a place for short-term rentals.
The total number of days should be less than half of the year.
If you are renting on a monthly basis, then you would not be subject to this or the TOT
@ Not partial, what about zoning? Our neighborhood is strictly residential, single family homes.
I am now not sure that the short term rental, furnished home I am specifically remarking about here is an Airbnb rental as I saw it listed for 9800/month or 8900 (forget now – an obscenely high rate) on the net – there is some semi-rental agency supervising it – but I thought it may be flogged on Airbnb as it is not leased to stable renters – anyway, instead of being a single family home with owners who reside there or long term renters, it is a short term rental. You have strangers coming and going, more cars, less residency, less stability. The owners of this newer property (foreign consortium of investors) are making coin, no doubt. We have an outstanding elementary school down the street and instead of housing a single family, it is short-term housing for the definitely rich who apparently want superior digs. There are problems with leaving trash bins out indefinitely, stuff like that.
Why does Palo Alto City Council insist on being the most anti-innovation city? WE are the heart of Silicon Valley.
It would BEHOOVE Palo Alto to be a LEADER and sit with Airbnb to explore solutions to REAL issues IF they arise. Airbnb’s incredibly creative business model is a phenomenon in startups – we are lucky to have them HERE.
The city’s ongoing mismanagement of our tax dollars is stunning. And they now they want to raise more taxes to drive more business and residents away?! Is there no end to the bad decisions?
This milestone in high tech and its revenue boost will not last forever. Anyone thinking of THAT?
Agreed with City council on this. I don’t want my neighborhood to become a transient fly by night motel without me knowing about it. This is a quiet single family residential area and needs to remain this way. If you have to make extra cash by going this particular route, then you probably cannot afford to live around here anyway.
I live next to small house that until recently, was a rental home. Now it is a permanent airbnb. Some people are there for a night; others for longer periods. But safety is ABSOLUTELY a concern. The owner doesn’t greet them or let the adjacent neighbors know(think five feet away).The “guests” tend to park in the wrong spot/driveway and block access to other homes. It’s one thing when someone rents out a room in their own home because they bear the risk of having someone there. It’s a completely different issue when the entire house is used as a permanent airbnb. And, what about people who live in apartment buildings with secure front doors? All “guests” get the security code or key. I’m fine with house swaps and occasional “guests,” but running it as a business means they should pay taxes to the city for running a hotel. The guests use all the services that the city provides – street repair, street lighting, etc.
I forgot to mention that a tenant from another rental unit nearby always rents out a room via airbnb as supplemental income. I’m quite sure the landlord doesn’t know, and I have no business or interest in telling him. But, landlords should be aware that their tenants may be making money from renting out their apartments. If I were a landlord, I’d put in the lease that any room cannot be rented to a “guest” or “tenant” without landlord approval.
I’d even go further and ban rentals of whole homes/apts for more than 1 month per year. There’s no advantage I can see to essentially turning residences in our residential neighborhoods into hotels.
I agree that the City Council needs to look at this issue. With the rental prices going crazy, more homeowners are likewise cashing in and renting out rooms and their homes on the various online “Vacation” sites. This affects the City in that these temporary renters use our public roads, facilities, etc. This also especially affects the look and feel of our neighborhoods with random people coming and going. Our children are also playing outside and walking to school etc. and it becomes more difficult to determine “strangers” vs. Palo Alto neighbors. The City needs to find a way to keep limits on the rentals per home per year or the neighborhoods will become more like hotel environments such as on El Camino.
Thank you.
No need to stop at only banning temporary rentals, I think we should ban all rentals in our neighborhoods. If you can’t afford to buy a house in Palo Alto you obviously don’t belong here.
Weren’t all of these downsides dismissed when we overturned the ban on car-camping?
We need to hire a consulting firm to do a $5 million study to advise our counsel on what is the most politically safe position to take. Then we can start our discussion all over again. If we still can’t decide we need a more expensive consulting firm (why go cheap when we can spent more?)
Not all the “revolving door rentals” are homes listed with airbnb. Some are listed on Craig’s List or other sites.
Someone from China bought two recently constructed homes on our street. One stays vacant, except for when the owner is in town ( so far, about four times a year for two or three weeks at a time–no problem there, except for the overgrown front yard). The other has a different guest or guests on a weekly basis. Uber, Lyft, limos and taxis drop them off and pick them up.
