HomeMy WebLinkAboutItem 06 Collection of Transient Room Taxes from Booking Agents for Short-Term Rentals AGENDA ITEM SUMMARY Meeting Date: 10/17/2016
Meeting Type: Regular Meeting
Staff Contact/Dept.: Courtney Griesel/CMO Kristina Kraaz, CAO
Staff Phone No: 541.726.3740 Estimated Time: Consent Calendar
S P R I N G F I E L D
C I T Y C O U N C I L
Council Goals: Financially Responsible
and Stable Government Services ITEM TITLE:
COLLECTION OF TRANSIENT ROOM TAXES FROM BOOKING AGENTS
FOR SHORT-TERM RENTALS
ACTION REQUESTED:
Conduct a second reading and adopt/not adopt the following ordinance:
AN ORDINANCE AMENDING THE SPRINGFIELD MUNICIPAL CODE SECTIONS 7.700, 7.706, 7.708, and 7.726 TO ADD DEFINITIONS AND
CLARIFY DUTIES OF BOOKING AGENTS AND HOSTS OF SHORT TERM
RENTAL LOCATIONS
ISSUE
STATEMENT:
The City of Springfield, through a voluntary agreement has authorized the City of Eugene to collect and distribute transient room taxes (TRT) received from
overnight stays booked through the internet-based platform, Airbnb, Inc. Collection of TRT through Airbnb requires amendment to Springfield Municipal Code (SMC) Chapter 7 to clarify that booking agents and hosts of short-term rentals
are subject to the TRT. Under the agreement with Airbnb, collection of TRT begins October 1, 2016.
ATTACHMENTS:
Attachment 1: Proposed Ordinance
Attachment 2: Voluntary Collection Agreement for Eugene, Lane County,
Springfield, Florence, and Cottage Grove Transient Room Tax
DISCUSSION/ FINANCIAL
IMPACT:
The City of Springfield, through SMC Sections 7.700 through 7.738, receives transient room tax (TRT) funds generated by overnight hotel stays within the
Springfield city limits. Each hotel operator is required to collect the taxes from the occupant of the room. These funds are collected, through an existing agreement, by the City of Eugene and distributed to taxing jurisdictions as specified in the
agreement.
In the last decade, Airbnb has become a leader in the tourism industry, providing a
platform through which third parties may offer accommodations to guests. These
accommodations are often located at non-commercial properties, such as private residences. Many, if not all, Airbnb hosts are required to collect and remit TRT
taxes under the current code. However, few hosts apparently comply with these
requirements, likely due to any of the following reasons: the current system for TRT collection was developed for hotel owners and not homeowners, the taxes are
collected by a different jurisdiction, and neither Springfield nor Eugene have
engaged in any significant public outreach educate these relatively-new Airbnb “hosts” about the obligation to collect and remit TRT.
In an effort to assist its hosts with complying with local occupancy tax requirements, Airbnb has been entering into voluntary collection agreements with taxing jurisdictions across the country to collect and remit these taxes. The City of
Springfield, along with Eugene, Lane County, Florence, and Cottage Grove, recently entered into a Voluntary Collection Agreement with and Airbnb, Inc. to facilitate the reporting, collection and remittance of applicable TRT incurred from
Airbnb facilitated overnight stays. The proposed code amendments are intended to modernize the TRT code and to clarify the obligations of booking agents and hosts
for collection and remittance of TRT.
A public hearing and first reading of this ordinance were held on September 19,
2016.
