Those who rent out their homes or guest houses during busy weekends or keep a rental property by the beach to make extra cash will soon be kicking a few bucks back to Malibu since Airbnb, one of the last holdouts against Malibu’s demand for taxes, has finally come to an agreement with the City.
City Council’s May 2014 decision to subpoena vacation rental sites for info so they could collect transient occupancy “hotel” tax (TOT) from individuals leasing out private homes raised a few eyebrows around town, but nearly a year later, Airbnb has finally responded and, beginning on April 20, four out of the five sites they requested will now be handing the City its 12%.
“We are pleased to add Malibu to the growing list of cities where Airbnb is able to collect and remit occupancy taxes on behalf of our hosts, and where local rules embrace home sharing and the peer to peer economy,” reads the official Airbnb announcement, authored by regional head of public policy David Owen.
City Attorney Christi Hogin explained that Airbnb is essentially agreeing to provide a service to those who rent out houses and apartments on its site, who are the ones legally responsible for collecting the tax.
“Airbnb is going to make it easy on the hosts by collecting the tax on their behalf and remitting it to the City, which the City is thrilled with,” Hogin said.
“We think that Airbnb is totally doing the right thing here,” Hogin added.
The story began 11 months ago, when Assistant City Manager Reva Feldman prepared a staff report for City Council suggesting they go after rental sites, including Airbnb, HomeAway (owners of VRBO and FlipKey) and YBYC.
According to Feldman, the City was missing out on hundreds of thousands of dollars in tax revenue.
Now, Feldman says, though numbers from Airbnb aren’t finalized, the city expects a bump from TOT.
“I can tell you that we expect for this fiscal year to get $450,000,” Feldman said, “That’s what we expect [now]. But I don’t know until Airbnb provides me with data, what we can expect.”
Hogin added that the tax money goes back to renters and hosts. “The money that we can use from those taxes is basically used for police, fire, roads, clean water: all of those things that both the residents and visitors employ,” Hogin said.
As for the other sites issued subpoenas, only HomeAway is holding out. According to Feldman, there doesn’t seem to be much hope for the City to collect the TOT from them, since they are not under legal obligation.
Since HomeAway does not have an L.A. County office, the subpoena from the City does not put any pressure on them, and, in addition, unlike some of the other sites, VRBO and FlipKey do not collect rental fees themselves.
“They’re just an advertising site; they don’t collect revenue through the site,” Feldman said. “Unless they willingly comply, there’s nothing we can do further with that.”
The City is making its money, but there has been little word about whether the tax will help cut down on vacation rentals, which was listed as a primary reason to issue the subpoenas in spring 2014.
“This is not a revenue-generating item. The reason we’re doing this, the genesis of this, was we’ve been getting a tremendous amount of complaints from residents throughout all areas of the city,” said Councilman Lou La Monte during a May 2014 council meeting.
Airbnb seems to have taken its agreement with the City to mean it’s more welcome than ever to operate in Malibu neighborhoods.
“Our community in Malibu already brings significant economic and cultural benefits to the city, and this is another way we can make it even stronger,” reads the Airbnb statement.