Airbnb Agrees To Pay Hotel Taxes In L.A.
City officials announced today that Airbnb will now be required to pay hotel taxes under a new agreement that could bring millions of dollars of revenue to the city.
City News Service report that the three-year agreement holds Airbnb responsible for paying these "transient occupancy taxes," as of August 1. The taxes are owed by the hosts who rent out rooms and properties through Airbnb's website.
The L.A. Times notes that city budget and tax officials are hoping to collect around $5 million in the next fiscal year, money which would go towards paying for programs to fight homelessness. The city's top budget official Miguel Santana said that the tax agreement does not need City Council approval, saying, "We just want to make sure that while that conversation is taking place, the city is not missing out on millions of dollars in revenues."
The legality and regulation of short term rentals is relatively unchartered territory, and when the desires of hosts, renters, and legislators come to a head, things can heated, and messy, as was the case for Airbnb in San Francisco.
As the Times notes, renting out a home for less than 30 days at a time throughout much of the city is still technically illegal: such is the case in Santa Monica, where most listings on the company's website would violate the "less-than-30-days" law. Just last week, a sleazy Santa Monica man was busted for illegally operating five short-term rentals (not to mention, literally writing a book on how to make six figures as a "rentalpreneur"). West Hollywood also said no to short term rentals, and may even increase fines for violating the law, as we reported earlier today.
But, it seems as if the city's taking a "if you can't beat 'em, join 'em" approach to Airbnb. Last month, the Los Angeles City Planning Commission approved an ordinance that would prohibit Airbnb hosts from renting out their units more than 180 days a year, which marked the first set of regulations on short-term rentals. This agreement to pay the hotel tax is the next.
A study published earlier this year found that the city was missing out on a potential $41 million in revenue it could have been collecting, had it regulated Airbnb rentals like hotels and other hospitality institutions.
As for Airbnb? They seem happy to accommodate. John Choi, a spokesperson with the company tells LAist in a statement:
Our community of hosts want to pay their fair share and we want to help. These agreements allow cities to rightfully benefit in the economic impact of home sharing while also making it easier for Airbnb hosts, the vast majority of whom are middle class people sharing their own home, to comply with local tax laws. We are pleased that this process is moving forward and will benefit Angelenos.
It's great that Airbnb will be held more accountable, financially-speaking, but that doesn't take away from the often macabre implications the proliferation of Airbnb rentals has on L.A.'s cutthroat housing market. In December, two women sued Airbnb after they were evicted from their rent-controlled apartment, only to see it available for renting for waaaaaay more than what they were paying before on the company's website.
But then again: there are those who argue that Airbnb is actually a *good* way to rent an apartment for those who might not otherwise be able to afford it.
Either way—it'll be nice to have an extra $5 million next year to chip away at the $12 billion (!!) that's proposed to provide housing for our city's staggering, unconscionably increasing homeless population.