I have a hunch the owner of these two homes has no intention of paying the enormous hotel tax that renting through airbnb would oblige him to pay.
Services that have an aspect of public risk/safety need to be regulated. It is not just about the money.
Adding to Carla, also these are businesses in a residential area. It seems fine to me that one or two rooms be rented out for Airbnb if the owner is present. We have one on our street and this is not bothering neighbors. And it’s fine for someone to rent out a bedroom or two. But when it turns into a bustling business, that’s not right. Our neighbor who rents out 2 to 3 to a room and also sofas, trying to cram more and more people in a home designed for a single family, creates problems for the neighborhood.
> Selection [sic] enforcement of regulations,
> zoning and laws must not be the hallmark
> of our world class city.
Unfortunately, that goes on all the time here. Certainly the Arrillaga mess should have made it clear how selective things can be.
I experienced life events that can befall any of us. I went through a nasty divorce (and expensive legal fees), both of my children developing medical conditions that cost thousands of dollars per month AFTER insurance, and trying to recover an income source after a long gap in my career.
While the house I have owned for 20 years has appreciated nicely, it is a very illiquid and expensive asset (property taxes, maintenance, etc.) If at all possible, I wanted to try to stay in the house for the kids’ sake, especially given their medical issues and the support structure we had grown in our neighborhood.
I considered renting the rooms out “permanently” to students or others, but I found that I could earn much higher income and pose a much lighter burden on my household if I went through AirBnB for occasional guests. Rather than having permanent members of the household that had full kitchen rights, etc, I have occasional guests who are grateful for a quiet room to sleep in at night.
I use the AirBnB tools to screen my guests carefully and I have been blessed with a wonderful selection of visitors. Perhaps it would help inform the discussion here to have some examples of the guests that have graced my home in the past couple of years partnering with AirBnB:
Medical residents doing a rotation at Stanford Hospital
Professors from other universities coming in for seminars, collaboration, and other higher ed activities
Relatives coming in to celebrate weddings
New hires at Facebook or Google who are just “landing” in the Valley and need a home base from which to find permanent housing
Entrepreneurs coming in to visit with our bevy of local venture capitalists
Family members of critically ill hospital patients who need a place nearby to recharge their batteries
These folks are a breath of fresh air, bringing their varied cultures and perspectives to my household. They also bring lots of dollars into the local economy as I send them to my favorite coffee shops, restaurants, grocers, etc all over the neighborhood.
The income I earn through AirBnB is reported on a 1099 and is reported on my tax return. On top of providing identity verification and security screening, AirBnB provides insurance for damage/loss to my property and now for accidents/injuries.
Note that had I rented the room privately, there would be no security screen, no insurance coverage, and no tax record of my income. For those to whom it makes a difference, the visitors tend to be a of a more mature age and higher socio-economic background than someone who would rent a room in a house on a permanent basis.
Palo Alto is woefully short of decent hotel rooms at reasonable prices for the types of guests who visit me. If the city wants to have AirBnB charge my guests a hotel tax and remit it directly to the city, that is absolutely fine with me. However, it will increase the cost to the visitor, discouraging them from staying in the city and spending their money in our local stores.
AirBnB and the sharing economy are new and scary to some. To me and my family, they have been a godsend.
Thank you
We rent our college-aged son’s room through Airbnb, and have loved the experience. A medical resident, professor from Oxford, an young dental surgeon from Paris. One guest was relocating to work at Stanford and rented for 3 months, and stayed for 6. She couldn’t find a place to live here! We currently have a student who is here for 3 months. We do not pay TOT for rentals over 30 days, under 30 days we have chosen to pay the 12% TOT to the City. I think the City of Palo Alto needs to be clear what the rules are so we know, but they should be very careful about over restricting this new and exciting business.
Here we are benefiting from being at the center of tech and our City acts very conservatively. We have a responsibility to the people who work and visit here, to have a place for them to stay. It’s what a community does.
Neil and others who say if you can’t afford to buy here you don’t belong here–well that is shameful. Half the City that owns now wouldn’t be able to buy today (or even stay in their homes if they had to pay the same taxes their new neighbors pay). Many professors and tech people come here for 1-2 years and don’t want to buy. I am not even sure completely restricting the rental rights of homeowners would make it through the courts.
But I understand people not liking houses rented to multiple people with high turnover where owner/hosts are not living in the home. Some kind of perimeters should be defined.
