Council closer to Airbnb rules

• By Megan Bachman
• Published: April 29, 2021

• No Comments

Those who run local Airbnbs or other businesses that offer short-term stays could soon be paying more to the Village — some a lot more.

Village Council considered new legislation at its April 19 virtual meeting requiring new certificate fees for operators of transient guest lodging, or TGLs, with the most significant increases aimed at those who do not live at the property they rent out.

As Council President Brian Housh described it, Council’s goal is to address affordability concerns when properties are used for short-term stays instead of as apartments or homes for villagers.

“Council is exploring a variety of tactics that will ultimately achieve a goal which is to avoid removing houses from the market — from the ability for people to buy or rent them … which affects the character of our community, affects affordability,” he said.

Under the proposed ordinance amending the Village Lodging Excise Tax, those who run a hotel, motel, or bed and breakfast, or who rent out a room or building on the property where they live would pay a $100 annual certificate fee, in addition to the 3% municipal lodging tax on all stays.

But those who do not live at the property would pay $2,000, including a $500 certificate fee and a $1,500 affordable housing mitigation fee, which the legislation stipulates is “to mitigate detrimental effects of removing traditional rental options for more affordable housing.”

There are currently 48 permitted TGLs in the village, 13 of which are non-operator occupied.

The legislation lays out other hoops that TGL operators would have to jump through, as they would annually have to show proof of residence or, in the case of a non-operator occupied TGL, submit an FBI background check.

Council also eyed changes to the zoning code that would impose additional restrictions on any new TGLs, such as only allowing one TGL per property and capping the number of non-operator occupied establishments to 30% of the total permits.

Those wanting to get a new TGL permit already have to appear before Planning Commission to request a conditional use permit, but the commission has had few grounds to deny a permit. The new zoning changes would give the body more power to add conditions or decline a new TGL’s application.

No legislation was passed, but both measures could become law at Council’s next meeting on May 4.

Council members were generally supportive of the changes to the Lodging Excise Tax, which was having its second reading, but got hung up on late payment penalties that some deemed excessive. The zoning code changes were only a first reading.

Council Vice President Marianne MacQueen objected to a section of the Lodging Excise Tax laying out fines of up to $1,000 and 30 days in jail for failing to pay the lodging tax.

“I think that is exorbitant,” MacQueen said.

MacQueen also wondered why the misdemeanor citation for late payment couldn’t be heard at the local Mayor’s Court instead of Xenia Municipal Court. The legislation gives the option for the case to come before either judicial body.

Council Member Lisa Kreeger agreed that those fines seemed high, and suggested a phased payment increase.

Village Solicitor Breanne Parcels said the high penalties are due to the expense in staff time of having to “chase down” those who don’t pay their lodging tax. Village Manager Josué Salmerón said staff will come back with a new proposal for late fees.

The most significant change to the legislation since its first reading on April 5 was the addition of the $1,500 affordable housing mitigation fee. Salmerón said the money would go into a local affordable housing fund. Previously, the Village was told they could not set up the fund because it lacked a “dedicated revenue source.” Parcels said the money would be used for “affordable housing activities,” such as waiving utility tap-in fees or providing matching grants.

MacQueen said she would like all of the money collected from TGLs to go into the affordable housing fund, not just the mitigation fee. The lodging tax yielded $54,000 for Village coffers in 2019 and $42,000 in 2020.

MacQueen added that the “real issue” is not TGLs but the lack of rental housing in town and that building it requires “concerted community effort.”

“It’s a piece of the puzzle, but not the elephant in the room,” she said of the new restrictions.

Council member Kevin Stokes was supportive of the penalties provided there is enough notice ahead of time, and said the legislation was timely to “tighten things up a bit” with regard to TGLs. He said he was in favor of somehow limiting the number of TGLs in town, but wasn’t sure what the optimal figure was.

“We’ll get to that sweet spot and we’ll get to the right number of TGLs,” he said.

Stokes, and other Council members, also affirmed the importance of TGLs run by villagers at their properties. Housh said it can help make living in town more affordable while offering lodging to visitors who can “come and experience the community.”

“One thing we are not talking about is limiting the ability for operator-occupied transient guest lodging to be able to supplement income,” Housh said. “We as a village have been very appreciative of supporting that activity.”

Several villagers, including some TGL operators, spoke during the public hearing via Zoom on both sides of the issue.

Matthew Carson said the legislation does not do enough to address the speculative housing market that is pricing young families like his out of the market, and out of the village. The proliferation of TGLs, he suggested, has both increased housing prices and reduced stock in town, while outsiders buy up homes as investment properties and rent them out as Airbnbs.

“I don’t think this goes far enough,” Carson said. “This is crisis mode. My cohort of age group have had to leave town.”

Reilly Dixon offered up research showing that Airbnbs raise local housing costs and rents by reducing the supply of housing in a community. As an “increasingly concerned citizen whose block is being eaten up by TGLs,” he said, he doesn’t think that the $1,500 fee is high enough, arguing instead for a ban on new TGLs.

“If Planning Commission and Council approve more — owner occupied or not — my rent will get even higher, and me and my partner will not be able to live here,” Dixon said.

Bob Swaney, who rents out four apartments on North Winter Street and Union Street as part of his Jailhouse Suites business, said that he felt “singled out” as a non-operator occupied TGL. He said he was concerned about the FBI background check, which seems “onerous” and argued that he supports the local economy by relying on local cleaning staff.

“I am 72, this is my retirement income,” he said. “If you want to tax me, I feel a little like I’m singled out.”

Eric Clark, who operates the Library Loft on East Davis Street, argued that those who rent a room in their house shouldn’t have to pay the $100 annual certificate fee, as they are not likely affecting housing affordability. He added that TGLs bring benefits by accommodating visitors.

“[Visitors] become a part of our town, and they spend an awful lot of money downtown,” Clark said. “Yes, we take some properties off the market for people to rent, but there are benefits that come with that. We really need to look at all of those factors before we start trashing the TGLs, asking how we can tax them to death.”

This reporter asked for more information on how the $1,500 was calculated, questioning if it would be an economic impediment for TGLs or would be enough to offset the impact of the loss of an affordable unit.

Other agenda items from Council’s April 19 meeting will be in a future issue of the News.

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