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Home My WebLink About2913-0415 Documents Submitted 2009-11-20 Reeder Reservoir Drawdown 10/17/2001 ended mandatory water curtailment. Mae 8/1612001 Started Water Curtailment 8/25!2009 Started Water Curtailment & 10123/2009 ended TO supplemental supply started mandatory water curtailment billing. 2001-2008 Average Target A 2009 2001 Last Curtailment PQ~ ~aA 3, boa ~oA A, 11 -y ~V ey N-Y Ii 11~; 10 g108-54 Right Water Right Use!Engr\Backgroud\Supply12009-11-20 Reeder Drawdown.xls Sl~bn.;al¢d., lFor L{ AS 113 • S S b ~ iJ V1~,~L,~-„-, {'~✓/gyp April 15, 2013 TO: Ashland Mayor and Councilors From: Ashland Lodging Association Board of Directors Subject: Council Study Session - VRBO Tax and License Requirements Dear Mayor and city Councilors; In anticipation of the Ashland City Council's Study Session of April 15m to discuss VRBO Tax and License requirements, the Board of Directors of Ashland Lodging Association, an organization of 50 licensed hotels, motels, inns, B&Bs, vacation rentals and cottages in Ashland respectfully presents its position for your consideration. In his memorandum to the City council for the April 15 Study Session, the City Attorney lays the foundation for the necessary code changes and proposes some policy questions for the council to answer. As the licensed lodging professionals, we would like to offer our point of view on some the City Attorney's statements and the policy questions. The City Attorney states: "establishing a level playing field for all short term lodging arrangements should be conceptually straightforward and readily achievable with some relatively minor changes to the relevant ordinances." ALA Position: We agree that there should be a fair and just "playing field" for all legal short-term lodging establishments. It is important to distinguish between the two kinds of illegal properties: those that are in R-i zones, and cannot become legal; and those in zones that could become legally permitted and licensed. Majority of the Vacation Rental by Owners are located in the city's Single-Family R-1 Residential zones, where short-term rentals are prohibited by the municipal code. Therefore, the "relatively minor changes to the relevant ordinance", does not and should not apply to those homes in R-1 zones. On the other hand, those properties that are operating illegally and are located in R-2/R-3 zones should be encouraged to apply and go through the process to become licensed and legal by obtaining Conditional Use Permits, Business License and other relevant permits. One of the A1Xs goals is to mentor those owners who are located in R-2/R-3 zones to become legal. The City Attorney further states: "While there can be little doubt that the current business licensing and lodging tax requirements both apply to vacation rentals by owners, the two provisions use different terminology and each contains ambiguities that may partly explain lax compliance by owners of homes used for vacation rentals." ALA Position: While the provisions may use different terminology, the code is clear in what is required to operate a legal lodging establishment, nonetheless, we agree if any ambiguities exist, it should be eliminated. In May 2012, the city sent over 40 "Cease and Desist" notices to illegal short-term vacation rental owners; and throughout the year since, few more notices have been sent because of citizen complaints or city staff initiative. Many of these owners have continued to rent illegally. These owners cannot possibly claim ignorance of the city codes. ALA members have gathered evidence of these illegal activities and have submitted them to the City staff for processing. These owners are people from all walks of life including a city commissioner, attorneys, business owners, April 15, 2013 Council Study Session - VRBO Tax and License Requirements professors and other professionals who are clearly aware of the City ordinances but chose to ignore it! Furthermore, these owners advertise their properties on websites like ww.v.-.mbo.com (currently tat properties listed for Ashland Oregon), where the site administrator require a rental owner to acknowledge and accept the company's Terms and Conditions. All these websites explicitly require that owners will abide by local municipal codes and state laws. Below is excerpt from www.vrbo.com User Agreement, Terms and Conditions: "Members further agree that they are responsible for and agree to abide by all laws, rules and regulations applicable to the advertisement of their rental property and the conduct of their rental business, including but not limited to taxes, permit or license requirements, zoning ordinances, safety compliance and compliance with all anti-discrimination and fair housing laws, as applicable." City Attorney's Policy Questions: • Should owners who have been using their