In an effort to enforce San Mateo’s short-term rental policy and collect data on how many home rentals are available on Airbnb and other platforms, city officials are working with a contractor to collect a 12 percent transient occupancy tax on all establishments offering short-term stays.

With an estimated 1,600 hotel rooms spread across 14 hotels, San Mateo is on track to collect some $9 million in transient occupancy tax, or TOT, revenue this year, said city Finance Director Drew Corbett. Though short-term rental owners are also required to collect a 12 percent TOT from their guests and remit payment to the city as well, officials have grappled with how to ensure properties that fall outside traditional hotels are identified and complying with the rules.

“That’s the biggest piece … the identification piece,” he said, in a subsequent conversation. “It’s very difficult to get a handle on getting that information.”

By contracting with HdL Software, which aggregates revenue data for local governments, Corbett is hoping the city can capture revenue and data on what many believe to be a growing number of homeowners offering short-term rentals on their properties. Following the City Council’s January approval of a three-year agreement with the company, Corbett said the company sent letters to homeowners with short-term rentals in March, notifying them they are subject to the 12 percent tax.

Corbett said the city has received some calls from residents who received the letter asking for clarification, but has not seen much pushback on paying the tax in recent weeks, adding that the tax does not apply retroactively but instead is aimed at collecting taxes on future rentals.

“I think for the most part, once people know that they’re subject to the ordinance … they make the adjustment to the rates,” he said. “In many cases, they just didn’t know, and I wouldn’t have necessarily expected them to.”

The agreement with HdL effectively transfers administration of the city’s TOT to HdL at a rate of $750 per traditional hotel property and 15 percent of the revenue collected from other short-term rentals in the city. The city will be able to add the remaining 85 percent of the new tax revenue collected to its coffers, said Corbett.

Short of scanning Airbnb and other platforms facilitating short-term rentals, Corbett said it’s very difficult to estimate the number of rentals in the city as well as the new revenue the city can expect by extending enforcement of its policy to those offering rentals on their properties. But he is hoping a few months of collecting payment data will give officials a better sense of the scope of rental activity in San Mateo.

Acknowledging Airbnb has collected the tax directly from those renting in other cities and remitted payment to the cities, Corbett said using a third-party provider to enforce the policy could allow the city to keep track of the volume of rentals in the city instead of receiving the total sum of the payment from the company, among other considerations. He said the company may have changed its policies since the city decided to work with a third-party contractor, and added that work with HdL Software does not preclude San Mateo from working with Airbnb to process future payment of the tax if it makes sense to do so.

One homeowner who did not want to be named said she heard from a neighbor that registering one’s home with the city’s new process was straightforward, but wished the payment could be processed directly through Airbnb. Increasing her rental rate by 12 percent or cutting back on the rentals she is offering at her home were among the options she has considered since receiving a letter about the change.

Though Redwood City adopted an ordinance requiring homeowners to live in residences where they are offering short-term rentals and limiting the number of days a renter can stay in homes without a host present in January and Half Moon Bay officials considered similar regulations in March, Corbett said more strict rules have not yet been part of the conversation for San Mateo.

He said bringing those offering short-term rentals into compliance with the city’s ordinance could inform whether officials consider additional restrictions in the future, and is the city’s first step in scoping the effect of short-term rentals on neighborhoods.

“It’s compliance with the TOT ordinance … which I think will guide us in the future in terms of do we need to do anything further,” he said.

Visit cityofsanmateo.org/3814/Transient-Occupancy-Tax for more information on the city’s policy.

(650) 344-5200 ext. 106

Note to readers: This article has been changed to say San Mateo is expected to collect $9 million in transient occupancy tax revenue in the 2017-28 fiscal year instead of $7.5 million in revenue, as was previously reported. Officials clarified $7.5 million is expected to contribute to the city's General Fund in the 2017-18 fiscal year, with an estimated $1.5 million to go to the city's hotel tax fund. 

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