Short-term rental company Airbnb has agreed to collect and pay hotel taxes on behalf of its Los Angeles hosts under a three-year agreement announced by city officials Monday.
Starting Aug. 1, Airbnb will be responsible for paying the hotel taxes -- also known as "transient occupancy taxes" -- that are owed by hosts who rent out rooms and properties through the company's website and smartphone applications.
City finance officials estimate the taxes could bring in $5.8 million in annual revenue.
Just as with hotels and motels, short-term rental hosts are legally required to pay taxes to the city for renting out their properties, but city officials needed an effective way to ensure they are actually receiving the revenue.
The city is also working to reach similar agreements with other companies that provide short-term rental and home-sharing services.
The agreement comes as City Council members are debating regulation for Airbnb and other online home-sharing services like HomeAway. Proposed regulations that will be considered by the panel include limitations on the number of days properties can be rented out, and requirements that the hosts register with the city for enforcement purposes.
Councilman Mike Bonin called for regulating short-term rentals last year, saying too many property owners were not merely sharing their homes, but evicting tenants and turning their properties into purely commercial hotel and motel businesses.
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Of the tax collection agreement announced today, Bonin said he is "glad to see that Airbnb has agreed to do its part in helping the city collect the transit occupancy tax that it is owed.
"This funding is a vital part of the city's comprehensive efforts to address homelessness," he said. "But it remains urgent for the city to approve reasonable regulations governing the short-term rental industry. We need to let our regulations dictate how much revenue we receive, and not let potential revenue dictate what sort of regulations we craft."
For the upcoming fiscal year, city officials have budgeted the same amount expected to be collected from Airbnb -- about $5.8 million -- mostly toward "rapid re-housing" vouchers to assist homeless people with their housing costs.
The tax collection agreement could be terminated at any time during the next three years if short-term rental regulations are adopted by the city.
