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Airbnb makes renewed push to reach STR agreement with City Council

Monday, February 28, 2022 by Chad Swiatecki

Short-term rental platform Airbnb is pushing City Council to change its long-held stance against working with companies that help STRs to operate and, in the process, take business away from area hotels.

A representative from Airbnb spoke to the Arts Commission last week and offered a draft letter of support that several arts organizations and other community groups have endorsed.

That support comes in large part because an agreement between the city and STR platforms would enable the collection of an estimated $15 million to $20 million in Hotel Occupancy Tax revenue, a portion of which by statute would be directed toward cultural arts and historic preservation.

A portion of the 2016 ordinance update passed by Council would have sunset the existence of non-homestead Type 2 STRs as of April 1, 2022. Provisions of the original 2015 ordinance that was connected to that update were later found unconstitutional by the Austin-based 3rd Court of Appeals.

Luis Briones, Airbnb’s Texas director of public policy and government affairs, said Austin should join cities such as Houston, Corpus Christi and Galveston in agreeing to let short-term rental platforms fully operate in the city, including having them collect and remit the 6 percent of rental fees in hotel taxes that STR hosts are responsible for.

As STRs became a popular option for Austin property owners and visitors, the city at first opted to enact its own licensing and regulation system instead of agreeing to the platforms’ terms that typically don’t provide data on locations and ownership details of specific homes. The city wanted the ability to track and restrict activity at problematic rentals and to steer STR activity into specific areas of the city.

“We’ve developed and refined our playbooks … to really tackle the issues of concern for folks in the communities around party homes, and we’ve suspended dozens of listings throughout this time,” Briones said. “Each one of us with our respective portals, not just for law enforcement but because of the neighbors as well, want to be able to track these issues as they come up.”

Briones said he and other STR industry representatives have had talks recently with Council members, and said “there’s momentum with some folks on City Council” to pass an agreement similar to those signed by other municipalities in Texas.

Based on conversations with city staff, Briones said hotel tax collections from STRs currently top out at $5 million per year, much lower than the $20 million forecast if STR platforms were able to fully operate in the city.

In 2019 the Tourism Commission voted to ask the city to seek an agreement with STR platforms, largely because of the opportunity to collect millions in new tax revenue.

Arts Commission members were generally supportive of the possibility of having more hotel tax money available for cultural arts purposes but wanted to review the draft letter before taking action to recommend that City Council strike an agreement with Airbnb or other STR companies.

“I want to clarify that what we would be hypothetically supporting is the ability with an agreement with the city that would allow for the platform to collect (hotel tax) on behalf of the city and remit it,” Commissioner Heidi Schmalbach said. “It’s important to try to separate our support for STRs generally from the tax issue, because we are talking about a tax that is not currently being collected and should be collected.”

Commissioner Felipe Garza noted that investors are purchasing single-family homes at high prices so they can list the properties as short-term rentals and wanted to know what STR companies are doing to prevent the displacement of longtime residents from East Austin neighborhoods.

“There seems to be displacement sometimes where Airbnbs go,” he said. “What protections are you guys going to be providing to not displace members of the community, to make sure that where there’s new Airbnbs there’s affordable housing … not just affordable as defined by Realtors but through Section 8 and stuff like that?”

Photo by Carlos Pacheco made available through a Creative Commons license.

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