US: A city vendor has told The Austin Monitor that less than a quarter of the city’s reported 11,000 operators are licensed to comply with local regulations and pay Austin’s Hotel Occupancy Tax.
The Austin Code Department is now set to send out violation notices to property owners who are purportedly operating without a required licence. According to one memo from last week which includes data from the Law Department, estimates that rentals cost the city up to $2.9 million in enforcing city rules and regulations.
In January, The Code Department agreed to enter into a pilot program with Seattle-based firm Host Compliance, which examines the level of rental activity in more than 300 client cities in the United States.
Host Compliance quickly found previous reports of 8,000 existing short-term rental sites in Austin had been significantly underestimated, with CEO Ulrik Binzer saying the company was identifying more sites in view of arranging a longer-term contract with the city.
Last week, The Code Department published a memo claiming there were more than 10,000 active rental properties in the city, although only 2,500 of them were legally registered. Of the rentals operating without permits, the department had received data on 3,500 of those and was looking to send out violation notices as part of its enforcement actions.
Like in other parts of the world, unregistered properties in Austin have come under the spotlight as they do not remit Hotel Occupancy Tax to the city and are not subject to the same safety and quality compliance inspections as hotels.
Speaking to The Austin Monitor, council member Kathie Tovo called for the implementation of more data into determining enforcement costs in the city, before adding that more inspections on unregistered properties would reduce the amount of rentals in Austin overall.
Tovo said: “My guess is, there’s a certain market for short-term rentals days and nights in the city and that taking aggressive action to shut down investor-owned properties will redirect that business toward homeowners who are making their homes available. In either case, we’re missing out on hotel tax revenue and homeowners are being made to compete for business against investor-owned properties.”
Austin and various rental platforms have been at odds on the issue of unregistered hosts and unpaid hotel tax revenue.
Platforms such as Airbnb and Vrbo have approached the city with agreements to remit future hotel tax revenue on the condition that past taxes are voided, however the move was not welcomed by either Tovo or other city leaders.
Meanwhile, Austin’s Tourism Commission asked the City Council to re-think its position on rental enforcement given the legal and tax impasse with platforms like Airbnb and Vrbo among others.
Concerns primarily revolved around the amount of annual hotel tax revenue that the city was failing to collect due to the non-compliance of unregistered rentals.