If an owner lives in the home, restrict the number of rooms that could be rented (no more than 3?) but not the number of days. If the owner is not in the house, restrict the number of days (no more than 180) and the number of unrelated guests in the house at one time (no more than 3). But what about the famous incubators–where would they fit if these restrictions were in place.
It is worth a thoughtful discussion. But really it doesn’t seem like the City needs more taxes. If there was an increase of 13% last year, why did we raise the rates from 12%to 14%–higher than SF??
Also, are people aware that when a disaster hits Airbnb people open their homes for free en masse. Some 1000 rooms became available in 1/2 hour after one disaster (all this came about from Hosts asking for this after the Hurricane Sandy Disaster).
There are many positives to this sharing economy.
I’m pretty sure Neil was joking.
@unlisted, it is entirely possible that the homeowner in old Palo Alto is using one of the houses for visiting business people, not renting it at all. Kind of “corporate housing”
No rentals at all?
If you can’t affiord to buy a house you shouldn’t live here??
Its all about being good community members
How does the city know if it’s 30 days or less? Even if it’s two months stay, these essentially boarding houses impact the neighborhood with a large turnover. The problem is the large number of adults crowded into a R-1 designated house. If you put in bunk beds, the city says that’s ok. But a boarding house should be zoned in mixed housing, and not allowed in R-1.
R-1 zoning does not limit the number of adults who can live in a residence. There is no rule that says that I can’t live in my R-1 house with a spouse or lover, grown children, a grandparent or two (or three or four).
Neither are there regulations about how long or how often one can rent out their R-1 house, or any rooms in Palo Alto. Does the city really want to get into the business of telling empty nest seniors that they can’t rent rooms to college students? Families living abroad a stint that they can’t rent out their vacant homes?
Are there security issues around rental tenants that we want to get into legislating? Are rental tenants less secure or less valid members of our community than homeowners? Is someone here for a week-long conference less secure than someone here for a semester? a year? a decade?
From this thread’s comments, I suspect that some want to somehow judge and control the activities of their neighbors. The fears are that the house next to yours has a people configuration that is not like your own, or is suspected to have a class of person that does not meet your standards, or that you don’t know exactly who is there at all times and want to have a say in who lives near you. Unless you want to buy all the lots around your house, good luck with any of that.
Renting rooms through AirBnB is work – significant work. I clean rooms, make beds, greet guests, bake goodies, clean dishes, etc. I have to make sure that my home is kept up neatly and attractively. I have to try to get my kids to cooperate by not having tantrums about homework during quiet hours. I make sure my guests don’t block anyone else’s driveways or inconvenience anyone around us. While I enjoy the visitors, this venture is not for the faint of heart. I probably earn less than minimum wage from these efforts, but it is keeping my family afloat.
I see no problem with city collecting hotel tax from ALL rental properties in Palo Alto – who is to say what length stay is a hotel vs rental? If the city wants to tax only guests staying less than a certain time period, that is fine too. Either way, it makes our city more expensive and less attractive to visitors who spend their money in our local businesses.
However, I encourage each of you to really understand where your concerns are coming from and do a sanity check to see if they are from a value and reasoning system you are proud of.
@Airbnb hostess:
I think you missed reading the posters who do not oppose renting out a few rooms. That’s ok and does not really impact the neighborhood, especially when they are as considerate as you.
The bigger problem is the bigger operations with a dozen or more people crowded into an R-1 house. That does impact the neighborhood.
You can report your neighbors who rent out empty rooms, or their entire home to the Franchise Tax Board (FTB) and Internal Revenue Service since this is considered taxable earned income.
https://www.ftb.ca.gov/online/fraud_referral/index.shtml
Airbnb is an on-line is a hotel service. VRBO is an on-line hotel service. VRBO rentals seem to pay local hotel taxes where I have used them, why not Airbnb? Local hotels pay the occupancy tax, so should Airbnb rentals.
It is most unfortunate that our local city Manager and entourage are mostly incompetent when it comes to spending tax dollars wisely, but that’s no reason to undercut local hotel businesses that provide a regulated and licensed service, and contribute to the city budget via the taxes they pay. Airbnb does none of that.
Several neighbors rent their places out to Airbnb on occasion, some renters are quiet, others are complete ***-***** because, well, it’s not their place, what do they care. It’s not like the hotel manage will toss them out, because there isn’t one!
Airbnb is an on-line is a hotel service. VRBO is an on-line hotel service. VRBO rentals seem to pay local hotel taxes where I have used them, why not Airbnb? Local hotels pay the occupancy tax, so should Airbnb rentals.
