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Music Commission shows support for STR agreement but delays recommendation to Council

Wednesday, April 6, 2022 by Chad Swiatecki

The Music Commission voiced support Monday for the city to enter into an agreement with short-term rental platforms such as Airbnb, but opted to gather more information from staff and held off on making a recommendation to City Council over the matter.

The presentation from Luis Briones, Airbnb’s Texas director of public policy and government affairs, was much like the one he gave to the Arts Commission in February. Briones explained that the city’s reluctance to enter into agreements with STR platforms is causing it to miss out on an estimated $15 million to $20 million annually in Hotel Occupancy Tax revenues, versus the roughly $5 million taken in by the city in 2019 from individually registered STR operators.

State laws specify that hotel tax collections must be spent on efforts related to the promotion of tourism, including funding for live music and cultural arts purposes, which is why a number of local arts groups and other creative stakeholders have signed a letter of support in favor of Airbnb and STRs as a whole.

The city’s stance on how STRs can operate and where they can be located has been weakened in the courts over the years. The gap in actual collections of hotel tax versus what could collected through the platforms is in large part due to the city’s lack of comprehensive information on individual operators – information the city could conceivably lose any right to as part of an agreement with the platforms.

Briones said Airbnb’s agreements with the state of Texas and assorted cities throughout the state show that it has the ability to collect and remit those funds, which removes that burden from city code enforcement staff. And removing some of the regulatory and tax payment responsibilities for operators would likely lead to more casual renters who can earn extra income from their homestead without concern about violating city ordinances.

“When it comes to the complexity of reporting all the things around this specific action of paying the (hotel tax), it becomes kind of a restrictive or onerous process for one to take on. We do this across many different cities and states around the country and the world and we have a process for it, so it’s much easier for us,” he said.

Commissioner Graham Reynolds and others on the commission expressed skepticism about the prospect of the city essentially receiving millions of dollars in new tax revenue if it agreed to work with the STR platforms and forgo some of its own role in regulating the industry.

“This seems like an obvious yes, and there’s an obvious bonus of like free money coming toward music and arts … when it seems like such a gift there’s also that red flag, there’s gotta be something more complex to this issue,” Reynolds said. “When a publicly traded company like Airbnb says they’re doing something to be nice, corporations don’t do things to be nice. That’s not the way corporations and publicly traded companies work. So I’d like to understand what I didn’t hear, which is what is the profit motive and why do the company shareholders support this?”

In response, Briones said he and others in the company think cities should have the benefit of receiving the hotel tax revenues they are owed and make the decisions about how those funds can be spent most effectively to support arts, music and creative culture.

Commissioner Scott Strickland said Austin’s popularity with visitors and real estate investors could lead to situations where entire neighborhoods are purchased by investment groups for the sole purpose of running the properties as STRs.

“If we basically water down the rules and make it easier for people to host, then corporations could just kind of come in and buy a bunch of houses and then all of a sudden you’ve got an entire neighborhood that is basically sponsored by Airbnb.”

Photo by Raysonho, CC0, via Wikimedia Commons.

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