Paso Robles looking to regulate short-term vacation rentals

A proposed ordinance in Paso Robles, California, that would regulate short-term vacation rentals is going before the City Council. The Paso Robles Planning Commission recently voted unanimously to recommend that the full council approve the proposal.

Currently, short-term rentals fall under city transient occupancy lodging regulations. The proposed legislation would create rules specifically designed for short-term vacation rentals.

The new law would require short-term rental operators to obtain business licenses and pay lodging taxes, with short-term rental license requirements for operators in residential districts.

The proposal also addresses concerns about the impact of short-term rentals on neighbors with “good neighbor” requirements, including distributing guidelines to renters on respecting neighbors and the creation of a hotline system for resolving neighborhood issues.

Currently, there are about 200 licensed vacation rentals in Paso Robles, although the city estimates that there are actually around 300 such businesses operating. The number of licensed short-term rental businesses in the city grew more than 150 percent in three years, from just 71 in 2014 to 182 in March 2017.

Paso Robles collects approximately $200,000 a year in revenues from short-term rentals and the city estimates that it could collect another $100,000 annually if all short-term rental businesses are licensed and generating taxes.

Short-term rentals in Paso Robles are subject to a 10 percent Transient Occupancy Tax (TOT), 1 percent San Luis Obispo Tourism Marketing District tax (TMD), and 2 percent Paso Robles Tourism Improvement District tax (TID) for a total lodging tax of 13 percent.

San Luis Obispo County, where Paso Robles in located, levies its own transient occupancy tax on short-term rentals located in unincorporated areas of the county outside of Paso Robles and other cities. The county recently reached an agreement with Airbnb, which is now collecting county lodging tax on rentals as of Oct. 1.

Short-term rentals in San Luis Obispo County are subject to a combination of 9 percent TOT, 1 percent TMD, and 2 percent Tourism Business Improvement District (TBID) tax, depending on the location of the rental.

The scrutiny on short-term rentals in both Paso Robles and San Luis Obispo County is part of a growing movement nationwide. Communities are increasingly aware of the growing popularity of short-term vacation rentals and home shares, and the tax revenue they can generate.

In this changing environment, where regulations are quickly evolving and crackdowns on under-the-radar rentals are rising, short-term vacation rental owners need to be aware of their licensing and lodging tax responsibilities more than ever. Even where Airbnb collects taxes on behalf of hosts, hosts are ultimately responsible to make sure they’re following all the rules.