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, not counting its competitors. 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 also 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 their 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.
Email Mark Noack at mnoack@mv-voice.com
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