homes for short-term vacation rentals be required to pay penalties pursuant to AMC 6.04.150 for not getting business licenses when required in the past? ALA Position: We strongly believe the same set of rules should apply to all businesses, that is if a shoe store or a cafe is required to pay penalty for not getting a business license, so should an owner of legal short-term vacation rentals. Should the City immediately begin requiring full payment of the TOT for short term vacation rentals by owners given the past lack of general awareness and enforcement? ALA Position: This question presents more of a conundrum. While there has been a general lack of enforcement, we don't agree that there's been general lack of awareness. As to requiring an owner to remit unpaid TOT, although the City is at a financial disadvantage because of the foregone TOT revenues, whether collected or not by the owners of the short-term vacation rentals, how can "the City immediately begin requiring full payment of the TOT for short-term vacation rentals by owners" knowing that the entire business is based on illegal activity under the City codes? Conversely, if the City requires payment of TOT from an illegal short-term vacation rental owner, is the City telling that owner that he/she does not need to become a legal business under the City codes? • Should owners who have been using their homes for short-term vacation rentals be required to pay TOT taxes on revenues from rent in past years? Should penalties for non-payment of the TOT be imposed in these circumstances? o Should the answer to these questions vary according to whether the owner has been occupying the home for at least most of each year in the past? o Should the answer to these questions vary according to whether the owner ceased such short-term rentals after becoming aware of the applicable lodging tax and business license requirements? ALA Position: Yes, the owners who have been operating illegally and not collecting TOT should be required to pay a penalty at least equal to the lost TOT that would have been otherwise collected and remitted by licensed lodging establishments. Page 2 April 15, 2013 Council Study Session - VRBO Tax and License Requirements It should also not matter whether the owner has occupied the home, cottage, condo or apartment for any part of the year. If the property was licensed and permitted, TOT would have been collected for the period of the year that was rented for short-term lodging. Additionally, many of these owners have been in the short-term rental business for a number of years. This information is readily available on the owner's advertising page of sites such as www.vrbo.com. It should also be noted that many of these owners are actually collecting io % TOT from the guests and are not remitting it to the City or the State. The Ashland Lodging Association has gathered substantial evidence on these owners and we are happy to share it with the City. • The City Attorney states: Should the City undertake proactive enforcement -as opposed to complaint-driven enforcement? If so, where should the resources for more active enforcement come from? ALA Position: We are strong proponents of proactive enforcement as the current system of the "complaint-driven enforcement" is certainly not working. There is sufficient evidence to prove that the number of these illegal operations have significantly increased over the years. Without active enforcement and penalties, there is no incentive to operate legally. As a matter of fact, ALA and the City staff are aware of at least two former licensed lodging establishments that have stopped renewing their licenses and continue operating without any fear of reprisal. In addition to the negative side-effect on housing supply and long-term rental prices for local residents, as more of these operations come online, more TOT is siphoned off from the licensed lodging operations and the City loses more and more over time. As to the question of "where should the resources for more active enforcement come from?" that is probably the easiest question to answer: from the increase in TOT revenues by active enforcement. We estimate the lost TOT revenues to the City range conservatively from $75,ooo, to realistically more than $ioo,ooo annually. These estimates are based on the review of the illegal vacation rental by owner's availability calendars, published on websites such as, www.vrbo.com,,vvww.airbnb.com and www.homeaway.com. We are happy to share our data with the City Finance Director at any time. Sincerely; ALA Board of Directors: Abi Maghamfar, President Lois Van Aken, Vice President Corrine Lombardi, Treasurer Ellen Campbell, Secretary Annie Dunn, Member At-Large Crissy Barnett, Member At-Large Barbara Hetland, Member At-Large Cc: David Lohman, Ashland City Attorney Barbara Christensen, City Recorder page 3