Handful of short-term rentals paid lodging tax

During the first seven months after Jefferson City began issuing short-term rental permits, the city saw paltry returns from lodging taxes generated by the properties, the city's finance director said Wednesday.

Margie Mueller, Jefferson City director of finance and information technology services, said the city collected just $1,477.02 in lodging tax revenues from short-term rental properties from June through December. Mueller and Jefferson City Planning Manager Eric Barron said the city issued only a handful of short-term rental licenses in 2018.

In January 2018, the Jefferson City Council approved an ordinance that gave property owners the ability to rent out properties in homes if owners paid the city's sales taxes and its 7 percent lodging tax. The council issued the first permits under the ordinance in June.

"There are only a handful," Mueller said. "I don't think we had an estimate of what it would take in at the time."

Only five short-term rental properties went through the planning and zoning process last year, Barron said. The Jefferson City Planning and Zoning Commission will consider special exception permits for 612 E. McCarty St. and 1500 Timber Trail at its Jan. 10 meeting.

The ordinance forces property owners who want to rent properties on short-term platforms in residential areas to receive special exception permits from the city, with the Planning and Zoning Commission and the council giving approval first. Property owners in commercial areas can receive short-term rental licenses without going through the process, Barron said.

"That does not necessarily mean that there are only five out there," he said.

Under Jefferson City's ordinance, a property owner can offer a short-term rental where someone rents a residence for less than one month. A property owner could also rent out a lodging room where someone rents a single room or basement for less than a month. Short-term lodging room rentals cannot have multiple rentals in the same residence.

San Francisco-based Airbnb allows users to rent rooms in their homes, cottages or other properties to users looking to stay at alternatives to hotels. Prior to last year's ordinance, Jefferson City residents could not legally rent out properties on Airbnb and other short-term rental platforms because the city had no mechanism to collect its lodging tax from short-term renters.

Still, some Jefferson City residents listed their properties on the platform anyway. In 2017, 1,050 Airbnb guests stayed in Jefferson City and generated $111,000 in revenue, according to a January 2018 Airbnb news release. In 2018, 1,412 Airbnb guests stayed in rooms in Cole County and generated $131,000 in revenue, according to a Wednesday Airbnb news release.

About 30 Jefferson City residents shared their homes on the platform in 2018, Airbnb Midwest spokesman Ben Breit said. The company did not have more specific 2018 data available for Jefferson City, but Breit said the city drives most of the traffic in Cole County.

Cole County Collector Larry Vincent said the county has no laws against short-term rental properties. Short-term renters simply need to get a merchant's license to rent out their properties on short-term rental platforms, Vincent said.

Statewide, Airbnb rentals also increased from 289,000 bookings in 2017 to 483,000 bookings in 2018, according to Airbnb news releases from January 2018 and January 2019. Last January, Airbnb struck an agreement with the Missouri Department of Revenue to collect the state's 4.2 percent sales taxes and a handful of smaller local and county sales taxes.

The company collects Jefferson City sales taxes on behalf of renters, but not the lodging tax, Mueller and Breit said. Airbnb has agreements to collect lodging taxes with St. Louis and St. Charles County in Missouri, but for now renters must collect and pay the city's 7 percent lodging tax without the company's help.

"There are really only a couple of those that have reported any income from it," Mueller said.

Airbnb has been uncooperative as the city sought to pursue an agreement for the company to collect the city's lodging tax on behalf of renters, Mueller said.

Airbnb told all renters to comply with local laws concerning short-term rentals, Breit said. An agreement with Jefferson City to collect the lodging tax could be struck in the future, he said.

"We're always securing more tax agreements, and hopefully that list in Missouri will grow," Breit said.

Along with paying the city's 7 percent lodging tax, property owners operating short-term rentals must obtain business licenses and adhere to the city's building and fire code inspection requirements.

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