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Compliance Rises as Cities Digitize Vacation Rental Processes

As Denver and other cities continue to migrate short-term rental permitting and tax-collection to online, software-as-a-service platforms, local governments are seeing increased participation.

An online portal for registering vacation rentals and paying associated taxes has led to significant increases in compliance with Denver’s short-term rental rules.

Compliance by operators of vacation rentals with the city’s vacation rental requirements sits at about 80 percent, the highest rate since the program was initiated three years ago, according to Denver statistics.

When the city first established rules and regulations related to the vacation rentals industry in 2016, compliance was about 14 percent, officials say. Denver soon began working with Accela, a technology company that provides an enterprise license and permitting platform, to develop a public-facing portal to allow home operators to easily apply for a vacation rental permit. It can also be used to file documents and pay fees, all via an online application they can access anywhere.

One of the chief reasons for the high rate of compliance, city and other officials say, is due in part to how easy the city has made registering a vacation rental, and remitting the required bed taxes. Making a trip down to city hall with paper documents to file is no longer needed.

“They can do everything from their own home,” said Dave Maxwell, senior product marketing manager at Accela, referring to vacation rental holders. “From their mobile device, wherever they’re at. You don’t have to go down to city hall. And that’s a major barrier for a lot of people. No one wants to stand in line and fill out a lot of paperwork.”

The online vacation rental portal was Denver’s first major venture into having the public do business with the city in a digital space. It’s an effort that has now expanded to other services that require permitting or similar interactions. 

In the case of vacation rentals, the city wanted to be able to issue licenses and run the program without a significant increase in staffing or staff time, said Dominic Vaiana, deputy director of operations for Denver's Department of Excise and Licenses.

“We wanted to be able to do this as efficiently and effectively as possible," he said. “We thought this would be a great opportunity to use… a public-facing portal."

Denver isn’t alone when it comes to developing an online portal to serve the vacation rental industry. Cities with large tourism activity like San Francisco or New Orleans have migrated all or some short-term rental related transactions online.

Oklahoma City just announced plans to partner with Accela on a similar software-as-a-service platform to manage vacation rentals there.

 “The issue of unregulated short-term rentals presents a delicate balance of encouraging tourism while also enforcing procedure, which can be challenging to hit,” said Lawrence Harrold, a systems analyst for Oklahoma City, in a statement.

Industry insiders are generally supportive of these moves. They do, however, advise that there needs to be more consultation with businesses, said Greg Holcomb, government affairs director of the Vacation Rental Management Association.

“The difficulty comes from the actual laws themselves and unwillingness of policymakers to work with the professional vacation rental management community,” said Holcomb in an email. “Many laws often conflict with state law, create bureaucratic ladders to climb, demand collecting massive amounts of data, that even hotels are not required to turn over, and often are simply unenforceable.”

Holcomb singled out some of the procedures put in place in Palm Springs, Calif., a vacation destination that counts about 2,000 registered vacation rentals. Operators can input information into an online platform, but the process can be cumbersome and time-consuming, since the city requires that each rental application is filed with the city department overseeing vacation rentals. Palm Springs limits the number of times per year a home can be rented.

“The system does not allow for bulk uploading or importing of data,” Holcomb said of the Palm Springs process. “The system also has three different forms depending on the type of rental. This onerous process requires professional property management companies to hire people who input thousands of contracts a year by hand.”

The vacation rental system in Denver is viewed as a bonus not just for operators, but for neighbors as well. The system makes it easy for residents to check on the vacation rental status of a neighbor, and file complaints in the event of nuisances. The city can also work directly with host platforms like Airbnb to receive a report of properties listed in the city, which could then be matched up with licenses on file.

Consistently, said Maxwell from Accela, cities are looking for the “Amazon effect,” where an interaction with city hall is not unlike an interaction with the mega e-retailer Amazon.

“And cities are always kind of lacking in that regard,” said Maxwell. “And they’re moving very quickly to provide that same sort of experience: easy, fast, convenient, online, and delivering great service. And that’s what cities are striving for.”

When residents do interact with the city, “we want to make sure that we are respecting them, and respecting their time, and doing it as easy as possible,” said Vaiana in Denver.

“Our customers, our citizens, don’t really care about what’s under the hood. What they car about is making sure we are delivering a world-class city, where everyone matters, and that it’s safe and a great place to live,” he added. 

Skip Descant writes about smart cities, the Internet of Things, transportation and other areas. He spent more than 12 years reporting for daily newspapers in Mississippi, Arkansas, Louisiana and California. He lives in downtown Yreka, Calif.