Title
Introduction of Ordinance Amending the Alameda Municipal Code by Amending Various Provisions of Section 3-61 (Transient Occupancy Tax) of Division IX (Taxes) of Article II (Taxation) of Chapter II (Finance and Taxation), Clarifying and Restating Hosting Platforms’ Responsibility to Collect and Remit Transient Occupancy Taxes. (City Attorney 2310)
Body
To: Honorable Mayor and Members of the City Council
EXECUTIVE SUMMARY
The City of Alameda (City) currently has large numbers of residential dwelling units advertised on hosting platforms, such as AirBnB, Vrbo, and HomeAway, for which transient occupancy tax (TOT) is currently owed, but is not collected. The current TOT Ordinance imposes an obligation on such platforms to collect TOT and remit it to the City. The City Attorney’s Office is recommending minor clarifying amendments to the TOT Ordinance designed to facilitate the immediate collection of TOT from such platforms.
BACKGROUND
In October 1974, the City adopted Ordinance No. 1739, or the Uniform Transient Occupancy Tax Regulations of the City of Alameda, which is codified at Section 3-61 (TRANSIENT OCCUPANCY TAX) of the Alameda Municipal Code. The Ordinance requires “hotels” to remit taxes on rents paid by transients for the privilege of occupying a hotel room.
The Ordinance defines “hotel” broadly to include “any structure or portion of any structure, which is occupied or intended or designed for occupancy by transients for dwelling, lodging, or sleeping purposes.” The City Attorney’s Office interprets this definition to include dwelling units, such as single family homes, rental units, and the like.
In recent years, the use of web-based hosting platforms to advertise and facilitate renting or the transient use of residential dwellings units (often referred to as “short-term rentals” or “home sharing”) has exploded. Many cities have struggled with the “hotelization” of residential neighborhoods, including cities up and down the State of California. Many residential dwelling units in the City rented on these platforms do not currently pay the City’s TOT.
City staff has reached out to platforms in an effort to collect TOT on existing units, but has been met with resistance. Although the City believes the Ordinance currently provides for the collection of TOT by hosting platforms for short-term rentals, in an abundance of caution only and to bolster the City’s legal position, the City Attorney’s Office recommends certain amendments that both clarifies and restates existing law, to pave the way for immediate collection of TOT.
DISCUSSION
Amendments set forth in the attached Ordinance would restate and clarify that existing law (Ordinance No. 1739) already provides for: (1) residential dwelling units being advertised by hosts on electronic hosting platforms, such as AirBnB, Vrbo, and HomeAway, are subject to the City’s TOT; and (2) that it is the obligation of all hoteliers, hosts, their “operators,” and hosting platforms to collect and remit these sums to the City directly.
Next Steps
If the City Council ultimately adopts the attached ordinance amendments, the City’s Finance Department, in consultation with the City Attorney’s Office, will do additional outreach to hosting platforms.
In the near future, Planning, Building and Transportation staff also anticipates working on a forthcoming ordinance to more comprehensively regulate units offered up as short-term rentals or home sharing.
ALTERNATIVES
• Make all of the proposed amendments.
• Make some of the proposed amendments.
• Decline to make any of the proposed amendments.
FINANCIAL IMPACT
There is no financial impact from the proposed action. However, staff anticipates that when short-term rentals and home-sharing platforms comply with the City’s TOT Ordinance, the City should expect to see an increase in TOT revenue.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
This action is consistent with the Alameda Municipal Code.
ENVIRONMENTAL REVIEW
The California Environmental Quality Act (CEQA) applies only to projects that have the potential for causing a significant effect on the environment. This action is not a project under Public Resources Code section 21065 and CEQA Guidelines section 15378.
CLIMATE IMPACTS
There are no climate impacts associated with this action.
RECOMMENDATION
Introduce an ordinance amending the Alameda Municipal Code by amending various provisions of Section 3-61 (TRANSIENT OCCUPANCY TAX) of Division IX (TAXES) of Article II (TAXATION) of Chapter II (FINANCE AND TAXATION), clarifying and restating hosting platforms’ responsibility to collect and remit transient occupancy taxes.
CITY MANAGER RECOMMENDATION
The City Manager concurs with the City Attorney recommendation.
Respectfully submitted,
Yibin Shen, City Attorney
By,
John D. Lê, Assistant City Attorney
Financial Impact section reviewed,
Elena Adair, Finance Director
cc: Eric Levitt, City Manager