Most vacation rentals in Petaluma unpermitted

Airbnb, VRBO have not complied with Petaluma’s subpoena seeking unpermitted rental hosts.|

A little more than a year after requirements intended to regulate short term rentals in Petaluma went into effect, officials are still struggling to gain widespread compliance and crack down on local hosts continuing to disregard the city’s rules and shirk taxes.

In December, after city estimates showed 80 percent of short-term rental operators were failing to comply with the requirements, the city attorney’s office issued a legislative subpoena to vacation rental websites Airbnb and VRBO seeking information to identify and contact Petaluma hosts. Though the city asked for that information by early January, Airbnb has yet to issue a formal response to the subpoena and VRBO declined to comply, declaring the request overly broad, City Attorney Eric Danly said.

The subpoena followed an ordinance passed in 2015 requiring short term rental hosts to obtain a permit and a business license, adhere to guidelines and pay a special tax that’s levied on hotel stays starting Jan. 1, 2016.

However, amid ongoing noncompliance, the city continues to miss out on a significant amount of tax revenue, with little way to identify or crack down on hosts because of the anonymity provided by rental sites, officials said. Enforcement has been prompted by complaints, though the city has only received one complaint to date, according to Deputy Planning Manager Kevin Colin.

To help understand the scope of the issue, the subpoena sought addresses and contact information for hosts and renters, as well as the dates a property was rented and the rates charged for each transaction since Oct. 1, 2015. The city also asked for details about payment methods and total gross revenue from the rental, information officials plan to use to follow up with local hosts to seek taxes and increase compliance.

Danly said the city will attempt to work with the companies without initiating litigation, though failure to comply could prompt the city to take the case to the Sonoma County Superior Court. Though there’s no timeline for a resolution, Danly said the city will attempt to get the details as quickly as possible.

“We’re in dialogue with them to make sure we get at least the minimum information we need to follow up locally,” he said.

A report in November when the city council approved the issuance of the subpoena showed that only 21 short term rental permits were on file at the city, while there more than 100 active listing on vacation rental sites.

As of last week, 17 short-term rental permits has been issued, with 12 renewals to the annual permit and five new permits, Colin said. Meanwhile, there are 163 active Airbnb listings in Petaluma, according to a company spokeswoman.

Since inception of the short term rental program, the city has received $37,414 in transient occupancy tax, Finance Director Bill Mushallo said. By the city’s calculations, 100 hosts renting for an average of 90 days at $150 a night would rake in around $162,000 in annual bed taxes for the city.

Mayor David Glass pointed out that the ordinance includes a sunset clause set for Dec. 31, 2018, which will allow the council to examine impacts.

“The primary goal (of the ordinance) was not revenue collection, but insuring the quality of life in neighborhoods impacted by it,” Glass said. “One of the reasons the ordinance has a sunset provision was so that we could come back and look at it and understand the issue.”

Noting a disparity between active listings and permits issued by the city, he said officials will evaluate enforcement measures, as the market is “not an even playing field.”

“It’s important that if we have a tax, we make sure we collect it from everyone with equal access. We need to find that path to achieve that,” he said.

Though Airbnb spokesman Christopher Nulty declined to comment on the subpoena, he said the company has worked with other jurisdictions to provide similar information. VRBO did not respond to requests for comment.

“We provided data to hundreds of thousands of cities around the globe, we definitely want to be able to provide information that allows cities to be able to make good and smart policy decisions,” Nulty said.

In December, Airbnb announced that it would collect transient occupancy tax on behalf of Sonoma County, an arrangement established in nearly 300 municipalities that Nulty called a “win-win-win” for residents, the company and local governments.

Though Petaluma doesn’t currently benefit from the county’s arrangement, Danly said the city could consider striking a similar deal.

“That may be something we look at as to whether that’s a satisfactory way to obtain compliance, but first we’d like to get the information we’d requested, or at least sufficient information to move forward,” he said.

(Contact Hannah Beausang at hannah.beausang@arguscourier.com.)

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