Short-term rental hosts in San Antonio are more frustrated with the City over its antiquated system for paying hotel occupancy taxes than they are with plans to move forward with new regulations for the industry.
City Council is set to vote Nov. 1 on regulations for homes, apartments, carriage houses, spare rooms, and even trailers listed on Airbnb, VRBO, and similar short-term rental platforms.
Owners of STRs say they would like the City to work with platforms such as Airbnb to make it possible for fees and taxes to be paid by the customers to the City through the platform. The State of Texas, which collects a state hotel occupancy tax, already has such an arrangement with most of the larger platforms.
Currently, San Antonio owners must collect their rental fees from customers, set aside taxes, and pay the city once a month by mail or by providing a credit card number. Owners say making it a one-step process through the platforms would assure the City collects much more of the hotel occupancy taxes it has missed out on in recent years as the short-term rental business has exploded.
“I wish the city would hurry up and do something,” said Craig Lee, who has operated an Airbnb for two years in a Government Hill home his family has owned since the 1930s. “I travel all over the world. We just spent 18 days in Europe, and every place we stayed was Airbnb and they collect all that stuff up front.”
The City estimates only 400 of the 2,000 owners, or “hosts” as they are called in the industry, are current on hotel occupancy taxes owed.
Troy Elliott, the City’s deputy chief financial officer, said the City is working to have an online system or app up and running by February, when new regulations would likely begin. The City plans to find owners who don’t pay their taxes and not only collect those back taxes but also get owners registered and complying with the new rules once the ordinance is approved, he added.
Elliott said the system the City is working on would operate through a third party, not the rental platforms, and it would offer the ability to hosts to register and pay their hotel occupancy taxes online while giving the City the ability to collect taxes and fees while also monitoring compliance.
“This is a more comprehensive solution allowing the STRs to come register, pay, and report to the City, and as a city, we will not have to negotiate and have up to multiple different standard processes with all these different platforms, because they’re all operating independently,” Elliott said.
Elliott said the system could be offered to the hotel industry in the future.
The Nov. 1 council vote will be based largely on the work of a 24-member task force that studied the issue, looked at what other cities have done, and listened to feedback from many individuals and groups before deciding on recommendations for the council. The City has been discussing for the better part of two years what regulations are appropriate for short-term rentals.
“I think it’s weighted a little bit more on the restriction side, but things can always be adapted,” said Charlotte Kerr Jorgensen, a task force member who has operated an AirBnB in San Antonio for several years. “I’m very grateful. There is no political capital in waiting and not doing anything, which is the direction that we were going.”
Earlier this month, the Las Vegas Planning Commission voted to ban short-term rentals in that city, which, like San Antonio, considers tourism a cornerstone of its economy. The Las Vegas City Council will decide whether to uphold that ban.
San Antonio’s task force never considered going that far, Kerr Jorgensen said, though it did hear from some residents who favor banning STRs in their neighborhoods, particularly properties that are not owner-occupied. Some people don’t like the idea of a rotating cast of strangers living in the house next door or across the street for a few days at a time.
The City’s proposed ordinance would define and regulate owner-occupied (Type 1) and non-owner-occupied (Type 2) STRs differently. Owners of both types will have to register with the city, pay an initial $100 fee, and then pay a $100 renewal fee every three years.
They also will have to certify their property is in compliance with safety and code requirements, with City inspections done when complaints or violations are reported.
There are density requirements for Type 2 properties under the new regulations. No more than 12.5 percent of units on a residential block could be used as a Type 2 STR; only one unit in multifamily buildings with one to seven units could be a Type 2 STR; and no more than 12.5 percent of units in a multifamily building with eight or more units could be Type 2 STRs. The City’s Board of Adjustment will review and grant exemptions to the density rules.
Lee said he has paid his taxes to the City as required, and he’s happy the City is finally moving forward with regulations because it will help level the playing field for everyone in the short-term rental business. He said owners who don’t pay their taxes are able to offer rentals at cheaper prices than he can because he is paying his taxes.
“I feel like they’re fair,” said Lee, who also participated on the task force. “I mean, every city has them. It was all based on pulling information from similar cities to see what was working for them. I feel like it’s, for the most part, fair for everyone.”
Lee also has been a traditional landlord for another property for years. He said he could easily be making more money off that property if he parted ways with his longtime tenant and turned the property into a Type 2 STR. He said the $900 rent he gets for the month could be achieved in nine nights on Airbnb.
He hasn’t done that out of fairness to his tenant, who has been reliable. But not everyone with an extra home to rent may look at it the same way Lee does.
Councilman John Courage (D9) has previously stated his disapproval of Type 2 rentals, believing they take away from what would otherwise be affordable housing in a city that needs more of it. Courage would like to see owners of Type 2 properties have to renew their permits with the City more often, making it more expensive for them to do business.
The new regulations would prohibit housing projects that received City incentives from becoming Type 2 STRs.
If Lee has any complaints, it’s that the task force went a little further in restrictions for Type 2 properties than he would have liked. He said there are neighborhoods close to downtown that have a high percentage of Type 2 properties, which can make residents of those neighborhoods nervous not knowing who is living next door on a given night.
“Certain neighborhoods don’t want it,” Lee said. “They think they’re going to be party houses, and some of them have been based on what I’ve heard. It’s destroying the neighborhood. It’s changing the fabric of the neighborhood because people don’t know each other. I haven’t run into that.”
David Guadiano is a local school teacher who has operated a Type 1 STR for several years and says he has not always paid his taxes because he believes it puts him at a disadvantage having to charge a higher rate. He said he plans to comply with the new regulations now that everyone will be on a level playing field, and he is happy the City is making it easier for hosts to pay fees and taxes online in the future.
“I really don’t see anything wrong with it,” Guadiano said. “I don’t have any problem with regulation. I find most of the regulations reasonable and they make sense. The only thing I wish the city was doing was pursuing communication with the short-term rental platforms such as Airbnb to get the short-term rental platforms to collect the occupancy tax.”
Kerr Jorgensen said she and her husband are over 65 and looking for ways to augment their income as they age. She said operating an STR has saved them and other people from serious financial challenges.
With that in mind, she believes the new regulations strike a good balance.
“I think we did pretty well,” Kerr Jorgensen said. “Some people think it’s too restrictive, but there were some people on the no-Type-2s-no-matter-what side in neighborhoods like King William. If you’re in a downtown neighborhood, you’re going to be more impacted by short-term rentals.”
Type 2 rentals are turning some of our neighborhoods into full on business districts. All my neighbors say the same thing I don’t want the house next door to me become a nightly hotel. Now that the city will allow them 0ur taxes will be going up since the revenue for the house gets added in as the value, according to our tax assessor. Slippery sloap ahead caution!
Why can’t the city enter into an agreement with the state to have them collect the taxes? Since the state already has the infrastructure, why does the city have to spend money to set up their own independent system?
I think the City could contract with a middle school coding class to fix this! They have shown NO interest in online collection. NONE! At the planning meetings it was an issue for over a year before they said they’d even look into it.