Tax on Airbnb rentals moves ahead

City Council panel presses forward with regulations on Airbnb-style properties

A Baltimore City Council committee is moving forward on a bill that would impose regulations and taxes on Airbnb-style properties, an issue that continues to pit the interests of the short-term rental hosts and the hotel industry against each other.

The council’s taxation, finance and economic development committee voted Thursday on a slew of amendments that represent wins and losses for both sides. Another committee hearing is expected within the next month.

The bill, introduced by Councilman Eric Costello and Council President Bernard C. “Jack” Young, would apply Baltimore’s 9.5 percent hotel tax to short-term rentals and introduce licensing requirements for these properties.

People are increasingly renting out spare rooms in their homes — or even entire properties — on online platforms such as Airbnb and HomeAway, and cities across the globe are reckoning with how to regulate them. In Baltimore, nearly 1,300 hosts generated $11.3 million in revenue last year that was not subject to the hotel tax, according to city documents.

While there is widespread agreement that the taxation requirement should move forward, other proposed regulations are more controversial.

The amended bill states that hosts would only be able to rent rooms in their primary residence and one other “dwelling unit.” And there would be restrictions in place to determine who can get an additional rental license.

A person will have had to host someone in a second property between August 2017 and the end of this year in order to be eligible for a second license. They will also had to have owned this additional property as of Aug. 1, 2018. Costello characterized the amendment as a “grandfathering clause.” That would mean people who move into the city later won’t be able to rent out an additional property.

“We’re trying to keep neighborhoods from becoming overly transient,” Costello said.

Baltimore Hosts Coalition had asked the council to allow hosts to purchase an unlimited number of licenses.

Rachel Indek, who owns five rental properties in the city and manages 10 others, said the committee’s move threatens hosts who view their rentals as small, locally owned businesses. She said the bill would discourage future property owners from bringing their homes and businesses to the city.

“Hotels are allowed to have multiple locations,” she said. “We, as citizens, are not.”

Short-term rental host Al Hallivis said fear over the bill’s outcome has already pushed him to get rid of some of his five city properties. He converted one into a longterm rental property and two others are for sale. He’s thinking of instead buying more properties in surrounding counties. “I can’t flourish here,” he said. More restrictive rules could lead to less tax revenue generated from short-term rentals. A fiscal analysis conducted by the city in July found the proposed bill would bring in between $587,000 and $1 million in hotel tax revenues annually. If a pair of restrictions were removed, including the property limit, it could generate between $1.6 million and $2.2 million.

Some in the traditional hospitality industry say the property limit doesn’t go far enough.

Roxie Herbekian, president of the hospitality workers’ union, said people shouldn’t be allowed to host guests in a property that isn’t their primary residence.

Doing so, “takes away from the legitimate hotel industry and our members,” she said. Every booking that isn’t in a hotel means less work for housekeepers, who are predominantly women of color, she added.

“The city has put a lot of energy into developing its hotel and convention center industry and many depend on it for jobs,” she said. “This undercuts that.”

The Baltimore Hosts Coalition did come away with a victory: The amended bill doesn’t cap the number of nights that hosts can rent out their secondary property. Initially, the council had proposed only allowing people to rent these units for 60 nights a year.

The city would begin collecting the hotel tax on Dec. 31, 2018. The restrictions would kick in a year later.

Costello said he and Young “felt adamant that it would be unfair and it would be flat-out wrong to implement a structure and force people to comply with this right away.”