CLEARLAKE, Calif. – The Clearlake City Council heard the latest from city staff about its efforts moving forward to collect taxes from vacation rental owners who advertise on the Internet.
At the June 10 meeting, Assistant City Manager Alan Flora gave the council an update on the city’s collection in this new year of transient occupancy tax – or bed tax – and assessments for the new tourism district assessments.
He said the city collects a 9 percent transient occupancy, or TOT, tax. This year, thanks to the formation of the new tourism improvement district, another 1.5 percent will be collected. Those funds will be dedicated to marketing Lake County as a destination.
The city can retain 2 percent of what it collects to cover administrative costs. Flora said the tourism improvement district’s first year budget is $170,000. City Manager Greg Folsom sits on the district’s board.
Flora said in this year’s budget the city anticipated $285,000 in TOT tax. In the 2017-18 fiscal year, it took in $330,000.
The data showed a significant spike in TOT tax for the city in the 2015-16 fiscal year, with the total amount at just over $350,000.
“It is good to see the increase,” said Flora, adding that year’s TOT spike was due to the disasters in Lake County.
He said the city expects to the actual TOT income in this fiscal year to also be about $350,000.
Flora then updated the council about the city’s new approach to collecting TOT tax for short-term vacation rentals of 30 days or less – which normally are houses but could be just a room in a house – that are commonly used by tourists or vacationers.
He said they’re rented through a third party such as AirBNB, VRBO and FlipKey. Many of those vendors don’t require operators to collect the TOT tax that needs to be charged.
“That has changed somewhat,” said Flora, noting that some of those companies have agreements with jurisdictions for TOT collection, but it’s not a universal practice.
AirBNB, Flora explained, doesn’t disclose addresses until someone makes a booking, which makes it quite difficult to determine exactly where they are located and who owns them.
He said city code requires TOT collection for any location occupied for less than 30 days for lodging, including campgrounds. However, very few are paying.
Flora said city staff did some research and identified 16 listings and 10 owners. Another 10 listings have eight owners who aren’t identified.
On Jan. 1, the city sent out letters to the 16 identified vacation rental operators notifying them that they are required to pay both the TOT and tourism improvement district assessment going forward. Flora said the rentals listed online range from $53 a night for an apartment to more than $400, and many are on the lakeshore.
Councilman Dirk Slooten asked if the city requires a permit for them to operate. Flora said they are required to have a city business license.
Flora said staff is crafting a whole section of new city could specific to this type of use. The city currently doesn’t have a way to regulate them but expects to have that with zoning ordinance update.
Councilman Russell Cremer asked how the city is enforcing it now. Flora said they’re not.
He said that the city sent out the Jan. 1 courtesy letter, and will send a followup letter informing them of penalties and interest in February if there isn’t compliance. Penalties, interest, fines and retroactive TOT may be applied.
Flora said that, with the average listing renting for $140 a night, they’re expecting potential TOT revenue of more than $71,000 for all 26 listings and a little under $50,000 for the 16 sites for which the information letters were issued.
Clearlake resident Henry Bornstein, a member of the board of Highlands Harbor Community Association, said they have had plenty of problems with vacation rentals in their area, recounting young people in huge boats racing up and down the creek.
“If you want to know where they are, we can tell you,” Bornstein said.
New District 2 Supervisor Bruno Sabatier said he calculated that the city of Clearlake alone would generate about $60,000 for the tourism improvement district.
Sabatier said he appreciated the tone of the letter from the city to vacation rental owners, noting that it offers a clean slate moving forward.
In other business, the council approved its 11th agreement with a cannabis business. The agreement is for Brian Galperin’s proposed cannabis manufacturing operations for Bliss X at 14915 Olympic Drive.
The council also rejected an offer in compromise to satisfy the abatement lien on 3800 Howard Ave. The owner, who said he purchased the property at a tax sale unaware that there was a large lien against it, asked for a 50-percent reduction, which would have had him pay $2,250.
The council also received a $49,826 check from Kin Ong, deputy general manager of the Public Agency Risk Sharing Authority of California; City Clerk Melissa Swanson went over with the new council norms and procedures; the council approved the mayor’s appointments for the year and appointed Sabatier and community member Sheryl Almon to the Measure V Oversight Committee; and adopted the recognized obligation payments schedule for the Clearlake Redevelopment Successor Agency.
City Attorney Ryan Jones said there is no reportable action from closed session to discuss labor and property negotiations.
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