How much does Airbnb owe the Keys?

Local part of bed tax on vacation rentals goes uncollected

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It’s just like Uber: exploding in popularity in the last decade and making it easier for travelers to get where they’re going, or in this case, stay where they land.

It seems innocent enough. Find a room or house on a vacation rental website like Airbnb, VRBO, or HomeAway, pay, and stay. According to Airbnb’s website, nearly 70,000 visitors to the Florida Keys last year did just that, resulting in $13.6 million in host income.

But just like with ride-sharing service Uber and its 2016 battle to operate in Monroe County, vacation rental websites and their ever-increasing presence in the Florida Keys pose issues.

Perhaps the most important is the loss of tax revenue. In Monroe County, vacation rentals pay a so-called “bed tax” — 12.5 percent of the value of the rental. For example, a $1,400 per week three-bedroom, two-bath home rental on a canal would generate $175 in taxes. In December 2017, the Monroe County Tax Collector collected almost $3.5 million in bed tax. Of that, $1,036,000 was generated by vacation rentals, not hotel rooms. The county sends 7.5 percent of that to the state, and 5 percent stays local. The local money goes into the Tourist Development Council fund that advertises the Keys as a destination, and pays for brick and mortar projects of a touristy nature.

The problem is that Airbnb isn’t paying the 5 percent Monroe County tax on properties it manages for homeowners. Since 2015, however, Airbnb has collected the 7.5 percent state tax on behalf of hosts and remitted the amount to the state Department of Revenue.

Airbnb has offered Monroe County a compliance agreement in the past, according to Monroe County Attorney Bob Shillinger, but won’t divulge the other pertinent data — how many rentals, for how much — that would help county officials calculate the exact amount owed.

“We were never comfortable signing one. It was pretty much akin to, ‘Trust us. We’ll pay everything we owe ya,’” he said. But Airbnb would not turn over its client data in order for the tax collector to do an audit. “To date, they have not agreed to any of the auditing terms the tax collector would find acceptable to enter into a compliance agreement with.”

County Tax Collector Denise Henriquez said Airbnb “wants to give us a large amount of money and say ‘Here it is.’ I wouldn’t be able to do an audit, I don’t know who to audit and they won’t supply any of that information.”

Airbnb public affairs representative Benjamin Breit said the company has agreements in place with 39 counties in Florida to collect the local bed tax from homeowners renting their homes. But not Monroe County.

“And it’s not just Florida where we do these agreements. We’re closing on 400 jurisdictions, big, small and everywhere in between. Never once have we agreed to turn over that very personal data,” he said. “Talk to the tax collectors in any of the 39 counties where we’re remitting tourist taxes. They’ll tell you it’s easy, and they’re all very happy.”

The rules and length-of-stay ordinances vary in municipalities throughout the Keys, but a homeowner must have the county license on top of, say, the Marathon or Islamorada license. The licenses help local officials track the taxes owed.

“We were never comfortable signing one. It was pretty much akin to, ‘Trust us. We’ll pay everything we owe ya.’” — Monroe County Attorney Bob Shillinger

“Someone who says, ‘I’m just going to rent my house out and I can make some money,’ gets on one of those sites and says ‘Hey, I have a house to rent or a liveaboard,’ they don’t understand they have to have a transient rental license in the city for that to be legal,” said Key West City Manager Jim Scholl.

Without taxing agreements in place with rental websites, the county and municipalities are left to look for illegal rentals on their own and impose fines and fees for bed taxes owed. Both Monroe County and the Monroe County tax collector have separate software systems and personnel dedicated to finding illegal rentals and assess fines to homeowners.

“I created my own system and my staff goes on to those sites every day looking for illegal rentals. We are finding them every day,” Henriquez said.

Once they are found, a notice is sent to the homeowner. If there is no response, a lien can be put on the home, and bank accounts can be seized.

“If we identify a piece of property that is renting illegally and they have reviews on their home on one of those websites, we can go back 36 months,” she said. “We just found someone that was renting and we have reviews that go back to 2012. We can only go back 36 months, so we’re sending them an assessment for tax plus penalties, a bill for over $10,000.”

In 2017, there were 1,245 cases of illegal rentals countywide.

The issue of Airbnb is not just a problem in Monroe County and not just an issue of missing tax money or illegal rentals. It’s also about the quality of life and affordable housing. According to Politifact.com, a 2015 study by the Los Angeles Alliance for a New Economy, an advocacy group for working families, concluded Airbnb was exacerbating the lack of affordable rental units in Los Angeles. The group also did a 2014 study that found rents were growing faster in Los Angeles neighborhoods with the highest Airbnb listing density. In New Orleans, full-time residents of the Marigny neighborhood have taped signs in their windows that read: “No Airbnb; Save Our Neighborhood.” Like Los Angeles, the full-time residents of some New Orleans neighborhoods say the working class families are being displaced by visitors as rents go up.

The city of Marathon also has staff looking for illegal vacation rentals daily.

“We embrace vacation rentals. They’re good for our economy. But we need to balance the rights of the property owner to have a vacation rental with the rights of those who live around the vacation rental,” said City Manager Chuck Lindsey.

In 2018, the state legislature narrowly voted down HB 773 and SB 1400, which would have prohibited municipalities from regulating vacation rentals “based solely on classification, use or occupancy.”

“I was one of the deciding votes to kill the bill, so I voted no,” State Rep. Holly Raschein said. “There wasn’t enough comfort language if you will, and there certainly wasn’t a carve-out for the Keys.”

Many in the Keys oppose the idea of the state setting vacation rental law. To that end, Monroe County, Village of Islamorada and the City of Marathon co-authored an amendment to the bills, or a “carve-out.” It would exempt state Areas of Critical Concern, which includes the Keys. (There are four Areas of Critical Concern in Florida, but only Monroe County has a substantial population.)

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