CITY OF SPRINGFIELD, OREGON
ORDINANCE NO. ___________ (GENERAL)
AN ORDINANCE AMENDING THE SPRINGFIELD MUNICIPAL CODE SECTIONS 7.700, 7.706,
7.708, and 7.726 TO ADD DEFINITIONS AND CLARIFY DUTIES OF BOOKING AGENTS AND HOSTS OF SHORT TERM RENTAL LOCATIONS
WHEREAS, online booking agents that facilitate transactions between individual property owners
(“hosts”) and people seeking short-term accommodations have become a major part of the travel
industry within the last decade and are viewed as an alternative to traditional hotels;
WHEREAS, through booking agents, hosts are offering short-term rentals within residential districts in
the City of Springfield for transient occupancy and transient room taxes are not consistently being
collected or remitted by these hosts under the City of Springfield’s transient room tax code, Springfield
Municipal Code sections 7.700 through 7.738;
WHEREAS, amendments are needed to chapter 7 of the Springfield Municipal Code in order to clarify
the obligations of hosts of short-term rentals to collect and remit transient room taxes under the
chapter;
WHEREAS, the City of Springfield believes that, to the extent that booking agents are booking rooms
for transient occupancy and accepting payments on behalf of hosts of short-term rentals, the booking
agents should also collect and remit to the City transient lodging tax on behalf of their hosts; and
WHEREAS, the City of Springfield has entered into a voluntary contractual agreement with Airbnb
Inc., a transient lodging booking agent, whereby Airbnb collects transient room taxes for rentals
booked through its online platform within the City of Springfield and remits the tax to the City of
Springfield through the Transient Room Tax program operated by the City of Eugene,
NOW, THEREFORE, THE COMMON COUNCIL OF THE CITY OF SPRINGFIELD ORDAINS AS FOLLOWS:
Section 1. Section 7.700 of the Springfield Municipal Code is hereby amended to read:
“The following words and phrases as used in sections 7.700 to 7.738 mean:
Accrual Accounting. A system of accounting in which the operator enters on his or her records the rent due from a transient when the rent is earned, whether or not it is paid.
Booking Agent. An Operator or any person that provides a means through which a Host
may offer a Short-Term Rental for transient lodging occupancy. This service is usually, though
not necessarily, provided through an online platform and generally allows a Host to advertise
the Short-Term Rental through a website provided by the Booking Agent’s hosting platform and
provides a means for potential users to arrange transient lodging occupancy and payment, whether the transient pays rent directly to the Host or to the Booking Agent. Booking Agents
include, but are not limited to: (1) Online travel booking sites which are involved in the process
of listing and booking Short-Term Rental transient lodging occupancies and handle any aspect
of the resulting financial transaction; and/or (2) Online travel booking sites for Short-Term
Rental transient lodging occupancy where advertisements of Short-Term Rental transient
lodging occupancy rentals are displayed; and/or (3) A hosting or other online site that provides
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a means through which an Operator, Host or agent may offer a Short-Term Rental unit for
transient lodging occupancy.
Cash Accounting. A system of accounting in which the operator does not enter on his or
her records the rent due from a transient until the rent is paid.
Host. The owner or person who resides at the Short-Term Rental or has been
designated by the owner or resident to manage the Short-Term Rental and who rents out the
Short-Term Rental for transient lodging occupancy either directly or through the use of a
Booking Agent.
Hotel. Any structure or portion of any structure which is occupied or intended or
designed for transient occupancy for 30 days or less for dwelling, lodging, or sleeping purposes,
and includes any hotel, inn, tourist home or house, motel, studio hotel, bachelor hotel, lodging
house, rooming house, apartment house, house, duplex, condominium, multi-dwelling
structure, trailer home, houseboat, public or private dormitory, fraternity, sorority, public or private club, space in a mobile home or trailer park, or similar structure or portion thereof so
occupied, provided the occupancy is for less than a 30-day period.
Occupancy. The use or possession, or the right to use or possession, for lodging or
sleeping purposes, of any room in a hotel, or space in a mobile home or trailer park or portion
thereof.
Operator. The person who is proprietor of a hotel in any capacity and, where the
operator performs functions through a managing agent other than an employee, the managing
agent who shall have the same duties and liabilities as his or her principal. Compliance with the
provisions of sections 7.700 to 7.738 by either the principal or the managing agent shall be considered to be compliance by both.
Rent. The consideration charged, whether or not received by the operator, for the
occupancy of space in a hotel whether or not valued in money, goods, labor, credits, property,
or other consideration valued in money, without any deductions.
