City leaders believe Corpus Christi is missing out on hundreds of thousands of dollars a year in taxes from short term rentals on sites like AirBNB.
The city has been looking for a way to start collecting those taxes, and a recent Supreme Court ruling may pave the way for that to happen.
That ruling is Wayfair v. South Dakota. It allows cities and states to require online merchants to collect all required taxes, including Hotel Occupancy Tax
“Just from AirBNB alone, it looks like we’re nor collecting about $600,000 a year,” said Greg Smith, City Council, District 2.
Smith is for short term rentals, and for good reason. Of the hundreds of homes in Corpus Christi listed on AirBNB. several are in Smith’s district; including on Padre Island.
According to AirBNB’s website, several Padre Island condos are available as short term rentals. The city has no way of knowing who owns them, or if those owners paying Hotel/Motel Tax.
That’s because the city doesn’t have a registry of short term rental owners. Also, rentals shorter than 30 days are prohibited by city code, unless that home is zoned as a bed and breakfast.
“There’s a lot of rentals in residential neighborhoods that are not allowed by our current zoning ordinance,” said Smith.
Currently AirBNB collects 6% in state taxes. Local short term rental owners are supposed to pay 15% in occupancy taxes, but doing so creates another issue.
“If you’re in violation of zoning and you do send that in, that proves you are violating the zoning in that neighborhood,” said Smith.
Smith says money collected through hotel/motel taxes helps bring more visitors to town by maintaining attractions like the American Bank Center, and local beaches.
“That money is used to promote tourism, and this is money we’re not getting,” said Smith.
City staff is expected to propose a way to collect these taxes to the council in June. Smith says there are bills in Austin which could affect the proposal, so the city wants to wait until after the legislative session.
Smith says the city could start collecting Hotel/Motel taxes on short term rentals as early as July.