Bal­ti­more takes up taxes on Airbnb

Lo­cal law­mak­ers join push to bring short-term rental web­site into reg­u­la­tory fold

Baltimore Sun - - NEWS - By Natalie Sher­man nsh­er­man@balt­sun.com

Ac­com­mo­da­tions booked in Bal­ti­more through Airbnb could be sub­ject to the city’s 9.5 per­cent ho­tel tax, as lo­cal law­mak­ers join a wider push aimed at bring­ing the short-term rental web­site into the reg­u­la­tory fold.

The bill, put for­ward by Mayor Stephanie Rawl­ings-Blake’s ad­min­is­tra­tion this month, is de­signed to up­date city laws to cap­ture the grow­ing ac­tiv­ity pro­duced by the book­ing plat­form, which links prop­erty own­ers of­fer­ing homes or rooms for rent on a short-term ba­sis to po­ten­tial cus­tomers.

Such ser­vice is com­pa­ra­ble to a ho­tel or bed and break­fast and should be taxed that way, Ni­cholas Blendy, an as­sis­tant deputy mayor, said at a City Coun­cil com­mit­tee hear­ing on Tues­day.

“Short-term rentals are very con­sis­tent with things we’ve al­ways reg­u­lated lo­cally,” Blendy said. “Fun­da­men­tally this is just a new tech­nol­ogy that re­quires a def­i­ni­tional change in or­der to put it on the same play­ing field as all of these other en­ti­ties that al­ready are reg­u­lated and taxed.”

The mea­sure has the sup­port of the ho­tel in­dus­try and Airbnb, which has said it views tax col­lec­tion as a way to nor­mal­ize its busi­ness in the eyes of the pub­lic.

But some of the site’s users op­pose the change. They would bear the brunt of the new fee and say it’s not fair to put the small-scale hosts on par with the city’s es­tab­lished ho­tels, which have ben­e­fited from large prop­erty tax breaks and other perks.

There are more than 700 ac­tive Airbnb hosts in Bal­ti­more, with more than 1,000 list­ings avail­able, ac­cord­ing to the city.

“We’re not ho­tels. We are small busi­nesses,” said Rachel In­dek, who has been a host on the site since 2012 and has three list­ings, in­clud­ing two in Fed­eral Hill. “It’s re­ally go­ing to raise the prices sig­nif­i­cantly, so that a lot of our guests right now who are com­ing to stay with us be­cause it’s a cheaper al­ter­na­tive … some of these peo­ple are go­ing to choose not to come.”

The tax col­lec­tion bill is the city’s lat­est foray into over­sight of the so-called “shar­ing econ­omy,” as law­mak­ers wres­tle with how to gov­ern new kinds of crowd-based busi­nesses, like Uber, un­leashed by the in­ter­net.

The city is also de­vel­op­ing zon­ing, health and safety rules for short-term rentals, but those aren’t ready, Blendy said.

“This is not unique to Bal­ti­more City, not be­ing able to fig­ure out how to draft an ap­pro­pri­ate reg­u­la­tory com­po­nent,” Blendy said. “It’s very com­pli­cated.”

San Fran­cisco-based Airbnb has sup­ported bills that ease tax col­lec­tion, in- clud­ing a statewide mea­sure that failed in Mary­land ear­lier this year. But it has been less re­cep­tive to other reg­u­la­tory moves.

It sued San Fran­cisco and Ana­heim, Calif., this sum­mer over laws that would pe­nal­ize the com­pany for hosts that do not com­ply with lo­cal rules, in­clud­ing reg­is­ter­ing their prop­er­ties. It also filed a fed­eral law­suit this month in Santa Mon­ica, Calif., over a short-term rental ban.

A spokes­woman for the com­pany said it sup­ports Bal­ti­more’s ho­tel tax bill, which fol­lows sim­i­lar mea­sures in Mont­gomery County and Washington. She de­clined to com­ment on other rules be­ing con­sid­ered in Bal­ti­more.

“To date, we’ve worked with more than 200 ju­ris­dic­tions glob­ally to col­lect and re­mit ho­tel taxes on be­half of our hosts and guests — in­clud­ing in Mary­land’s Mont­gomery County — and look for­ward to do­ing the same for our Bal­ti­more com­mu­nity,” Crys­tal Davis said in a state­ment.

The bill, which could come for a vote be­fore the end of the year, would de­fine a ho­tel as a build­ing with ac­com­mo­da­tions for at least one pay­ing guest, in­stead of the five re­quired un­der the cur­rent rules. It also changes the lan­guage so that a web­site like Airbnb, or an­other “in­ter­me­di­ary,” would col­lect the tax on be­half of the ho­tel own­ers or op­er­a­tors.

The city es­ti­mates the change would yield about $300,000 in new tax rev­enue. Visit Bal­ti­more, the city’s tourism and con­ven­tion bu­reau, would re­ceive 40 per- cent of those funds, with the re­main­der go­ing to the gen­eral fund. That split of the city’s ho­tels tax is up for reau­tho­riza­tion by the state next year, Blendy said.

Some City Coun­cil mem­bers said they were in­ter­ested to see the new rev­enue go to other uses, such as the cash-strapped Charm City Cir­cu­la­tor, a free bus ser­vice the city runs through down­town to nearby neigh­bor­hoods.

Airbnb re­mains a rel­a­tively small part of the city’s tourism mar­ket, which booked more than 2 mil­lion rooms be­tween April 2015 and March 2016. But it is grow­ing. More than 24,000 vis­i­tors to Bal­ti­more stayed in an Airbnb rental dur­ing the 12 months that ended in March — more than dou­ble the year be­fore, ac­cord­ing to the com­pany, which charges hosts and guests a per­cent­age of each pre-tax book­ing. (The 9.5 per­cent ho­tel tax would be added to trav­el­ers’ bills as an ad­di­tional fee.)

Com­pe­ti­tion from Airbnb is one rea­son growth in the hos­pi­tal­ity in­dus­try is ex­pected to slow, an­a­lysts from Moody’s In­vestors Ser­vice wrote in a re­port is­sued this week.

At­tor­ney Frank Bos­ton III was rep­re­sent­ing the Mary­land Ho­tel & Lodg­ing As­so­ci­a­tion at the city’s Tues­day’s hear­ing and said the group sup­ported the city’s over­sight ef­forts.

“Make no mis­take,” he said. “This has be­come a big busi­ness.”

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