Hamilton County, Airbnb ink pact on lodging tax collections

Hamilton County, Airbnb ink pact on lodging tax collections

August 15th, 2018 by Judy Walton in Breaking News

The guest bedroom has been prepared for the next Airbnb guest Thursday, May 25, 2017, at Olivia Karavatakis' Highland Park home in Chattanooga.

Photo by Erin O. Smith /Times Free Press.

Hotel-motel tax collections in Hamilton County are about to skyrocket, Hamilton County Trustee Bill Hullander told county commissioners Wednesday.

He said his office has reached an agreement with Airbnb, the short-term vacation rental website, to start collecting the tax from its operators in the county.

Hullander said his staff was pretty sure there were more hosts offering short-term rentals than the 90 or so that currently are paying the county's 4 percent lodging tax.

But the actual number as reported by Airbnb was jaw-dropping, he said.

"You may be as shocked as I was," Hullander said. "We've got 90 on the record. Anyone want to guess how many we've got in Hamilton County? Six hundred."

Had all those been paying up, the county's $90,000 annual lodging tax take would have been closer to $7 million, he said.

Under the county's agreement, Airbnb will monitor the hosts, collect the tax and turn it over in a lump sum averaging around $600,000 a month. It won't give the county the hosts' names or locations, he said.

"We have worked for years, not months, but years trying to find these places and figure out how to get paid," he said.

Now, he added, "anyone running these needs to register with us. It's not fair for one person to be paying it and their neighbor down the street not."

Commissioners congratulated Hullander and wondered about enforcement.

"Thanks for doing this," Chairman Randy Fairbanks joked, so county employees "don't have to go hide out in the bushes looking for these people now."

"What is consequence for tax cheats?" Commissioner Greg Martin asked. "How will it be enforced for those who are shifting the burden onto those who are playing by the rules?"

Hullander said the ones they catch are warned to get a business license, register and start collecting the tax. There's a $50 a day penalty if they're late, he added.

Chattanooga reached a similar agreement with Airbnb in January to collect its own 4 percent lodging tax, and Hullander said then the county was working on this one.

The company said at the time that 53,000 people visiting Chattanooga in 2017 booked Airbnb rooms, earning local hosts some $5.2 million, the company said. Another 10,000 or so stayed in towns such as Lookout Mountain, Cleveland and Ooltewah, the company said.

Spokesman Benjamin Breit said in a news release then that Chattanooga is the No. 4 home-sharing market in Tennessee, behind Nashville, Memphis and Sevierville.

Hullander also briefed commissioners on this year's delinquent tax sale, which was primarily held online.

He said 175 properties with delinquent taxes from 2104 were auctioned on the Civic Source website, netting just under $2.5 million, with bidders from all over the U.S. He said 123 sold and the city and/or county kept 52. By comparison, the 2017 sale, held in the county commission room, saw 201 properties offered and 124 sold, but the take was lower at $1.89 million.

And starting this fall, as a convenience for taxpayers, the trustee's office will be adding automatic bank drafts to its payment methods, Hullander said.

In other business, commissioners

> Denied rezoning to build a cell tower on a hilltop above the Hurricane Ridge subdivision. The builders said the proposed tower would fill a coverage gap and enhance phone service, and they emphasized that it meets all the requirements to be approved. Commissioner Sabrena Smedley, who said she lives in the subdivision, helped neighbors organize opposition based on a possible reduction in property values, harm to the neighborhood's aesthetics and setting a proximity precedent in the unincorporated area.

> Voted to rezone a site on Dent Road in Middle Valley from A-1 Agricultural to R-1 Residential for a builder who wants to put 131 homes on the site. Neighbors opposed to rezoning filled seats in the commission room and one, Bob White, showed a video showing flooding during heavy rains, narrow, curvy roads and the low-lying site where the subdivision is proposed. Commissioners noted that the A-1 zoning would allow 102 homes on the site anyway, and also that the developer would have to jump numerous permitting hurdles before he could build.

> Voted to allow Commissioner Joe Graham, who is leaving, to make multiple grants from his travel and discretionary account. Graham gave $33,275 for new windows at the John A. Patten Recreation Center; $25,000 for repairs to recreational facilities in the town of Lookout Mountain; $17,000 for recreation repairs in Red Bank; $20,000 each to the Honoring the Sacrifice Foundation and the Medal of Honor Hall of Valor Museum of Military History; $19,000 to the Children's Outpatient Center at Erlanger; $25,853 to the Lookout Valley Neighborhood Association and $25,000 to the Lookout Valley Lions Club.

Contact staff writer Judy Walton at jwalton@timesfreepress.com or 423-757-6416.