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After years of dithering, Mountain View is getting ready to start regulating and taxing the local cottage industry of Airbnb rentals and other similar services.
In a discussion Tuesday night, the City Council unanimously supported the idea of forcing an estimated 670 listed rentals operating in the city to register as formal businesses and pay taxes similar to hotels. To accomplish that, city leaders endorsed a plan for Airbnb to start collecting taxes on behalf of the city, which the company has been offering to do for years.
The regulations were described as a “no-brainer” by council members, yet it has taken a long time to get to this point. For years, city officials have acknowledged the need to put together policies for services like Airbnb, but the effort was sidelined for other priorities. Over that time, city officials have mostly turned a blind eye as Airbnb rentals have steadily spread throughout Mountain View, even though they were technically illegal under the city’s rules.
During that time, Mountain View has forfeited a small fortune in tax revenues. A previous Voice report found that Mountain View was losing out on about $1 million a year by not taxing Airbnb, and that’s not counting its competitors in the short-term rental market. One scrupulous Airbnb host described how city officials would actually mail him back his money when he tried to pay the same taxes as hotels.
The reason for this was city legal staff believed Mountain View needed to first draft regulations before they could tax the industry. At the Tuesday night meeting, elected leaders made it clear they were ready to take that step.
“The fundamental principle here is we want this system to work,” said Councilwoman Pat Showalter. “We want people to make a little more money, and welcome visitors to the community, but not to reduce housing stock.”
In regard to housing, a number of public speakers urged caution. Poorly written rules could end up encouraging homeowners to rent out their properties on Airbnb instead of providing long-term housing, warned Sarah McDermott, an analyst with the Unite Here labor union.
“In cities like San Francisco and Los Angeles, we’ve seen whole apartments being converted into hotels. Suddenly there’s keypads on the units and they’re being rented out like short-term units,” she said. “The concern here is incentivizing taking a long-term rental unit off the market.”
To curb this, council members suggested they could put a cap on the number of days each year that any vacant housing could be rented out through Airbnb. Exactly how many days will be decided at a future meeting, they indicated.
Some of the more complicated questions on short-term rentals were left up in the air. City staff did not address whether they would need to modify the city’s zoning rules to allow Airbnb services in residential areas. Under the current rules, rental services operating like hotels would be prohibited, pointed out Councilman John McAlister.
Similarly, staff avoided wading into the question of how short-term rentals would jibe with the city’s rigid rent control policies. In San Francisco, rent control protections have been exploited by Airbnb guests to force homeowners to treat them as tenants. City Attorney Jannie Quinn gave assurances that she was looking into the issue.
The City Council supported signing an agreement with Airbnb to have the company start collecting taxes from lodgings and turning that money over to the city. Councilman Chris Clark suggested the company could also help handle the business licenses that hosts would be required to obtain. In San Francisco, the company is currently testing out a system to use its own website to do this, but it’s unclear if the service is available in other cities, he said.
Council members gave general direction to city staff on drafting future policies on short-term rentals, but no formal vote was taken. A full set of regulations is expected to come back before elected leaders in the fall.
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Surely the board is aware that many of the RVs that are fixtures on our streets are being rented out. And so surely they will enforce the rental tax on these RVs. When it comes to lost tax revenue, the board will enforce the laws.
Now we can find out who these RV people really are.
It isn’t as if taxes were not already being collected. The property is taxed, income earned from the property is taxed, any purchases or dinning out by visitors is taxed – how much additional tax will satisfy the politicians?
And what about the RV’s which pay $0 in taxes??? At least the homeowners who leverage AirBnB are already paying property taxes.
On top of that, most homeowners here aren’t paying anything close to their fair share of property taxes. But, I do like Jim Neal’s idea to eliminate zoning!
Another way to overtax the little guy. Greed, greed, greed!
Why does the city think its entitled to more and more taxes. They just won’t tax the likes of Google as the council is in love with them 🙂 Its amazing that there are those who think that home owners don’t pay their share of taxes. Its very tough being a home owner in MV. And what about the RV’s? HMmm!
Kal, what’s the effective property tax rate on the market value of your house?
Maybe readers of Townsquare don’t get the connection between taxes and a good city in which to live.
