Opinion: Airbnb Should Pay Tax in Pacifica

By Lionel Emde
Riptide Correspondent
 
The San Francisco Chronicle reported July 2 that Airbnb pays more than $1 million a month in tax revenue to the City and County of San Francisco. This stunning revelation is a tribute to the efforts of S.F. city officials who have, despite the fast pace of change, reacted to this new way for homeowners and landlords to make money.

According to Airbnb's website, Pacifica has (at this writing) 66 rentals at an average cost of $171 per night. If rentals were assessed at 10 percent tax (close to the hotel tax), revenues would be about $1,128 per night for the city. On a yearly basis, this would be about $411,000. There would also be revenue from licenses to legitimize these businesses.

A featured listing is one on Talbot Avenue, a house I have seen and been in years ago. It is listed at $350 per night, with an 18-night stay minimum, and a monthly rent of $7,500. The view is fantastic, as is the rent. Is this not a business? The agent listing the property mentions many other properties available for rent.

San Francisco has done much of the preliminary legal work and law-building here. Why wouldn't this be a project for our City Council?

 

Comments

[Carl May]

Are Uber, Lyft, et al. subject to the same permits, insurance requirements, taxes, etc. in Pacifica as taxi and limousine companies?

[Larry Rosenstein]

I don't think the situation is as simple as the council thinks. My suspicion is that Airbnb will take the position that it is not in the hotel business, but that it is just facilitating transactions between hosts and renters, and the hosts are responsible for following the laws in their cities. This includes collecting taxes and applying for business licenses.

The way the company frames the tax question on its site (https://www.airbnb.com/support/article/1036) is that it has agreements with some cities to collect the tax on behalf of its hosts. I think it makes those agreements largely for political reasons. These types of rentals either fall into a gray area or are technically illegal in some places, and it wants to avoid cities cracking down on the practice. In San Francisco, there has been a battle about exactly how to regulate these rentals.

Pacifica isn't big enough to have this kind of leverage, so it might be a struggle to get Airbnb to collect the tax for the city.

[Peter Loeb]

VRBO lists 21 rentals in Pacifica. Airbnb shows 18 listings in Pacifica.

[big banker]

In Tahoe (north shore, Nevada side of the lake) the hotel tax collection department of county government goes through Tahoe property rental websites to try to match up people who try to make money by renting out their Tahoe properties when they are not being used for personal use.

I kid you not, they send letters to owners asking for hotel tax.

Don't know how successful they are in collecting.

[Lionel Emde]

Here's another waterfront property being rented short-term:

http://www.homeaway.com/vacation-rental/p411896vb#ratesAnchor

It's on Beach Blvd. near the pier, pretty prominent house -- $375 per night. 3-night minimum. $2,250 per week. $6,750 per month.
$150 cleaning fee.

This is a business that should have a license and be paying hotel tax.

[Lionel Emde]

So here is another local rental service:
http://www.vrbo.com/659719

Airbnb comes up fourth on the Google list for "short-term rentals in Pacifica, CA."

Seems like a rich potential field of visitor revenue. These folks are glad to come to our beautiful town, and we need their revenue.

[Tom Clifford]

Big Banker, thanks for making the effort to talk to City Hall. I am not surprised by the "deer in headlights" responses. I am disappointed but not surprised.

[Lionel Emde]

It's obvious that this is a potential cash cow, and also that further LOCAL regulation of this new rental technology should be -- at least -- observed. To think that hundreds of thousands of dollars are being lost, when the local workforce is in line for pay raises -- well, the city government better start working on this.

[bigbanker]

"Pacifica should also investigate a title-transfer fee so that when the $5 million homes start selling, the city is in line for a piece of the pie. Yes, this would apply to all other home sales. That is how the big boys cover the cost of services to run their cities and counties." (Posted by: Tom Clifford | July 03, 2015 at 11:43 AM)

Tom: When I suggested that to City Hall, their eyes just glossed over and they gave me the "deer in headlights" look.

What you are talking about is a city transfer tax. This is above the county transfer tax on all transactions.

[Makes no sense]

From what I have heard, a person in my neighborhood is being evicted so the out-of-town owner of that house can use it for Airbnb. Apparently, the demand is so high, it makes more sense for this landlord to replace a longtime, permanent tenant with revolving ones. His other house in the neighborhood was reportedly recently used by a party of about 20 people to throw an all-nighter. Is this what we want in this town? Really? Doesn't seem to mesh with the idea that we need MORE permanent housing.

