Jacksonville, Fla., Considers Whether to Accept Airbnb's Tax Money

For the city to receive the tax revenue, the home-sharing company included a contract provision the allow their service to operate in the city.

by Andrew Pantazi, The Florida Times-Union, Jacksonville / April 11, 2016

(TNS) -- Airbnb wants to pay its taxes, but first, the county must go through its contracts.

For years, the website allowed anyone to rent their abodes — houses, apartments, treehouses, tents, RVs or any other creatively defined “home” — like hotels to strangers.

In Jacksonville and most cities, the website has done so without paying bed taxes, arguing that it is up to the person renting his home to pay the taxes.

But two months ago, a PricewaterhouseCoopers tax manager hired by Airbnb sent the Duval County Tax Collector a boiler-plate contract to allow the website to start sending in tax payments for its hosts.

City attorneys are going through the contract with Duval County Tax Collector Michael Corrigan before presenting it to the City Council.

The attorneys say they have no time frame for when they expect to finish going through it or if they will present it before September, when the U.S. Men’s National Team will play a FIFA World Cup qualifying match here, or before October, when the Florida Gators and Georgia Bulldogs face off.

The Airbnb contract is similar to ones agreed to in Orange County, Pinellas County and the state revenue department, which handles taxes for 22 counties. The bed tax is limited in what it can be used for. It is intended to pay for a county’s tourist-related costs — marketing, beach maintenance, and in Jacksonville, stadium improvements.

The proposed contract, among many other things, includes a clause that would exempt Airbnb from paying back taxes.

While considering the bed tax contract, city attorney Jason Teal said, the city will also have to consider how Airbnb is regulated and whether any laws need to change.

Erin Sullivan, Pinellas County’s chief tax auditor, said she doesn’t see any reason to not accept the taxes, even if there are objections to Airbnb in general.

“The rentals are taking place, so why wouldn’t the counties want to have the tax revenue submitted?” she said.

City attorney Lawsikia Hodges said she first has to get the tax collector’s feedback, then look at what changes are possible, then negotiate with Airbnb.

Airbnb did not respond to a request for comment, and the city said Airbnb did not share data about how much tax money it would expect to collect.

The website draws fans who say it offers cheaper options to visit cities, and that staying in someone else’s apartment or home is more welcoming than a traditional hotel.

More densely packed urban areas like San Francisco and New York City have seen controversial debates play out between Airbnb and affordable housing advocates and hotel lobbyists. Airbnb hosts, in many cases, take houses and rental units off the market, so critics argue it contributes to rising housing costs. Airbnb spent more than $9 million on an ad campaign to defeat a measure that would’ve regulated short-term rentals in San Francisco. Meanwhile, New York City refuses to agree to a similar bed-tax contract for fear it will legitimize the website.

Yet Jacksonville is a different type of city.

In 2013, the U.S. Census Bureau’s American Housing Survey found that 15.8 percent — or about one in six — of housing units in the Jacksonville area were vacant. In New York City, the vacancy rate was 4.9, and nationwide, it was 7.8.

But Airbnb’s 179 Jacksonville rentals are heavily concentrated in Riverside, according to Airdna, a pro-Airbnb website that tracks data.

While the city’s overall high vacancy rate makes Airbnb seem to have less of an impact, if the rentals focus in one neighborhood, then it could take coveted apartments off the market or raise housing costs.

“There’s an intersection between desirable neighborhoods for residents and for tourists,” said Murray Cox, a critic who posts data his website Inside Airbnb. “City officials see it [the bed tax] as a Trojan horse. Once they pay taxes, it legitimizes it.”

Teal said the city attorneys’ job isn’t to weigh in on the argument for or against Airbnb, but just to look at what the city’s charter allows and what might need to be changed. For example, if residential properties are being used for commercial gain, what does that do to zoning?

“There’s a different question between whether the city can or can’t do something and whether it should or shouldn’t. We’re looking at questions of can or can’t.”

While Airbnb could help some cities, Cox said, even economically depressed cities like Detroit must ask what would happen if the city revitalizes or housing becomes more scarce.

“You don’t want someone like Airbnb to be a tool for real-estate speculators to maybe take control as hotels,” he said. “What’s the occupancy rate? How many are entire rooms? Is this helping tourism? Do people want to live in the neighborhoods? Are you displacing them? How many people have multiple properties? … As the city revitalizes, what do people do?”

Alex Sifakis, president of real-estate investment firm JWB Real Estate Capital, said he could see Airbnb taking homes off the market in Riverside and at the Beaches, but he doesn’t think that’s a bad thing.

“In comparison to other cities, Jacksonville is never going to have an affordable housing problem,” he said. “Certain neighborhoods will.”

But he said that just means those neighborhoods are more in-demand, and he thinks that’s good.

©2016 The Florida Times-Union (Jacksonville, Fla.) Distributed by Tribune Content Agency, LLC.

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