REPORT TO COUNCIL
SUBJECT
Title
Authorize the City Manager or His Designee to Waive Transient Occupancy Taxes for Short-term Rental Hosts Who Come into Full Compliance with the Sunnyvale Municipal Code.
Report
BACKGROUND
Transient Occupancy Tax (TOT) has been collected from hotels since 1965 in accordance with the Sunnyvale Municipal Code (SMC) Chapter 3.16. At that time TOT was applicable only to the hotel industry, but now Sunnyvale residents are offering accommodations to visitors in their homes. Private, short-term rentals (STR) in residential areas have become an attractive option for visitors. With the increased popularity of STRs, Council took formal action to amend the SMC in 2015. Regulations allow hosted rentals accommodating up to four adult guests; requirements include the collection and remittance of TOT. In 2018, Council approved a Voluntary Collection Agreement (VCA) with Airbnb to remit TOT on behalf of their hosts. Airbnb provides the leading internet platform for SRTs and captures most the TOT due to the City. Other hosting platforms are used for booking accommodations and they do not remit TOT on behalf of their hosts. Staff intends to collect TOT from all hosts operating a STR in Sunnyvale.
Currently, the City has the ability to contact hosts directly through an outside vendor who identifies hosts who are operating an STR without a TOT certificate or STR approval. Resources to collect TOT will include assessing back taxes, penalties/interest, managing the expected push-back from hosts and conducting administrative hearings as needed. With the adoption of the VCA with Airbnb, the City agreed not to seek back taxes from Airbnb hosts prior to the effective date of the VCA. However, this provision in the VCA only applies to Airbnb transactions, not to hosts who used other platforms.
EXISTING POLICY
Council Policy
SMC Chapter 3.16. Transient Occupancy Tax
ENVIRONMENTAL REVIEW
The action being considered does not require environmental review ...
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