It is most unfortunate that our local city Manager and entourage are mostly incompetent when it comes to spending tax dollars wisely, but that’s no reason to undercut local hotel businesses that provide a regulated and licensed service, and contribute to the city budget via the taxes they pay. Airbnb does none of that.
Several neighbors rent their places out to Airbnb on occasion, some renters are quiet, others are complete ***-***** because, well, it’s not their place, what do they care. It’s not like the hotel manage will toss them out, because there isn’t one!
AirBnB Hostess:
Just wanted to point out that the muni code defines “family” as:
18.04.030 (a) (54) “Family” means an individual or group of persons living together who constitute a bona fide single housekeeping unit in a dwelling unit. “Family” shall not be construed to include a fraternity, sorority, club, or other group of persons occupying a hotel, lodginghouse, or institution of any kind.
(83) “Lodging unit” means a room or group of rooms not including a kitchen, used or intended for use by overnight occupants as a single unit, whether located in a hotel, motel or a bed and breakfast providing lodging. Where designed or used for occupancy by more than two persons, each two-person capacity shall be deemed a separate lodging unit.
and finally
(15.5) “Bed and breakfast” lodging means the furnishing of rooms or groups of rooms equipped regularly to provide lodging by prearrangement and for compensation for short periods of time and not to exceed six guest rooms. Meals may or may not be provided, but there is one common kitchen facility.
R1 is the “single family” district. You’re running a modern version of a lodging house / unregistered bed and breakfast. AirBnB is in a grey area that’s open to interpretation.
Joe,
The SF Chronicle did an analysis of the effect of AirBnB on San Francisco. It’s pretty clear AirBnB has been part of what’s created the insanely tight rental market in SF. So, yes, the numbers are out there.
Personally, I think AirBnB needs to regulated and taxed. Palo Alto has always had a high percentage of renters (we are, after all, a college town.), so losing long-term rentals to short-term airBnB turnovers is a problem. A couple of houses near me have gone from owner-occupied to rental and, yes, I notice the difference. Given the issues with parking and traffic, I think there’s a reason for the city to look into regulating short-term rentals. I’ve no problem with the city collecting a tax on it either.
I truly doubt anyone’s looking into banning AirBnB here.
@Anonymous — thank you for your post. That is very good info and I am surprised to hear that there is a six guest room limit. Code enforcement has been telling us that you can put as many renters as you want in your R-1 house. But that doesn’t make sense. Motels/hotels/B&B’s have to abide by certain regulations and safety codes and can’t just be located anywhere and have to provide parking. But not R-1 homes?
Looks like the city cherry picks the zoning regulations and enforces only what they want to.
I think this is a great idea. I have two neighbors within 500 feet of my home who rent out their homes for several MONTHS of the year while they vacation all over the world. They are using their single family home as a hotel business bringing in numerous strangers throughout the year, and this DOES impact the neighborhood. The TOT will be paid by the “hotel guest” just as they would have to pay in a hotel.
This (Air BnB’s position) sounds like another on-line business trying to avoid paying local taxes to get advantage over competing businesses in the community–even while they USE local resources. I agree with Council. They should pay. Palo Alto would not be breaking new ground with this tax. Other cities have already gone this direction.
The NY Times has been covering this and the Uber problem. These online businesses do generate local safety and transportation impacts. They should pay for that just as their hotel competitors do.
” not to exceed six guest rooms” means a B&B can’t have more than six bedrooms for guests, it does not mean that there is a limit to the number of people per room or house. (How can this phrase possibly be interpreted to mean that?)
As far as I know, there is indeed no limit to the number of renters allowed in a house, in fact a landlord cannot limit the number to less than two per room.
But many cities in California have a prohibition against short term rentals in many of their R1 neighborhoods.
Clearly two different problems each with their own issues: 1) too many people per room or house in a given neighborhood; 2) allowing short term “hotel-like” rentals in a given neighborhood.
Typically, 2) is addressed by zoning better than 1). Doing something about 1) runs the risk of de facto discrimination against protected groups.
@RTW is right up to a point. But the only further mention of bed and breakfast in the muni code is in 18.10.030 Land Use that only permits bed and breakfasts with up to 4 units (including the owner’s) in “RMD” districts. Bed and breakfasts are not an enumerated use in 18.12.030 which governs R1 districts.