Disruptive technologies are called that because they circumvent traditional methods of business. Uber and Lyft don’t pay local taxes, but taxi companies do. Hotels customers pay taxes but AirBnB customers do not. In the early days of the internet, shopping online was a way to avoid taxes as well.
Perhaps people who complain about this, desire a no-tax, anarchic society. I for one appreciate the police and fire department being able to respond to my calls. And I enjoy the high quality drinking water that comes out of my faucet. And I appreciate building codes that make it so the place where I work doesn’t crash down on my head. Etc.
This is a way for the City to continue to have revenue to provide you a government in the era of disruptive technologies. You still have the right to rent out your home or a room. That has not been taken away from you.
@DisruptiveTechnologies.. The city council just passed a tax on strawman arguments. Their budget for providing oxygen to its residents needs to be paid for somehow.
I really like JIM NEAL and wish he was on City Council!
The man has good common sense.
@ teacher
My property tax bill was $17,000 last year.
I can’t afford anymore taxes….. I don’t rent out my house. I just want to live in peace without my driveway blocked by RVs.
For once I completely agree with Jim Neal.
@ Teacher – “and the tax money gets used for the community’s services and infrastructure.”
Yes, you’re right. The homeowners that pay a significant property tax rent a room in their house out and should be taxed so that they can provide community services such as free lunch in the park to whomever shows up, free “dumping” service to all the RVs parked all over the streets, free legal aid to the illegal immigrants, etc.
@ William Hitchens – why should Airbnb tenants be any more restricted on parking than any other rental property or owner-occupied home? There is not an ordinance limiting the number of cars any one homeowner can have nor one limiting the number of cars a renter can own.
Why is it that no one complaining about their taxes ever wants to say what their effective tax rate is in the market value of their home? Weird.
psr, feel free to be the first. I’m not holding my breath.
@teacher
My property tax rate is 1.17%, which is above the median in California and that doesn’t include bond measures. Do you think I should pay more? What is your rate?
VOTE THEM OUT! Naw,thats not going to happen. Same ol same ol here.
how do you manage to get your property tax rate to 1.17% when the normal rateis 1%?
fwiw: mine is about 0.5%
There is no way your property tax rate is 0.5%. Post a copy of property tax bill and I will figure out for you.
When you include all the parcel taxes and assessments it is typically between 1.17% to 1.29% of assessed value and under prop 13 is limited to at most a 2% per year increase, which politicians are trying to circumvent with catch messaging about schools which translates into more money for superintendents, administrators, and teachers salaries (yes, in that order).
@Me:
1% is only the general levy.
Is this why people think it’s no big deal to raise taxes? They truly don’t understand how much they pay or they don’t pay them?
MyTaxes, you’ll notice that I asked for the effective property tax rate on the market value of your home. “Me” is probably the only one of you that actually did the calculation correctly. Thank you for proving my point.
@Teacher:
You’re making a big assumption about when I bought my house.
MyTaxes, that isn’t a denial. As the above poster said, post a copy of your property tax bill and let’s figure it out.
@Teacher:
Assessed value for property resets to market value (what a willing buyer would pay for it) every time there is a change of ownership on the property.
What’s your tax rate? Do you pay property tax?
Keep digging, MyTaxes. I love having my point proven.
Only point you have made is that you have no idea what people pay for property tax, that’s all.
There are many zero income tax states. It’s a free country. CA never going to be one of them. Think about your options. You only live once, make rational choices. Leave mv to us who love the city, it’s taxes, parks and community sercices.
My point stands about homeowners not paying their fair share. If that weren’t the case, the bulk of you wouldn’t be too embarrassed to post your effective property rate on the market value of your home. I at least appreciate the honesty of the person who admitted they pay 0.5%.
Not surprising. After all, why should homeowners have any control at all over what they do with their own property? Also, it’s not as if struggling middle class families might benefit from making a few extra dollars a month top make ends meet and maybe be able to pay their mortgage or tuition for their kids. It’s also not as if the middle class and those at the lower end of the earnings bracket aren’t already paying enough taxes right? I mean the Republican’s just gave everyone a big tax break, so why isn’t the city entitled to take that extra cash right back out of their pockets?
Jim Neal
Old Mountain View
Not sure why everyone is so upset by this. Businesses use their assets to make a profit, which gets taxed, and the tax money gets used for the community’s services and infrastructure. That’s the long-standing social contract.
