Tag: lodging tax

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Show them the money: Revenue commissioner says no to Airbnb collecting local occupancy taxes

Airbnb says it has 1,100 listings in the Charlottesville area.

Over graduation weekend, Fry’s Spring resident Chris Meyer rented his house for a “ridiculous amount of money to someone from California,” he said at City Council May 20.

He appeared before council to complain about the difficulty he encountered in getting the proper city permits and in trying to remit the transient occupancy tax, and asked councilors: Why not do what Alexandria and Blacksburg do and have Airbnb collect the lodging tax? He also suggested raising the rate from 7 percent to 15 or 20 percent, and using that money for affordable housing rental vouchers.

Mayor Nikuyah Walker commended his “very different perspective,” and councilor Kathy Galvin noted that in 2018, the city lost about 250 housing units to short-term rentals.

Commissioner of Revenue Todd Divers is not enthusiastic about the idea of turning lodging tax collection over to a “multinational corporate entity that has repeatedly shown its willingness to flout tax, zoning, and regulatory structures all over the world.”

In a memo to City Council and City Manager Tarron Richardson, Divers says his office is doing a “fantastic” job of collecting transient occupancy tax of licensed homestays—over $1 million since the city created a hotel residential permit a few years ago.

His problem with having Airbnb collect the lodging tax is that the company will not disclose the identity and location of hosts, nor will it allow the city to audit its tax records more than once every four years, which means the city has to take Airbnb’s word it’s collecting all the taxes. Meanwhile, the city still must make sure hosts have business licenses and homestay permits.

Divers also questions how Airbnb can determine the appropriate jurisdiction for an Albemarle rental with a Charlottesville address.

“We’ve done this all over the world,” says Airbnb spokesperson Liz DeBold Fusco. Airbnb has collected more than $1 billion in taxes in 400 municipalities. “I’m not sure why [Divers] thinks our methods don’t work.”

She also “vehemently” disagrees with his characterization the company flouts regulations. “We think that’s baseless.”

Divers points out that 189 jurisdictions in Virginia collect lodging taxes, and he contends that rather than asking why Charlottesville doesn’t follow the Alexandria/Blacksburg model, the question should be, “why did 187 other jurisdictions in Virginia reject it?”

In Meyer’s case, Divers says someone who rents out his home once or twice a year, is “de minimis” by taxation standards, which means the person doesn’t have to get the short-term rental permit. “I’m not going to make you do anything” as far as trying to collect the lodging tax, says Divers, although one is still free to pay the tax if he wants.

However, he’s still checking the Airbnb website, and if someone claims to have an infrequent rental and he finds out otherwise, “I’m going to come to get you,” says Divers.

Meyer met with Divers after the City Council meeting, and learned he didn’t have to do the paperwork, but he still feels the city should be collecting the $125 tax in his case.

And he likes the idea of making a difference between the lodging tax hotels pay and the tax on short-term rentals, upping the transient occupancy tax to 15 or 20 percent on the latter to help mitigate the loss of housing stock.

“That excess revenue should be plowed into rental housing vouchers,” he says, “to help people displaced by Airbnb.”

Developer Oliver Kuttner owns nine apartments on the Downtown Mall that he rents full-time on Airbnb, for which he pays more than $1,000 per month in transient occupancy taxes. He says the city pays “lip service” to affordable housing. In 2015, he wanted to build micro-apartments behind the Glass Building on Second Street SE, but couldn’t get the rezoning needed. An office building is now going up in that spot.

“It cost me $80,000 [in permits] and six months of my life to be denied the permit to build micro-units,” he says. “The city is the single biggest obstacle to lower-cost apartments.”

Now, he wants more decentralized hotels like Airbnb. “We need to support the person who wants to build one hotel,” says Kuttner. “I would like to see more independent hotels than a fifth Marriott downtown.”

Currently Charlottesville has no plans to funnel lodging taxes into affordable housing vouchers, says city spokesperson Brian Wheeler. The taxes go into the general fund, which funds the city’s affordable housing initiatives, he says.

Meyer says he thinks Divers is doing a “very good job” in collecting the lodging tax, but says, “I wonder if we can do better.”

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In brief: Basketball fever, deadly tracks, terrorizer pleads, and more

Boylan Heights goes nuts March 30 as UVA takes down Purdue to advance to its first Final Four since 1984. Martyn Kyle

Buzzer beater

UVA heads to the Final Four in Minneapolis April 6 after a heart-stopping 80-75 win over Purdue’s Boilermakers, thanks to a last second bucket by Mamadi Diakite to put the Cavs into overtime. The win marks Virginia’s first appearance in the Final Four since 1984, coach Tony Bennett’s 10th year leading the Hoos, and redemption for last year’s first-round loss to a No. 16 seed.

Guilty plea in CHS threat

Albemarle High senior Joao Pedro Souza Ribeiro, 17, pleaded guilty March 27 to making a racist threat online that shut down Charlottesville city schools for two days last month. The Daily Progress reports Ribeiro told a juvenile court judge that he was “bored” in study hall and posted the threat as a joke. He’ll be sentenced April 24. Another Albemarle teen was charged with a felony for a shooting threat to Albemarle High, but police have not released his name.

Suing Alex Jones

Federal Judge Norman Moon ruled that Clean Virginia exec Brennan Gilmore’s defamation lawsuit against Infowars, conspiracy theorist Alex Jones, and others of his ilk can proceed. Gilmore videoed James Fields plowing into protesters August 12, 2017, and he alleges the defendants spread false information about him, resulting in death threats against him and his family. Jones is also being sued by Sandy Hook parents for claiming the mass murder of children was staged.