As any good lawyer will tell you, codes mean what judges say they mean. Not what the words on the page say. But the code does not appear to allow B&Bs in R1 districts.
Ironically, short term whole-house rental seems to be allowed under the code in R1. But short-term room rental does not appear to be allowed.
@RTW — The point is that B&B’s are regulated and must meet certain safety codes and abide by certain restrictions. Usually it’s two to a guest room. I am guessing you cannot just set up a B&B in your home without oversight from the city and without the approval of your neighbors.
AirBnB’s are a new phenomena. The irony is that the city wants those tax dollars from the AirBnB’s that don’t bother people when the the AirBnB’s rent out a room or two. That’s not likely to impact the neighborhood. But that’s who the city wants to regulate, not the problem high density boarding homes. If the tenants stay 31 days, there are no taxes and no regulation of the single family home in a R-1 zone.
What doesn’t make sense, is that the city allows you to stuff as many tenants as you want in a single family home even if it turns into a big rental business. Really no limit?
And your last point: How could limiting the number of tenants in a single family home in a R-1 zone be viewed as discriminating against anyone?
Neither AirBnB nor I are trying to get away with cheating anyone. We report and pay income taxes on the income and all hosts sign an agreement to comply with all local ordinances (where they exist.) Everything is designed to be totally above board.
Please note that AirBnB and I are both in support of having guests pay hotel taxes IF that is what the city wants to do. It is up to each city to determine how they want to characterize the AirBnB stays and whether they want to tax them (and for how much.)
One tricky point is defining what constitutes a hotel stay vs a rental. Many of my guests stay for a month or two while doing business in the city. Is this a hotel stay or a rental? I have stayed at hotels for six weeks while my house flood damage was being repaired. Should that have counted as a rental and not have me charged hotel taxes?
Another tricky point is making sure that whatever regulation the city develops is applied fairly across the whole city. If someone is renting their house or rooms independently for however long, but not going through AirBnB, how will the city know about it and collect the appropriate taxes? What about HomeAway, FlipKey and other rental marketplaces? If the city wants to tax rentals of whatever duration, then it needs to figure out how it is going to register and monitor ALL rentals to ensure that taxes are collected correctly.
But before we jump to decide to tax rental guests, let’s not forget the financial impact that our guests have on the local community. They spend money here, in our neighborhoods, in our local stores, in our grocers, etc. If we decide to tax in Palo Alto but Menlo Park doesn’t, guests may choose to stay over the creek. How much of a premium do they place on being in our city? What is the net financial impact of taxing these guests?
As for AirBnB supposedly tightening the already impossible rental market, I absolutely disagree. AirBnB (and its brethren) make it possible for people to explore opening their homes to guests and get used to sharing their spaces. The process has created hundreds of rentals where there were none. It has created thousands of rooms beyond the almost always full hotel stock that are available for visitors to stay and spend in this city. This is a win-win for the city!
Airbnb stays are no different than B n B stays, except they don’t pay occupancy taxes, and they are unregulated. Claims that imposing the occupancy tax on Airbnb will hurt this allegedly important cottage industry are rubbish. E-retailers insisted that taxing them would crush their business too, and low and behold, the sun came up the next day and those businesses have continued on, passing the sales tax costs onto customers just like any other business. I can’t recall any e-commerce business, or hotel, that failed because of a sales or occupancy type tax. The idea that Airbnb in Palo Alto will wither if they must pay an occupancy tax but Menlo Park Airbnb hosts don’t not is laughable. When is the last time you picked a hotel room based on the room tax? Ever bother to even look up the room tax rate before booking a room? Quick, how many even know what the Palo Alto occupancy tax rate is? How about the Menlo Park hotel occupancy tax? I do know that the Airbnb occupancy tax rate is now 0% and that should change.
@Mel, if occupancy tax had no effect, we would have made it 114% instead of 14%.
Yes Regulation… but to what degree. What are the reasons… to collect taxes.
The city wants to have their cake and eat it too.
They are concerned with the tax, but also imply that it isnt allowed with the zoning codes…
So which is it, is it allowed or not.
They are handling these matters separately but for them, to pass the tax bill but to not pass a bill to change the code to allow it, would allow them to collect tax on potentially illegal airbnb’s…
If its not allowed, you shouldnt be allowed to make money off it.
What the city should do is decide wether they want to allow airbnb first, in which zones, and to what degree…. before they demand tax dollars…
So greedy.