County’s Tourist Development Council members voice concerns about whether county is collecting all the applicable ‘bed tax’ revenue from online platforms such as Airbnb
As of the end of 2019, the Sarasota County Tax Collector’s Office had 8,152 accounts that collect the county’s 5% Tourist Development Tax — or “bed tax” — on rentals of accommodations for six months or less time, Sherri Smith, chief deputy tax collector for the county, reported to members of the Tourist Development Council (TDC) on Feb. 20.
That number actually was down 7.7%, she said, compared to the figure for 2018.
Of those accounts, Smith continued, condominiums made up the largest portion — 71.97% — with houses in second place at 20.09%.
In reviewing highlights of the Tourist Development Tax (TDT) data for the 2019 fiscal year, Smith noted that for the fourth year in a row, hotels/motels were the leading group for revenue collected, generating 44.46% of the total. In second place, condominiums brought in 36.4% of the record-breaking total of $23,349,088.39 at the end of the 2019 fiscal year.
Before the 2016 fiscal year, Smith told the TDC members, “Condominiums generated the most revenue.” Each subsequent year, she said, “The gap narrowed.”
Even though two smaller hotels closed during the 2019 fiscal year, Smith noted, the Tax Collector’s office welcomed one new hotel, “and [we] have several on the horizon.” Among the latter, she emphasized, will be a Hampton Inn & Suites in North Port, that city’s first hotel since 1973.
Each fiscal year runs from Oct. 1 through Sept. 30.
Online platforms — such as Airbnb and HomeAway — accounted for 8.36% of Sarasota County’s TDT revenue in the 2019 fiscal year ($1,952,774), she said, with house rentals bringing in 7.03% and campsites at 0.38%.
The $23.3 million collected in the 2019 fiscal year was 2.59% higher than the total for FY18, Smith noted. Yet, “We had quite a significant amount of red tide” in the early part of the 2019 fiscal year.
As for monthly totals: “We had an especially strong August,” Smith pointed out. The revenue for that month was up 26.96%, compared to the figure for August 2018, she said. September 2019 also saw a big jump from the previous year, Smith noted: $18.61%.
For the second year in a row, Smith continued, collections for a single month exceeded $4 million. In fact, she said, that month — March — had revenue of $4.25 million. February 2019 was in second place, she said, with $3.03 million, and January had a total of almost $2.62 million.
Then Smith turned her focus to delinquent accounts. Each month, she said, the two staff members of the Tax Collector’s Office who handle the TDT collections contact each account from which the office receives no report. Smith called those employees — Kenni Gregg and Nicole Brown — “a friendly but very persistent collection team.”
Phone calls and emails are the first means of contact, Smith continued, as those are the “most cost-effective” means of communication. If those efforts do not prove successful, Smith said, then staff sends a formal letter to the account, seeking a remedying of the delinquency. “Sometimes we have to warn them that we have a beautiful, colored sign that we could place on their [property],” Smith added, so people will know those accounts are delinquent. “That, my friends, gets their attention, and typically we get payment shortly thereafter.”
Smith emphasized that Gregg and Brown “touch every delinquent account every month.”
When no attempts at persuasion prove successful, she said, the Tax Collector’s Office files warrants; it had to resort to that measure for two accounts in FY19, she added.
Altogether, the office has four outstanding warrants, she continued. One is on a payment plan, and staff is working on the other three “to get them on a payment plan.”
Thanks to enforcement efforts, Smith told the TDC members, the Tax Collector’s office added 1,114 new accounts in the last fiscal year, along with an extra $175,000 in bed tax revenue. The latter figure was up from $137,000 in the 2018 fiscal year, she said.
About those online platforms …
In turning to figures about revenue from the online platforms, Smith explained that Sarasota County did not get an agreement signed with Airbnb until April 2017, so the company did not make its first collections until May 2017.
For the 2017 fiscal year, she continued, Airbnb paid $310,000. The next year, the amount grew to $1.1 million; for FY19, it was more than $1.6 million, she noted.
Through the first three months of the current fiscal year, Smith said, Airbnb has paid the county $481,488.75.
In April 2019, she pointed out, the Tax Collector’s Office worked with the Office of the County Attorney to execute collection agreements with HomeAway and TripAdvisor, including those companies’ subsidies.
