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Short-term rental properties are facing scrutiny in the Queen City following discussions at the two most recent Springfield City Council meetings.
At the June 13 meeting, council learned from Springfield Convention & Visitors Bureau President and CEO Tracy Kimberlin that the city and CVB were jointly missing out on $500,000 per year in tax revenue from short-term rentals, which are not required to remit the city’s 5% hotel/motel tax.
Concerns over missing revenue continued in the June 27 meeting, when Councilperson Abe McGull said he worried short-term rentals were changing the character of neighborhoods.
The meetings seem to have opened the door to discussions about applying the hotel/motel tax to short-term rentals, though no action is planned by council as of press time.
The conversations painted a dim picture of short-term rentals – temporary lodging in places other than hotels or motels, often booked online through providers like Airbnb or Vrbo.
Local proprietors, however, offer a sunnier view of the services they provide.
“We have a lot to offer,” said Adie Williams, who manages nine properties in Springfield through Airbnb. “Some travelers want that neighborhood experience when visiting, and Airbnb gives that to them.”
She added short-term rental hosts often offer a personal touch to guests while boosting local spending. Williams offers guests pages of recommendations of her favorite places to eat or explore, and she believes there is a place for short-term rentals within the city’s tourism ecosystem.
Kimberlin estimated the city has 375 short-term rentals, but city officials say only 183 of these were licensed, as of June.
In a recent interview, Kimberlin told Springfield Business Journal it’s possible 300 of the rentals are homes with multiple bedrooms.
“You could double the number of homes for rent to equate to hotel rooms,” he said. “That is probably somewhere in the neighborhood of 800 hotel rooms and they’re running $150 average daily rate and a 70% occupancy.”
In 2018, Airbnb.com listed 265 properties in Springfield, and the local industry grossed $1.4 million from 15,800 guests, according to past SBJ reporting. The site shows 462 rentals now – significantly over the CVB estimate, without including rentals through Vrbo and other providers.
The Airbnb experience
Williams began with Airbnb by renting a private suite out of her own home, and with it she managed to pay off her mortgage.
“I turned that home into a full-time Airbnb while I rehabbed a new house for myself,” she said.
In Springfield neighborhoods, a short-term rental where an owner also lives on the premises is a Type 1 rental property. One where the owner lives off site is considered a Type 2.
Those types of rentals are in districts zoned for single-family residential and residential townhouses. Each requires buy-in by a majority of adjoining neighbors, as well as registration with the city.
There is also a Type 3 short-term rental, which can be in any other zoning district.
City code specifies that those operating short-term rentals without a license be restricted from obtaining one for up to a year. Council voted on regulations to short-term rentals in January 2019.
Williams does not object to operating under a local lodging tax.
“It just is an added expense and something to keep track of,” she said. “That’s where I hope they keep in mind we are smaller-time operations.”
Airbnb provides guests with something different than hotels, Williams said.
“Sometimes guests want a space they can gather with family in the area, or they want to cook a meal for themselves or their college student child who attends Missouri State,” she said. “They can do that in my spaces.”
There goes the neighborhood
Councilperson McGull is not convinced. He noted some neighborhoods have covenants that restrict commercial establishments and allow only single-family residents. A short-term rental operates like a hotel, he said.
“It kind of destroys the character of the neighborhoods,” he said. “People purchase a home with the idea they’re going to live next door to someone they know with a vested interest in the neighborhood, like they have.”
He added that short-term rentals provide no revenue to the city while hurting the hotel and motel industry, and they can also create a nuisance when rented for parties. “The neighbors have to deal with it,” he said.
McGull is on record for opposing home-based businesses. In January, he registered his objections to acupuncture being offered in a home.
“I’m all in favor of people making money – I love the free-enterprise spirit of the American people – but there are commercial places for that,” he said.
Williams, however, said the city has provided some density limits to ensure there won’t be too many short-term rentals in one area.
“Mine are peppered next to owner-occupied and rental homes in Rountree and the surrounding neighborhoods,” she said. “I don’t think I’ve ever had a neighbor call me with any complaints other than something very minor. It’s been a positive experience for us all.”
The CVB has a $4.2 million operating budget, and about $3.3 million comes from the city’s hotel/motel tax.
Kimberlin said in May, the most recent month for which figures are available, the city and CVB each lost $25,000 from would-be lodging tax revenue from the 375 rental properties. By the end of May, the city and CVB had lost $84,000 each in tax dollars.
Kimberlin told SBJ in a recent CEO Roundtable interview that for short-term rentals to be included in the lodging tax, council would have to put it on the ballot and voters would have to approve the measure.
Alexis Deane-Downing, board president of the Springfield Hotel and Lodging Association, also shared concern at the roundtable that companies like Airbnb can offer almost anything in terms of amenities. She supports including them in the city’s hotel tax collection in order to create an “equal playing field.”
Paul Day, another Type 2 short-term rental proprietor, said he has no problem with charging guests the tax as long as Airbnb takes it out on the booking.
“Right now, they already take out a lodging tax, so I’m not sure what that is for if it’s not the city tax,” he said.
An Airbnb receipt from one of his recent guest visits showed a couple paid $99 per night for two nights, plus a $45 cleaning fee, a $36.42 guest service fee, a $15 pet fee and $20.90 in what was referred to by Airbnb as occupancy taxes, for a total of $315.32 for a weekend stay.
Lara Dailey, Airbnb’s public policy manager, said Airbnb has an agreement with the Missouri Department of Revenue to collect and remit state-administered taxes on behalf of hosts – as Day’s receipt indicates. She added short-term rentals can be a source for meaningful tax revenue for communities.
“We stand ready for work with local leaders on any changes necessary to enable the city to collect lodging taxes directly from all short-term rental platforms,” she said.
Dailey said Airbnb has collected more than $4 billion in tourist taxes globally.
“In the U.S., we collected and remitted a total of more than $1.5 billion in tourism taxes in 2021, in all 50 states plus the District of Columbia and Puerto Rico – an 87% increase over 2019,” she said.
Additionally, some residents have found renting rooms a satisfying sideline.
Sally Frisbie said she and her husband, Clay, own two small cottages that are short-term rentals, and they split time between them.
She said the city does a good job of limiting the number of short-term rentals per neighborhood, and she suggested city leaders consider a law to keep short-term rentals under local ownership.
“This will help ensure our neighborhoods are cared for by the people that care about them most and call them home,” she said.
McGull noted not everyone agrees with him about the issue, but he thinks the rentals put added pressure on city staff, which must manage whether they follow the rules.
“These short-term rentals are going to come to a head sooner or later,” he said.
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Taxing them (short term rentals) is a "no brainer"...it helps the CVB, it helps the city, and it helps the the hotels who are competitors, enjoy an equal playing field.
Why is this even being questioned?