The Daily Hustle: 2/23/11

Vacation rentals in HOT water

The Daily Hustle: 2/23/11

Vacation rentals have seen their share of controversy lately, but this has nothing to do with flying test babies: A report delivered to City Council's Audit and Finance Committee yesterday “found evidence that strongly suggests” short term vacation rentals of the sort offered by aren't paying their share of the Hotel Occupancy Tax.

The report didn't estimate how much revenue was lost, likely due to the limitations of their scope. The report states:

OCA attempted to quantify the number of short term vacation rentals operating in the City that were not paying the HOT. OCA began contacting Austin property owners who were advertising vacation rentals on a worldwide vacation rental website to determine if they were paying the tax. However, the owners of the site, on advice from their attorney, directed OCA to cease that activity. Subsequently, the City’s Law Department has directed OCA that it has the right to contact the property owners. Therefore, HOT revenues related to short term vacation rentals will be the subject of a future report.

It continues, stating “The web site owners stated a willingness to work with the City to help inform Austin property owners of the requirements for registering with the City and paying the HOT.”

Without directly questioning renters, the OCA trolled that certain site for info to compare against city records:

A search of a worldwide vacation rental website in January showed over 200 properties for rent in Austin. However, the Controller’s Office estimates that there are only approximately 80 short term vacation rental property owners registered with the City. OCA was unable to determine whether the short term vacation rental registered with the City match any of the properties listed on vacation rental websites because of the scope limitation discussed earlier in this report.

The properties listed on vacation rental website ranged in size from a studio space attached to a private home suitable for two people to a six bedroom home suitable for fifteen people. The rental rates ranged from $100 to $3,000 per night. In addition, there are other websites where vacation rental properties may be advertised. There may also be properties that the owners do not advertise. Therefore, the short term vacation rental properties not registered with the City could represent a loss of HOT revenue.

OCA ends by offering three suggestions:

The Controller’s Office should update its web site to make the HOT reporting form easier to find and work with major short term vacation rental marketing companies to provide links to the site;

The Controller’s Office should coordinate with other departments to be informed of the existence of short term vacation rental properties;

The Controller’s Office should update the proposed amended HOT Ordinance to clarify that it applies to short term vacation rental properties.

With the issue already flaring up as a sore spot in some neighborhoods, we can expect to hear a lot more in the future. You can see the whole report here [PDF].

What the hell else is happening?

On the city calendar: City Council's Committee for Emerging Technology and Telecommunications meets in the Boards and Commissions Room at City Hall, 3pm.

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