Washington Could Have As Many
As 63 Unregistered Short-Term Rentals
Washington could soon join a growing list of Midwestern city governments that contract with a third-party vendor in an effort to crack down on unregistered short-term rental properties.
These rental properties use a variety of online platforms, including AirBnb, Vrbo, HomeAway and others, to rent rooms or entire houses for a single night or multiple days.
Washington’s Community and Economic Development Director Sal Maniaci said there are 24 registered short-term rental properties in Washington. Officials with ProChamps, one of the companies vying for a possible city contract, said its research shows there are 87 active short-term rentals operating in the city.
“As you are likely aware, (short-term rentals) continuously are becoming more popular not just in our downtown but throughout Washington,” Maniaci said. “More people are wanting to put their homes up or their apartments up for short-term lodging.”
He continued, “That’s a pretty big gap that we’re missing, and I’m not convinced that all of those are active (throughout the year). Maybe on busy weekends, one person may make a listing online, but they technically should still be registered with the city. It levels the playing field.”
According to Maniaci, registered short-term rental property owners have to allow for the property to be inspected once a year, pay for a city business license and collect the city’s 5 percent hotel bed occupancy tax.
“Other than that, the city has pretty much just relied on good faith that these people are coming in and registering their homes or apartments for this,” Maniaci said. He said a city staff member does try to periodically check online listings to confirm whether those short-term rentals are licensed with the city and paying the tax.
That process is time-consuming and difficult as the short-term rental companies will not release the address to the city, so city staff members have to become quasi-detectives to match a picture of the house’s exterior to a possible address.
This would all change if a third-party vendor such as ProChamps is contracted by the city.
“I have been reached out to by multiple companies who say they offer solutions to this problem,” Maniaci said. He said these third-party vendors would buy ZIP code-specific data from the nine major companies and then compare online bookings to the city’s list of licensed short-term rentals.
“They scour all of this information, and they will actually do the legwork and contact the property owners for the city,” Maniaci said. In exchange for this service, Maniaci said ProChamps has said they would charge a $100 fee per property. Other companies would charge the city a monthly fee.
Although no formal ordinance was presented at Monday night’s meeting of the Washington City Council, Maniaci said he and other city leaders would likely be drafting a proposed ordinance change that would add an additional short-term rental annual fee. Under current city ordinances, short-term rental owners pay $60 for their annual business license and $25 for the annual inspection. If enacted, the ordinance could add an annual $100 per property fee. This fee would be paid to the company.
The city is losing a source of revenue with unregistered short-term rentals, according to City Administrator Darren Lamb, which is why he said he is supportive of efforts to ensure all short-term rental properties are registered. He and other city officials say it is difficult to calculate just how much the city is losing by having potentially more than 63 unregistered short-term rental properties operating in the city.
According to city officials, the hotel bed occupancy tax generates about $180,000 annually. Revenue from the tax is re-invested into the community through tourism and promotional efforts.
City leaders in Quincy, Illinois, said the city is anticipating a $10,000 annual increase in the city’s hotel and motel tax revenue after the city hired a third-party vendor and found that there were dozens of unregistered short-term rentals operating in the city.
Meanwhile, Little Rock, Arkansas, officials reported in 2019 that city officials learned there were more than 350 short-term rental properties operating in the city after the council agreed to contract with a vendor. Officials previously believed there were around 200 short-term rental properties, according to press reports.
Leaders in Hannibal and Independence have been able to broker voluntary collection agreements with companies like Airbnb or Vrbo. Under those agreements, when an online user books their room or home, they are charged the city’s hotel tax, which is then remitted to the city.
According to Maniaci, the city is hoping to reach a similar agreement.
“We’ve reached out to those companies and basically have been told to get in line. We’ve just not heard anything back,” Maniaci said.
Missouri Airbnb hosts made $75 million in 2019, according to Airbnb. Hosts in St. Louis earned $20.5 million, which translates into nearly $1.5 million in taxes remitted to the city.