Mission Viejo city officials are looking to make sure the city’s hotel taxes also apply to short-term rentals like Airbnb, boosting more tax revenue for the city.
When people rent rooms, they typically pay a Transient Occupancy Tax (TOT) – commonly known as the bed tax – applied to hotels and other rental properties. That tax is typically sent to a city’s general fund, the most flexible spending fund city officials have.
Mission Viejo already collects these taxes for short-term rentals, but it isn’t formally written into the city code.
And not all owners are paying.
Cheryl Dyas, director of administrative services, said there are about 150 short-term rentals in Mission Viejo, but the city only collected $5,700 in taxes last year from these facilities.
“We do require that short-term rentals pay TOT, and they are required to be registered to do that,” Dyas said during the Jan. 9 council meeting. “While we do have some in the city that do actively on their own do that, it’s not a large number of them.”
The city council approved the first reading of the changes unanimously on Jan. 9.
The second reading was approved on Jan. 23, and the changes are set to go into effect 30 days after that second vote.
“It’s money that we’ve been missing out on,” Mayor Trish Kelley said during the Jan. 9 meeting. “I’m glad that it has been flagged for us and that we’re looking into it.”
Dyas said city staff are looking into ways to monitor and enforce TOT collection for short-term rentals.
Just before the vote, City Attorney Bill Curley clarified that no tax rates are being increased.
Instead, the action is updating the language in the city’s code to reflect that short-term rentals are also included in hotel taxes.
“As the short-term rental world expanded, they came up with new definitions and new titles,” Curley said during the meeting. “This is high-level housekeeping to get our code current. What we had was usable, but it didn’t have all the current lingo in it.”
The updates add definitions for terms like “short-term rental unit” and “online travel company.”
Cities across the county have grappled with short-term rentals and ways to regulate these facilities over the past few years.
Many residents across Orange County have criticized the rentals on occasion for attracting a rowdy crowd that can take up parking spots, overfill trash cans and make too much noise.
City officials in Laguna Hills, Fountain Valley and Costa Mesa have already banned the rentals.
Others allow the units with certain rules, like capping the number allowed in the city. Orange has handed out 125 permits, while Seal Beach capped the total at 33.
Bigger cities hand out many more permits. Newport Beach has reached the city’s maximum of 1,550 short-term rental permits.
Angelina Hicks is a Voice of OC Tracy Wood Reporting Fellow. Contact her at ahicks@voiceofoc.org or on Twitter @angelinahicks13.
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