City Council will consider ordinance to fine unregistered Airbnb renters

Southsidedaily.com is your source for free local news and information in Virginia Beach

Rentals listed on Airbnb in Virginia Beach from July 29 to July 31 (Courtesy of Airbnb.com)

Rentals listed on Airbnb in Virginia Beach from July 29 to July 31 (Courtesy of Airbnb.com)

Virginia beach residents who rent their home on Airbnb may be paying a little more to do so.

City Council is considering an ordinance that would require Virginia Beach residents who rent their homes on Airbnb and other home-rental sites to register with the City’s commissioner of the revenue and pay a transient occupancy tax (TOT). Phil Kellam, the revenue commissioner, briefed Council on the draft ordinance Tuesday. The registration requirement would permit the city to collect the TOT on the rental properties.

“I have the approach and you expect me to have this approach to be fair and equitable,” Kellam said during the briefing . “It’s not possible right now – they’re growing so fast. I can’t really discover them. I want to just get folks registered.”

Under the proposed ordinance, residents who rent properties on Airbnb would be required to register and pay the TOT. If they failed to register and pay, or if they registered and failed to pay the TOT, they would be required to post a $1,000 bond “to insure faithful performance” of their duty to pay the tax. Failure to obtain the bond would result in a $1,000 fine. The commissioner of revenue would also be empowered under the measure to “take appropriate action” against the bond if notified by the city treasurer about nonpayment of the necessary taxes.

Residents would likely be informed of the registration requirement through mail or online, Kellam said after the briefing.

The city already requires residents who rent their homes to pay a transient occupancy tax . The proposed ordinance, by requiring registration, would better inform the City of current rentals, making tax collection easier.

It could also make the rentals safer, according to Councilmember John Uhrin, who oversees the operation of multiple hotels at the Oceanfront.

“I get inspected every single year to make sure all my smoke detectors are working,” Uhrin said during the briefing. “I need somebody to be verifying that. But we can’t get to that point if we don’t know where they are – this seems like a way to get there.”

There are fiscal considerations as well. Robert Matthias, assistant to City Manager Dave Hansen, said in April the City is losing an estimated $200,000 a year from home rentals that are evading the TOT. Kellam has used the Airbnb website and Google Maps to pinpoint Virginia Beach residents who are renting out their homes. He was able to register 63 residents this way.

After the briefing, Kellam also said that if the City outlines how it would like to regulate Airbnb rentals, the General Assembly might consider its views when enacting legislation next year.

The loss of revenue isn’t just from the uncollected local tax, but also the uncollected state tax, part of which comes back to the city, Matthias said during the briefing.

He also emphasized the health, safety and welfare of visitors, a concern with the current home rentals since no safety inspections are required.

Airbnb rentals raise other issues as well, beyond city revenue, Councilmember Rosemary Wilson said during the briefing. 

“And just so the public is aware, we understand this is just one layer of this onion – the taxes – there is a whole lot of other problems in regards to our neighborhoods and how this is affecting our citizens.”

Kellam said the proposed ordinance could take effect “pretty quickly” if approved. He also said he is in negotiations with two entities, iCompass and Harmari, who claim to be able to provide addresses of Virginia Beach homes that are listed on online rental platforms. However, he is not yet certain he would retain either of them.

iCompass Technologies Inc. is a privately held located in Kamloops, British Columbia, according to its website; it “provides citizen engagement solutions for small and medium sized local governments.” Harmari Tools “help detect and monitor fraud and criminal activity” on online classifieds, social media websites and e-commerce sites, including Airbnb, according to its website, harmari.com.

The prospect of greater scrutiny has one Airbnb renter concerned. Virginia Beach resident Daniel Dill rented his Hilltop Area home on Airbnb last month for the first time, he said in an interview. He is not currently registered with the City because he was unaware he needed to be until the Tuesday briefing, which he said he attended because he was concerned about restrictive regulations. His first Airbnb rental was to a small group, one of whom is terminally ill, he said.

Still, Dill believes those who rent their homes often and treat the service as a business should be taxed as one. He would fall into this category, in his view, because he plans to rent his house more than five times a year. However, he said there shouldn’t be strict regulation or taxes for those who rent their homes on occasion.

“I don’t want to criminalize all the guys who are just renting two weeks a year,” Dill said in a phone interview. “I think it’s bad for society when we make something that’s not really criminal, criminal.”

NOTE: Due to an editing error, an earlier version of this story neglected to explain that under the proposed ordinance, Airbnb renters would be required to post a $1,000 bond if they failed to register and pay the TOT, or if they registered and failed to pay the TOT. The $1,000 fine comes into play when renters do not obtain the required $1,000 bond.

 

Comments

comments

City Council will consider ordinance to fine unregistered Airbnb renters