Jacksonville City Council Checks Into Local Vacation Rental Tax Losses

Aug 7, 2018

Update 4:03 p.m.: This story has been updated to include comments from Airbnb Florida.

Like the protracted legal and legislative battle over supervising ride-hailing smartphone apps like Uber and Lyft, the Jacksonville City Council is again finding itself in the middle of a regulatory Catch-22 that is costing it tax revenue.

Late last month, the council auditor issued a report concluding the city could have collected as much as $366,000 in extra taxes last year if it agreed to a deal offered by Airbnb in 2016.

But according to the report, the offer from the so-called “peer-to-peer rental company” didn’t provide a clear way for the city to recoup past tourist development and convention development taxes.

It’s also not clear, whether Airbnb would have agreed to city audits.

“It is difficult to find a solution for the auditing rights aspect since the city would likely want to retain audit rights, and it is not clear if the … companies would be open to allowing the city’s auditing rights requirements,” the report read.

In other words, agreeing to a taxing schedule in the future may mean giving up some regulatory oversight.

On top of that, Jacksonville Chief Administrative Officer Same Mousa told the City Council Finance Committee Tuesday it would also require new zoning.

“This matter not only includes collection of tourist development tax funds but will also entail significant zoning code changes to allow Airbnb and other similar entities to operate in the County,” Mousa said.

Mousa recommended City Council creates a special committee on vacation rentals to help craft new municipal code and City Councilwoman and former council president Lori Boyer mentioned that resolving the issue is a priority for current President Aaron Bowman.

Boyer said the issue hasn’t changed much since her presidency, but that as a member of the Duval County Tourism Development Council, she’ll be taking part in a Thursday discussion on whether to subscribe to a third-party service that tracks Airbnb occupancy.

“We would at least have regular data on how much we’re losing and how many there are and things like that,” she said. “That’s a topic that we will discuss.”

Finance Chair Greg Anderson followed Councilman Bill Gulliford’s lead and directed the council researcher to investigate how other counties have dealt with Airbnb zoning issues. According to the city’s July report, 39 of 63 Florida counties have established regulations for peer-to-peer vacation rentals. That works out to 62 percent.

One of those county agreements was struck in April of last year in Broward and provided a path for Airbnb to start paying tourist development taxes. Although that agreement doesn’t explicitly provide a way for the South Florida County to collect back taxes, it does state that the locality retains its power to sue the San Francisco-based app company for recompense.

“Nothing contained herein shall impair or prevent the county from collecting or seeking to collect any amounts related to tourist taxes,” the agreement read.

Another one struck with Leon County allows the county to “audit Airbnb on the basis of [Tourist Development Tax] returns and supporting documentation” but “agrees not to directly audit any individual guest or host relating to Taxable Booking Transactions unless or until an audit of Airbnb by the county … has been conducted with the matter unresolved.” If a specific host in Leon has a complaint filed against them, the county would also be allowed to audit that individual.

That agreement also doesn’t explicitly mention back taxes, but does say the company agrees to “remit all [Tourist Development Taxes] collected from guests in accordance” with the agreement.

In an email Tuesday, Airbnb’s Florida spokesman Benjamin Breit wrote that “hosts want to pay their fair share and we want to help.”

“We already collect and remit the state sales tax on behalf of our Duval hosts and we would be happy to also collect the Duval bed tax and deliver new revenue to the county. Our tax agreements include robust auditing measures which we’d be more than willing to discuss with any local policymakers,” Breit wrote.

Still, even if Duval does successfully pass a regulatory framework, it could be wiped out in much the same way an agreement with ride hailing apps was last year when the state legislature preempted local control. Similar bills stripping localities of their Airbnb regulations failed earlier this year during the 2018 legislative session, but are expected to be filed again, according to our Florida Times-Union news partner.

“It’s not an issue that’s going away,” State Sen. Greg Steube, R-Sarasota, said at the time.

Like the ride hailing measures, local government groups like the Florida Association of Counties and the Florida League of Cities vehemently oppose Steube’s bill.

“I think there has to be some balance in recognizing that we love our tourists to come to Florida but we also love our residents and we have to find a way for everybody to be good neighbors,” Florida Association of Counties spokeswoman Cragin Mosteller told the TU in February.