Baltimore Lawmakers Propose Airbnb Taxes

The measure has the support of the hotel industry and Airbnb, which has said it views tax collection as a way to normalize its business in the eyes of the public.

by Natalie Sherman, The Baltimore Sun / September 28, 2016

(TNS) -- Accommodations booked in Baltimore through Airbnb could be subject to the city's 9.5 percent hotel tax, as local lawmakers join a wider push aimed at bringing the short-term rental website into the regulatory fold.

The bill, put forward by Mayor Stephanie Rawlings-Blake's administration this month, is designed to update city laws to capture the growing activity produced by the booking platform, which links property owners offering homes or rooms for rent on a short-term basis to potential customers.

Such service is comparable to a hotel or bed and breakfast and should be taxed that way, Nicholas Blendy, an assistant deputy mayor, said at a City Council committee hearing on Tuesday.

"Short-term rentals are very consistent with things we've always regulated locally," Blendy said. "Fundamentally this is just a new technology that requires a definitional change in order to put it on the same playing field as all of these other entities that already are regulated and taxed."

The measure has the support of the hotel industry and Airbnb, which has said it views tax collection as a way to normalize its business in the eyes of the public.

But some of the site's users oppose the change. They would bear the brunt of the new fee and say it's not fair to put the small-scale hosts on par with the city's established hotels, which have benefited from large property tax breaks and other perks.

There are more than 700 active Airbnb hosts in Baltimore, with more than 1,000 listings available, according to the city.

"We're not hotels. We are small businesses," said Rachel Indek, who has been a host on the site since 2012 and has three listings, including two in Federal Hill. "It's really going to raise the prices significantly, so that a lot of our guests right now who are coming to stay with us because it's a cheaper alternative … some of these people are going to choose not to come."

The tax collection bill is the city's latest foray into oversight of the so-called "sharing economy," as lawmakers wrestle with how to govern new kinds of crowd-based businesses, like Uber, unleashed by the internet.

The city is also developing zoning, health and safety rules for short-term rentals, but those aren't ready, Blendy said.

"This is not unique to Baltimore City, not being able to figure out how to draft an appropriate regulatory component," Blendy said. "It's very complicated."

San Francisco-based Airbnb has supported bills that ease tax collection, including a statewide measure that failed in Maryland earlier this year. But it has been less receptive to other regulatory moves.

It sued San Francisco and Anaheim, Calif., this summer over laws that would penalize the company for hosts that do not comply with local rules, including registering their properties. It also filed a federal lawsuit this month in Santa Monica, Calif., over a short-term rental ban and is battling lawmakers in other cities, such as New York.

A spokeswoman for the company said it supports Baltimore's hotel tax bill, which follows similar measures in Montgomery County and Washington. She declined to comment on other rules being considered in Baltimore.

"To date, we've worked with more than 200 jurisdictions globally to collect and remit hotel taxes on behalf of our hosts and guests — including in Maryland's Montgomery County — and look forward to the doing the same for our Baltimore community," Crystal Davis said in a statement.

The bill, which could come for a vote before the end of the year, would define a hotel as a building with accommodations for at least one paying guest, instead of the five required under the current rules. It also changes the language so that a website like Airbnb, or another "intermediary," would collect the tax on behalf of the hotel owners or operators.

The city estimates the change would yield about $300,000 in new tax revenue. Visit Baltimore, the city's tourism and convention bureau, would receive 40 percent of those funds, with the remainder going to the general fund. That split of the city's hotels tax is up for reauthorization by the state next year, Blendy said.

Some City Council members said they were interested to see the new revenue go to other uses, such as the cash-strapped Charm City Circulator, a free bus service the city runs through downtown to nearby neighborhoods.

Visit Baltimore's promotions focus on tourist options downtown, but many Airbnb users come for family and other reasons that have nothing to do with that advertising, said City Councilman Bill Henry, who asked for more time to consider the bill before a vote.

Airbnb remains a relatively small part of the city's tourism market, which booked more than 2 million rooms between April 2015 and March 2016.

But it is growing.

More than 24,000 visitors to Baltimore stayed in an Airbnb rental during the 12 months that ended in March — more than double the year before, according to the company, which charges hosts and guests a percentage of each pre-tax booking. (The 9.5 percent hotel tax would be added to travelers' bills as an additional fee.)

Competition from Airbnb is one reason why growth in the hospitality industry is expected to slow, analysts from Moody's Investors Service wrote in a report issued this week.

Attorney Frank Boston III was representing the Maryland Hotel & Lodging Association at the city's Tuesday's hearing and said the group supported the city's oversight efforts.

"Make no mistake," he said. "This has become a big business."

©2016 The Baltimore Sun Distributed by Tribune Content Agency, LLC.