Petaluma needs to enforce vacation rental laws

Petaluma enacted a policy to deal with Airbnb hosts, then turned its back on enforcement.|

After several months studying and debating the issue, Petaluma, like many cities in California, decided last year to regulate short-term vacation rentals, the houses and rooms that people rent out on websites like Airbnb and VRBO.

For the past several years, dozens of Petaluma homeowners have used these online services to lease space to visitors, a practice that has prompted some neighbors of these establishments to complain about traffic and noise from visitors coming and going at all hours of the day and night. They make a compelling argument. After all, they bought houses in neighborhoods zoned for residences, not commercial enterprises.

But instead of banning these rentals outright, Petaluma chose the more pragmatic approach of adopting reasonable regulations to ensure neighborhood safety while attempting to capture tens of thousands of dollars annually in transient occupancy tax revenues.

Only that revenue has failed to materialize, despite the fact the Petaluma is home to a robust network of short-term vacation rental hosts. A quick check of Airbnb shows dozens of houses and rooms on offer, while only 15 percent of the active hosts in Petaluma have gone through the process of obtaining a city permit and paying the 10 percent tax levied on other lodging establishments in town.

In a study, the city estimated that 50 permitted rentals with guests for a cumulative 90 days per year each would generate an annual $117,000 in hotel tax revenue for the city. By that same calculation, roughly $350,000 could flow into the city’s general fund each year from the 150 rentals Airbnb says are active on its service in Petaluma.

Meanwhile, hosts in Petaluma have paid a combined $11,439 as of Sept. 1, according to information provided through the city’s planning division, which handles the permitting process.

Clearly, the city is leaving money on the table. The only current permit enforcement system for vacation rental hosts is the honor system. Hosts are expected to know the city’s rules, actively seek out a permit and then accurately report revenue each month and pay the bed tax. There is no real mechanism for going after scofflaws, other than if neighbors report them to the city.

The city must me more proactive in enforcing the laws that officials went through so much trouble to enact. It would not be very labor intensive. A simple check of a website like Airbnb to see where hosts are located combined with a cross-reference of the list of city-permitted vacation rental hosts, would reveal which hosts are non-compliant.

While it is true that the short-staffed planning department doesn’t have the time to knock on the door of every host without a permit, there are outside companies that could do the work. The city of Sonoma, for example, uses one such service to ensure its short-term rental hosts are compliant with city code. The additional revenue from bringing these properties into compliance would more than cover the cost of the contractor.

Short-term vacation rental services are here to stay, and Petaluma’s leaders had the forethought to regulate the industry to preserve the character of neighborhoods, protect the long-term rental housing stock and ensure that hosts are paying their fair share of taxes like other lodging proprietors. But these goals cannot be achieved without active enforcement.

In doing so, the city stands to reap hundreds of thousands of dollars annually from fees and taxes. That’s money the city can use.

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