Rental Property Owners Oppose Transitional Occupancy Tax Increase | Latest news
Eleven local business and rental property owners told the Nelson County Board of Supervisors on May 10 that they should not expect to collect double the current occupancy tax rate from their tenants if other tenants do not perceive at all.
County staff proposed increasing the Transient Occupancy Tax (TOT) – levied on hotels, motels, campgrounds and other facilities offering temporary accommodations – from 5% to 10%. The council set its proposed county budget for fiscal year 2023 to include the $1.3 million in projected revenue from the increase.
Beth-Anne Driskill, General Manager of Crabtree Falls Cabins, addressed an issue she first raised at council in April. Driskill maintained that many independent tenants, who use vacation rental platforms like Airbnb and Vrbo to rent out their properties, do not collect the local transient occupancy tax from their tenants.
“We would like to play on a level playing field and others don’t always follow those rules,” Driskill said.
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Wintergreen Property Owners Association executive director Jay Roberts told the council that doubling the tax would be like using “a hammer for something that requires a screwdriver”, and urged the council to work with owners instead to resolve the problem of unequal collection.
Tax Commissioner Pam Campbell said her department has done its best to police short-term rentals, often identifying tenants who don’t pay the tax via social media posts. She told the board that her department collects from more than 540 properties listed on Airbnb in the county and also receives a lump sum of local tax revenue from Vrbo. Campbell explained that Vrbo does not tell his department how many properties his payment is collected from.
“We do everything we know how to do. Of course we are missing people and we could do better,” she said.
A search for rental properties in Nelson County on Airbnb yields 729 “stays.” The same search on Vrbo yields over 300 properties.
According to Airbnb’s website, hosts using the platform must manually collect local occupancy taxes “unless automatic tax collection and payment is configured for their jurisdiction.”
Airbnb only lists Arlington County, Clarke County, Abingdon, Alexandria, and Blacksburg as jurisdictions in Virginia that automatically levy a regional transient occupancy tax on reservations.
Supervisors have argued the tax affects tourists and not Nelson County citizens, while some rental business owners say a higher tax will drive tourists away and make it harder for them to stay in business .
“The phone starts ringing again. People are starting to come back and at a time when we really need a bounce back, I’m afraid this tax will do the opposite and set us back again,” Jay Gamble, general manager of Wintergreen Resort, told the council. administration.
Hayes Humphreys, COO of Devil’s Backbone Brewing Company, spoke about the effect an increase in TOT could have on the food and beverage industry in Nelson County.
“Anything we do to discourage people from staying put and spending their money overnight in the county rather than returning to their localities when they get home has a significant negative impact on our business,” Humphreys said. .
County Administrator Steve Carter reminded the board that it had reached consensus at a previous budget work session to increase funding for the school division by $1.5 million over the course of fiscal year 2023. Carter said the board designated the planned $1.3 million of a TOT increase to go to schools.
Supervisor Tommy argued that the county could offset budgeted revenue by collecting from all short-term tenants.
“I can think of a lot more people not paying this tax than people paying this tax,” Harvey said.
Supervisor David Parr said he did not recall allocating TOT revenue to schools: “I feel like ‘schools’ is a good buzzword for a bad economic decision.” He withdrew his earlier support for raising taxes.
Parr said he could not support an increase to the existing rate, “until we are comfortable and confident that we are collecting at least 80% of this tax locally.”
Board Chairman Jesse Rutherford said he would lead a subcommittee to resolve the issue with Supervisor Ernie Reed, county staff Pam Campbell, director of planning and zoning Dylan Bishop and the “Community Stakeholders” to represent the county’s hospitality and lodging industry.
The board took no action on the TOT but planned to meet for another budget work session on May 18.