One train, two deaths

A Buckingham Branch train struck Sebastian Herrera, 39, of Waynesboro, around noon March 31 in Crozet, and then hours later killed an unidentified man in Waynesboro. Herrera, the third person to die on the train tracks in Crozet since 2015, was killed near Lanetown Road, close to where a Time-Disposal employee died last year.

Orange hotbed

The gated community Lake of the Woods has been the scene of alleged criminal activity recently. Ryan Chamblin, 36, was indicted on 161 counts of possession of child porn March 25. He’d previously been charged with five counts and two of failure to register as a sex offender. That same day, Stafford resident Roy C. Mayberry, 46, was indicted for embezzling more than $450,000 from the Lake of the Woods Association.

Quote of the week

“It’s clear that you would lynch me if you could so I’m never concerned with your thoughts.” —Mayor Nikuyah Walker in a Facebook comment to Justin Beights, who sarcastically said her negativity is inspiring.

Crime pays—a little into government coffers

Cash-strapped localities have been known to use speed traps to plug their budget holes (ahem, Greene County), and after the Department of Justice found that law enforcement in Ferguson, Missouri, had effectively been acting as tax collectors (bringing 23 percent of the town’s revenue in fines and fees), a 2017 report said that a number of other municipalities were doing the same thing. But it’s not the case in Charlottesville and Albemarle. 

“CPD does not use ‘speed traps,’” says Charlottesville police spokesperson Tyler Hawn. “We use traffic enforcement to ensure drivers are following the posted speed limits and rules of the road for everyone’s safety.”

As City Council finalizes its 2020 budget, it voted April 1 to up the local meals and lodging taxes (and seems likely to not raise the real estate tax, after “finding” another $850,000). With all that cash, citizen criminal activities make a small revenue contribution to the proposed $188 million budget. Albemarle County also gets revenue from convictions, a .1% pittance in its $487 million budget.

Here’s how some of the numbers stack up in the proposed fiscal year 2020 budget.

Charlottesville

Court revenue $500,000

Parking fines $420,000

Property tax $73.3 million

Meals tax $14.9 million

Lodging tax $6.4 million

 

Albemarle

Fines and forfeitures: $457,282

Property tax $201 million

Meals tax $9.8 million

Lodging tax $1.2 million

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News Opinion

A moral map: The city budget is a chance to show what matters to us

The city has proposed a 1 percent increase in the meals tax in its 2020 budget. Photo: Robert Llewelyn

It’s budget season. For four months every year, council and staff hold public meetings about the coming year’s priorities. For four months, I sit through what I am absolutely certain is the exact same PowerPoint at least a dozen times. Much of it remains inscrutable to me. I am growing comfortable with the idea that I’ll never be entirely sure what it means in the real world to move money around on paper. What I do understand, though, is that the city, like most of us, can’t pay for everything it wants.

“The city has better ways of getting income,” Joan Fenton, president of the Downtown Business Association of Charlottesville, said at a March 4 council meeting of the possibility of raising tax rates. Better ways than taxation? Localities too afraid to raise taxes (because of the ire of business owners like Fenton) often rely on fees and fines to increase revenue. That means raising court costs and turning the city into a speed trap to fill the holes in our budget, which would disproportionately impact the poor. It is regressive and unreliable and relies on a weaponized justice system.

While a truly progressive tax is an avenue not available to the city under the Dillon Rule, there are revenue streams that don’t literally rely on criminalizing poverty. Raising tax rates provides a reliable, steady revenue stream to tackle the problems the alternative would only exacerbate.

While much about the budget process remains opaque to me, it is bewildering to see what feels like intentional misrepresentations about what it would mean to raise meals and lodging tax rates. Business owners have appeared at public comment to make the case that increased meals and lodging taxes would hurt their business. One restaurant owner said he would have to raise prices to account for the “loss,” but failed to explain how an additional one dollar in tax on a $100 meal at his pricey establishment would drive down business to the point that he would have to raise prices to make a profit.

The restaurant experiences no loss here. The tax is paid by the consumer and only passes through the business. The hysteria is puzzling to me.

When you make your personal budget, you have to make hard decisions about what’s important to you and what things you can do without. It’s the same when a city makes a budget, except we’re deciding what our neighbors should do without. The real hurdle in balancing the budget is not a column on a spreadsheet, but in the public understanding of what the budget is. A budget is more than just a balance of revenues and expenditures—it’s a moral document, an agreement about what is important to us.

Beyond the public protestations of business owners about the meals and lodging rates, there has been a lot of uncertainty about the real estate tax rate, whose increase would fund affordable housing. At a March 16 budget forum, Councilor Kathy Galvin was vocally in favor of a 1-1-1 increase. By Wednesday night, she was expressing relief that the real estate tax would remain steady for another year. While the higher rate was advertised, it seems we won’t know the fate of the tax until the March 27 work session.

At the first reading of the final 2019 budget in April of last year, the meeting went into an hour-long recess due to threats of violence from an armed neo-Confederate. A woman had just commented that the Downtown Mall was the jewel of Charlottesville. That jewel sits in a crown forged by centuries of racial inequity. The violence isn’t always as overt as an angry racist with a gun in council chambers. Sometimes, it creeps insidiously into our lives, in the form of a budget that doesn’t value the lives of our most vulnerable community members.

UVA professor Walt Heinecke offered us a positive reframing at a recent public comment period: When the national press returns to Charlottesville this summer to ask us what we’ve done to address the conditions underlying the violence of the summer of hate, let this budget be the jewel in our crown, he said. He urged council to move forward with the real estate tax increase to put money into affordable housing and to publicly frame the meals and lodging tax increases as a public good—even going as far as proposing a campaign to put signs in restaurant windows advertising the meals tax increase as a micro-investment in equity. I’m not sure this budget goes far enough to deserve to be called a crown jewel. But it has the potential to be a down payment on a crown this city never earned.