I have two problems with Airbnb. First, I want to make sure that rentals don’t increase on-street parking problems. Anyone engaged with Airbnb must be forced to make space for their tenants to park on their property and not on MV streets, where they will create clutter and parking problems. 2nd, Airbnb will not list the names and addresses of MV homeowners. MV must insist that we know the names and addresses of ALL property owners who are renting to strangers — and report them for parking and other violations of MV law.
@@Teacher
Not paying my “fair share” of taxes? I’ll try to remember that when I pay my property tax bill, which is TENS of THOUSANDS of dollars every year. I guess I should be pitching in more so that the city can provide more legal advice to illegal aliens and have the police NOT enforce the law on illegally parked RVs on my nickle rather than have the city stop paying for things they shouldn’t be doing in the first place.
@William Hitchens
Do you want the city to enforce those same strictures on the numerous RVs parked all over the city as well? They are here a LOT longer than anyone staying in somebody’s house. Also, those residents are allowed street parking for their overnight guests unless there is another ordinance to prevent it. They already pay for that with their tax dollars.
@JIM NEAL
I agree. I have voted for him when he has run and I would do it again. He has far more common sense than anyone currently on the council.
There is only so much air around here. Currently, air is being consumed with no tax collected. What a waste. Tax air consumption to raise needed funds and discourage deep breaths.
If you choose to get into the short-term rental business, you will be required to pay the tax. If you don’t get into the business you don’t.
It is a choice. You turn your private property into a public business, the rules change. Providing rentals on your property changes the rules because it is not private property anymore. It is public accessible. GFranted you can pass the cost to the customer in the end anyway.
Thus you do not lose anything.
Hey guys, I sold all my rent controlled apartments in Mountain View to a developer that’s tearing them down and made a 10 Million dollar profit. Now I’m buyin this from all my tenants money. What do ya think the taxes look like on this baby?
http://www.650lowell.com
Howard,
Please understand that we are not discussing that topic?
Thats all.
@psr: Little late getting back. To answer your question, I’d do everything legally possible to convince on-street RV dwellers to leave Mountain View for another, more hospitable city. RV’s create dangerous auto, pedestrian, and bicycle safety problems, they pollute (trash and sewage), and are a huge public nuisance that affect quality of life in the places where they are allowed to park.
@ William Hitchens
Glad to hear that you are willing to treat the RV parkers at least the same as those who are guests of actual residents (read taxpaying permanent dwellers) of the city. I assume you agree that guests of any resident should be governed by the same set of rules, which means they can park on city streets as long as they move their vehicles every 72 hours.
Why is everybody arguing about property tax rates? Assuming this works the way it does in other cities, homeowners will simply set a higher price per night on Airbnb, and renters will book the property if it suits them. Airbnb will pay the city a chunk, and the homeowner will get the rest after the site takes its commission. The homeowner’s property taxes (and yours, too!) will be unaffected. The net effect of this policy will be higher rates on Airbnb for Mountain View properties.
@BDBD
The point is not property taxes. The point is if it is reasonable for the city to take yet more money from residents when they are doing nothing to deserve it. The city is doing exactly ZERO for the residents and Airbnb users, yet they feel it is somehow their right to tax residents for providing this service to visitors to the area. If they think they should get money in this case, then thy should outline exactly what they plan to provide to deserve it.
@teacher
If you think paying tens of thousands of dollars in property taxes each year is not my “fair share”, then I would like you to state precisely what you think IS a “fair share”. I’m pretty darn sure that the city isn’t providing anywhere near $30,000+ worth of services to my household every year. If you think homeowners don’t pay for the services they use, I would like to hear your reasoning, because you have been all bluster and no substance in that area. I personally don’t mind paying more to make up for lower bills payed by long-time residents, but paying for services to be given to people here illegally (and who are clearly not paying property taxes) is not something that the city should be doing. Maybe you should direct your contempt toward law-breakers rather than those who benefit from a law you don’t happen to like.
psr, your fair share would be assessing taxes on the market rate of your house, not your artificially surpressed valuation. Your reticence to post what actual tax rate you’re paying is consistent with the others on here, as you’re struggling with the cognitive dissonance of cheating your neighbors and your community. It’s certainly a tough pill for the rest of us to swallow when people who own $3M+ houses are paying a <1% property tax rate!