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Redwood City working on plan to regulate short-term vacation rentals

  • Dec 5, 2017 | MyLodgeTax

Redwood City, California

In Redwood City, California, the city’s Planning Commission is working on a proposal to regulate and tax short-term vacation rentals. Currently, such rentals are not permitted in Redwood City, but city staff recently counted about 300 Redwood City listings on online short-term vacation rental platforms including Airbnb, VBRO, and HomeAway.

In San Mateo County, where Redwood City is located, Airbnb listings grew from fewer than 100 in 2010 to more than 10,000 in 2015.

The proposal aims to allow homeowners to offer legal short-term rentals (and aims to allow the city to collect related fees and taxes) without negatively affecting the city’s available housing, introducing commercial activities into residential areas, or disturbing neighborhoods.

Under the Planning Commission’s recommendations, homeowners offering short-term rentals would be required to register with the city and get a business license. They would also be required to collect a 12 percent transient occupancy tax from renters and pass that on to the city.

Currently, the city collects around $6.5 million in lodging taxes each year, which goes into the general fund. The city estimates that taxes from short-term rentals could generate another $400,000 annually, although those revenues would be earmarked for affordable housing.

The new rules would include several restrictions on short-term rentals. Homeowners renting out their primary residence when not present would only be allowed to do so for a maximum of 120 days per year. There would be no limit on rental days per year when homeowners are present at the time of the rental, including when renting out an “accessory dwelling unit” such as a mother-in-law apartment.

The proposal also prohibits short-term rentals for special events such as corporate retreats or weddings, and homeowners would be required to provide on-site parking for renters and designate a local contact for renters to turn to with complaints if the host is not present.

The City Council is expected to make a final decision on the proposal sometime in January.

Short-term vacation rental hosts in Northern California communities are increasingly facing scrutiny from local governments looking to control and tax this business.

Communities that have taken recent action include Pacific Grove, where the City Council voted to replace a former short-term rental law with another that regulates vacation rentals more strictly.

Meanwhile, nearby Carmel and Monterey have made it clear that short-term vacation rentals are not welcome. This summer, Carmel conducted a sting operation and filed a lawsuit against a couple who had rented out their home via a vacation rental website.

In Paso Robles, the City Council is considering a proposal that would create rules specifically designed for short-term vacation rentals. And San Luis Obispo County recently reached an agreement with Airbnb, which is now collecting county lodging tax on its listings.

It’s clear the short-term vacation rental industry is no longer flying under the radar of local communities. Vacation rental owners can avoid trouble with the authorities by keeping current on their local compliance requirements and  lodging tax collection obligations. Governments are increasingly recognizing vacation rentals as a serious business, and owners need to do the same.

Lodging tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
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