Short-term sighted: Sacramento City Hall complains it’s not getting its cut of Airbnb rentals

Eighty-five percent of Airbnb operators are not paying their cut to the city under a relatively new program intended to regulate the booming short-term rentals marketplace—and now the city’s about to get tough.

That’s the message from the Sacramento City Council’s Law and Legislation Committee meeting on December 12. Earlier this year, the council enacted codes requiring anyone renting personal living spaces through Airbnb and VRBO, another website facilitating boutique rental listings, to obtain permits, limit their guests to six per night, and pay the same transient occupancy taxes that hotels collect. But that’s not the way things have playing out since the code went into effect, says Finance Director Brad Wasson.

“There’s an estimated 600 short-term rental operators in the city of Sacramento, and to date we’ve issued 94 permits,” Wasson told council members. “Quite frankly, we were expecting more compliance.”

Making matters worse, Wasson added, were the 43 complaints he’d recently received from different neighbors of Airbnb operators—complaints his code enforcement officers have trouble resolving in cases where permits haven’t been issued. Wasson wants the City Council to sign off on hiring a data-collection firm to monitor the online activities of Airbnb operators. He also wants elected officials to clarify whether the code limiting a property to six guests per night refers to overall parcels or individual structures on a parcel.

River District Councilman Jeff Harris, who said the “lion’s share” of Airbnb complaints have come from his constituents, had a clear idea about that. “When we set the limit at six people, I certainly felt that it was six people per property, and even at that, it was stretching it,” Harris said. “Short-term rentals can have an adverse effect on the immediate neighbors. … All of the sudden it can be something like a bed-and-breakfast or a de facto hotel.”

Harris believed most of the complaints the city is fielding involve off-site Airbnb operators, as opposed to locals trying to earn extra income. “We also know that some speculators from outside the city have purchased homes and use them as a business,” Harris observed, “because short-term rentals can be very lucrative and more than pay the mortgage on a property.”

Harris’s comments about off-site Airbnb operators raised an additional concern with Councilman Steve Hansen. “How many of our houses in town, and our apartments, are now being occupied in this manner, without a primary tenant in there, and what does that really do because of the city’s housing shortage?” Hansen wondered aloud. “If the city has to declare a housing crisis, we may need to manage the number of those permits.”

Harris agreed and went a step further, directing Wasson to amend the code in such a way that if an Airbnb owner is caught advertising a unit for more than six people, the owner will have their permit revoked.

Councilman Eric Guerra was also supportive of a crackdown. “My concern is the scofflaws who are trying to make a buck here,” he said.

The finance department is now finalizing a plan to amend the short-term rental code and hire a tracking firm. From Harris’ perspective, if that results in fewer off-site Airbnb operators in Sacramento, so be it. “They don’t have any skin in the game,” Harris said. “Considering that other municipalities have outlawed those, after trying them for a while, because they had so many complaints, and it was too costly to gain compliance, I think we should be keeping our eye on that.”