Rent Package Plan. The consideration charged for both food and rent where a single rate is made for the total of both. The amount applicable to rent for determination of the
transient room tax under section 7.702 of this code shall be the same charge made for rent
when not a part of a package plan.
Short-Term Rental. A house, multi-plex, apartment, condominium, houseboat, trailer or
other residential dwelling where a person rents guest bedrooms for transient lodging
occupancy. Generally, a Short-Term Rental is zoned as residential property.
Tax. Either the tax payable by the transient, or the aggregate amount of taxes due from
an operator during the period for which he or she is required to report his or her collections.
Tax Administrator. The director of finance, city of Springfield.
Transient. Any individual who exercises occupancy or is entitled to occupancy in a hotel
for a period of less than 30 consecutive calendar days, counting portions of calendar days as
full days. The day a transient checks out of the hotel shall not be included in determining the
30-day period if the transient is not charged rent for that day by the operator. Any individual so
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occupying space in a hotel shall be deemed to be a transient until the period of 30 days has
expired, unless there is an agreement in writing between the operator and the occupant
providing for a longer period of occupancy. A person who pays for lodging on a monthly basis,
irrespective of the number of days in the month, shall not be deemed a transient.”
Section 2. Section 7.706 of the Springfield Municipal Code is hereby amended to read:
“(1) Each operator shall collect the tax imposed by section 7.702 on a transient at the same
time as he or she collects rent from the transient. The amount of the tax shall be separately
stated upon the operator’s records and on any receipt for the rent rendered by the operator to
the transient. No operator of a hotel shall advertise that the tax or any part of the tax will be
assumed or absorbed by the operator, or that it will not be added to the rent, or that, when
added, any part will be refunded.
(2) An Operator or Booking Agent that directly or indirectly accepts, receives or facilitates
payment, including through Application Programming Interfaces (APIs) or other computerized
devices where third party providers receive information about a transaction and collect funds
that may or may not be transmitted to the operator, owner or other person offering a Short-
Term Rental, for the transient lodging occupancy from a transient, is required to collect, report
and remit transient room taxes in accordance with this Chapter.”
Section 2. Section 7.708 of the Springfield Municipal Code is hereby amended to read:
“No tax may be imposed upon:
(1) Any occupant for more than 30 successive calendar days;
(2) Any person who pays for lodging on a monthly basis, irrespective of the
number of days in the month;
(3) Any occupant whose rent is of a value less than $5.00;
(4) Any person who rents a private home, vacation home, cabin, or like facility
from any owner who rents the facility incidentally to his or her own use thereof, when the
facility is rented for less than seven calendar days per year and not advertised or marketed to
the public; (5) Any occupant whose rent is paid for a hospital room or to a medical clinic or
foundation, convalescent home, or home for aged people;
(6) Any occupant whose rent is paid by an agency, either directly or through a
voucher in response to a local disaster or an emergency declared pursuant to Springfield
Municipal Code section 2.808.”
Section 3. Subsection 7.726 of the Springfield Municipal Code is hereby amended to read:
“Every operator or booking agent liable for the collection and remittance of the tax
imposed by section 7.702 of this code may withhold five percent of the net tax due to cover his
expense in the collection and remittance of the tax.”
Section 4. Savings Clause. Except as specifically amended herein, Sections 7.700 through
7.738 shall continue in full force and effect.
Section 5. Severability Clause. If any section, subsection, sentence, clause, phrase or
portion of this Ordinance is, for any reason, held invalid or unconstitutional by a court of competent
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jurisdiction, such portion shall be deemed a separate, distinct and independent provision and such
holding shall not affect the validity of the remaining portion hereof.
ADOPTED by the Common Council of the City of Springfield this ___ day of _________, ____,
by a vote of _____ for and ____ against.
APPROVED by the Mayor of the City of Springfield this ______ day of __________, ____.
_______________________
Mayor ATTEST:
__________________________
City Recorder
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