[Pacifica.city]

Good point, @Tom Clifford: A potential residential title transfer tax like Chicago's ($3.75 per $500 of purchase price) would raise $5,250 every time a $700K average-priced Pacifica home sold.

On my street alone last year that total would've been around $35K.

http://www.cityofchicago.org/city/en/depts/fin/supp_info/revenue/tax_list/real_property_transfertax.html

[Pacifica.city]

My link below is bad, try this one:

https://www.youtube.com/watch?v=TNAOrvXGtjo#t=01h35m05s

[John Maybury]

Today's San Francisco Chronicle reports that the City of Philadelphia has begun taxing Airbnb rentals in Philly.

[Tom Clifford]

Pacifica should also investigate a title-transfer fee so that when the $5 million homes start selling, the city is in line for a piece of the pie. Yes, this would apply to all other home sales. That is how the big boys cover the cost of services to run their cities and counties.

[todd bray]

Right on, Lionel

[Jennifer]

This is a very interesting idea. Are you assuming a 10 percent occupancy rate? Because $1,128 a night for a year is $411,720 (365 days in a year). I do agree that 100 percent occupancy is unlikely. It seems reasonable that if residents are going to potentially disturb the peace and solitude of their neighbors, there should be some renumeration to the city. We just discovered a house next to us is now an Airbnb. Their first rental had 20 people at the house! (It sleeps six, the listing says!) Not all were staying there, but certainly more stayed than the place was advertised for. I have pictures of people splayed out on the deck at 6 a.m. We and another neighbor have already voiced our concerns. The person who owns this house does not actually live in Pacifica and has never lived in Pacifica. I sense that they don't much care about our standard of living here. It's all about making money. So Pacifica should definitely get a piece, especially if our standard of living is going to go down because of the transient nature of Airbnb tenants. If you're less invested in a town, you don't care so much about being quiet, picking up trash, or contributing to social goodwill. It remains to be seen how this will play out as this rental intends to expand its occupancy by including another building on the property, which would allow it to sleep even more (and if six gets extrapolated to 20, I fear what the next incarnation will be). I may have to get the Pacifica police on speed dial. Let's just hope no one dies. (Now they probably won't come because I've noticed they're not big on a sense of humor.)

[Dan Underhill]

For many years I have had hopes of eventually joining Airbnb and fully expected that, by the time I can do so, Pacifica will have come up with a fair and reasonable tax policy on such enterprises that will allow homeowners a reasonable profit and still gather the much-needed revenues for Pacifica so that we can maintain this gorgeous town. The rates cited in this article are far in excess of any Airbnb endeavor that I have ever heard of, and any taxation should be based on the actual profits rather than any projections based on the very questionable numbers in this article. Before the crash of 2008, I had a revolving line of credit that was used exclusively to prepare rooms for an Airbnb-type rental. I racked up a considerable variable-rate debt with the understanding that I would soon be making money off those rooms to pay off that debt. In 2008, like everybody else, I was cut off at the knees. My revolving line of credit became just a mammoth debt that, if and when the variable rate goes into the double digits, will promptly lose me my house. Of course, while all of this is happening, the banks that caused this problem are being bailed out with MY tax money. The banksters who caused the banks to cause this problem are getting bonuses made up of MY tax money for their clever swindling of MY government. Anyway, I didn't lose my house yet, I have chosen to behave as if I won't do so, and I still have high hopes of paying the City of Pacifica some significant tax money from a successful small Airbnb business. Please do bear in mind that most of us who are doing this are not part of some huge corporate empire but are just citizens trying to find a way to keep our houses.

[Pacifica.city]

Council member John Keener suggested that exact revenue source in a June 8, 2015 City Council meeting during the Economic Development portion.

Source:
https://www.youtube.com/watch?v=TNAOrvXGtjo#01h33m00s

June 8, 2015, council member Keener: On a completely different topic, with respect to the TOT tax, is Airbnb subject to that tax?

EDD Anne Stedler: With LorenZo's support, I'd like to say that in this community at this time it is not.

Council member Keener: OK. Are other rentals -- house rentals for one or two nights or something of that nature -- are they subject to that TOT tax?

Mayor Ervin: VRBO? That type of thing?

Council member Keener: Yeah, yeah.

EDD Anne Stedler: I need to research that and come back to you with that answer. I don't know.

City Manager Lorie Tinfow: I don't believe we're getting any tax revenue from those sources. I don't know legally if we're entitled or not.

Council member Keener: If you could research that briefly and come back to us, because I think that is somewhere...we should be getting that tax.