Marathon’s vacation rental owners will see their licensing fees increase in the coming year – but not by the $1,000 margin originally proposed to the Marathon City Council.
Backing off significantly from the figures posed in January, the council voted unanimously to approve a $100 increase for registration and renewal fees for all rentals with two or fewer bedrooms, with a $200 increase for rentals with more than two bedrooms. The newly-approved fee schedule increases the new license fee to $1,200 and renewal fee to $1,100 for a one-bedroom rental.
In January, a proposal from city staff floated a $1,000 increase to both new and renewed rental fees, raising the base cost for a new one-bedroom rental license to $2,100 with an annual $2,000 renewal fee.
Adding together the costs of code enforcement staff, vacation rental agents, vehicles, fuel and software, along with other salaries and costs, an analysis provided by Deputy City Manager Brian Bradley also included 10% of the city’s parks and recreation and fire/EMS budgets, calculated at roughly $199,000 and $878,000, respectively.
The new fees, the original agenda statement read, would generate $1.23 million for the city budget, reducing Marathon’s planned deficit spending in the upcoming year by 52%.
For months, fees assessed to vacation rentals have been discussed as one of Marathon’s few legally-permissible changes to rental management, as state statute has preempted further modification of the city’s vacation rental ordinance since 2011.
In the last 15 years, the city has modified its vacation rental fees six times – most recently with a $100 increase approved in 2022. The most controversial raise came in 2015, when a 3-2 vote increased the vacation rental renewal fee from $250 to $500.
Other changes to the ordinance, staff have repeatedly cautioned the council, could result in removal of Marathon’s local control over vacation rentals, dismissing the city’s seven-night minimum stay and forcing reliance on sparse state-controlled enforcement agents.
A line of public commenters told the council they supported bringing the city’s fees in line with its expenses if needed, but questioned justifying a 100% increase with parks and fire budgets – particularly as rental homes already pay higher rates of ad valorem taxes to support the departments without homestead exemptions.
Real estate broker Brian Schmitt said his company manages 171 rentals from 163 owners averaging 2.4 bedrooms apiece. The homes, he said, generate $8.5 million in annual revenue – more than 50% of which goes to local businesses for maintenance and management expenses.
“To try and tax them without reasonable basis is probably not fair,” Schmitt said.
“If I’m a property owner of a three-bedroom (vacation rental) house, I can’t be homestead exempt, so I’m paying the full rate of tax,” said Grassy Key resident John Walton. “That covers EMS, fire and parks and rec. That sounds like you’re double-taxing here, whether you call it a tax or not.”
Former councilman Jeff Smith said he viewed the proposed increase as a question of risk that could have significant tax repercussions for locals.
“Your existing (vacation rental) revenue represents around 15% of your ad valorem tax revenue,” Smith said. “I know everything’s defensible, but I heard ‘defensible’ on many items that have gotten us in trouble over time. If we jeopardize this and lose to the preemptive statute of the state of Florida … I don’t think the community would be too happy with a 15% tax increase and the inability to manage vacation rentals.”
Councilman Lynn Landry said he couldn’t justify including fire and EMS services in a fee increase, as rentals accounted for 18% of Marathon’s single-family homes, but only 5% of emergency calls over the past year. He argued that impacts to Marathon’s parks could instead be offset by raising existing parking fees for visitors at Sombrero Beach.
“I’m convinced a lot of our housing issues are because we have about 1,400 vacation rentals in this town that locals can’t live in,” said councilman Kenny Matlock, who originally requested the fee analysis. “They are good, but they do have some negatives on our small community. … We’ve increased this fee six other times – this is not some uncharted territory.”
City Attorney Steve Williams told the council that “no (number) through the last 45 minutes has raised my alarm that you’re in danger of losing your ordinance,” but that “the further you get away from zero, the more risk.”
Vice Mayor Debbie Struyf said a fee increase could disproportionately impact smaller rentals with lower revenues, eventually proposing the unanimously-approved fee increase. The council directed staff to pursue a third-party study analyzing the city’s fees against its costs.