However, she explained, “Those platforms will not give permission for us to share their individual collection amounts,” and they will not provide staff with the numbers of homeowners renting accommodations. They say the reason they will not provide the latter data, Smith noted, is because the figures change “each and every month.”
Since April 2019, she continued, the Tax Collector’s Office has received more than $537,000 from HomeAway and TripAdvisor.
Starting with this fiscal year, Smith explained, the Tax Collector’s Office added a line to one of its monthly TDT revenue reports — which shows how much money came from each location — to include the online platforms. The figure listed on that chart represents all of the companies, including Airbnb, she said.
The staff takes all sorts of opportunities, she pointed out, to educate homeowners about the Tourist Development Tax, “to bring them gently into compliance and collect any [money] that may be due.”
TDC member Angus Rogers, founder and CEO of Floridays Development Co. — which constructed the Art Ovation Hotel in Sarasota — told Smith that getting rental information and the TDT revenue data from the online platforms “is vitally important. … I don’t know what means you have to twist arms to get more of these statistics, but I would implore that you do so.”
Other Florida counties have taken Airbnb to court in an effort to get details about that company’s hosts, Smith replied. In both cases — involving Manatee and Palm Beach counties — the judges ruled that Airbnb “did not have to produce that information,” she added.
Moreover, bills have been filed in the Legislature this year to restrict local governments’ efforts to regulate short-term rentals, Smith pointed out.
“It’s tough from a zoning aspect,” County Commissioner Charles Hines, who chairs the TDC, pointed out of the vacation rental situation. Single-family neighborhoods, he continued, “are suddenly turning into … mini hotels, basically.”
In response to a question from TDC member Kim Matlock of Matlock Digital Group in Venice, Smith explained that Airbnb handles its TDT revenue just as hotels do: It calculates the 5% tax on the number of rentals of accommodations in the county and remits the appropriate amount to the Tax Collector’s Office.
The Tax Collector’s Office staff does not know how many rooms each hotel rents each month, she continued, but the Sarasota County Clerk of the Circuit Court and County Comptroller does audit hotel records from time to time “to verify all of that information.”
Rogers protested that a big difference exists between hotels and the online platform rentals. Each hotel operates in one location, he pointed out. However, the accommodations rented through Airbnb and the other online platforms are widely scattered, he said. “You’re getting one check that could be from 1,000 different properties.”
Because of the way Sarasota County’s agreement with Airbnb was structured, Smith responded, the Tax Collector’s Office “could certainly request the [Clerk of Court] to do [an audit].”
Additionally, she explained, the Sarasota County contract allows the Tax Collector’s Office to request an audit of the records of a person who rents property through the online platform “and assess those people” who were not paying the Tourist Development Tax before the Airbnb agreement went into effect.
Vice Chair Norman Schimmel told Smith that, until a level of technology becomes available to enable thorough checks of all rental records, he believes the county will not get the total Tourist Development Tax revenue it is due.
“I think you’re absolutely right,” Smith told him.
Smith did explain that best practices for collecting revenue from online rental platform hosts has been a big topic of discussion among attendees at meetings of the Florida Tax Collectors Association. “We get better ideas on how to track that money down,” she said, and the Sarasota County staff offers tips about initiatives it has found to be successful.
For example, she continued, the Sarasota County staff was able to get a free program developed by the Monroe County Tax Collectors Office, which enables Sarasota County employees to compare data from Airbnb with details from the Property Appraiser’s Office’s Geographical Information System (GIS) software to help pinpoint properties being used for Airbnb accounts. The county Tax Collector’s Office staff also checks on whether owners of those Airbnb accommodations have the required county business license and whether they are claiming homestead exemptions, which are not legal in those circumstances, she noted. The staff shares its findings with the county’s Code Enforcement Staff and the Property Appraiser’s Office, Smith added.
“It’s a difficult job,” TDC member Jill Luke, a North Port city commissioner, told Smith. “It’s going to get worse,” Luke added, if the Legislature approves a new short-term rental law that pre-empts local regulations already in place.
“Hopefully, Sarasota County’s rules [will] remain,” if the proposed state law passes, Commissioner Hines said. Yet, Hines made it clear that he is concerned that existing regulations no longer would be “grandfathered in.”