Legislators discuss wisdom of adding room tax
With the growing popularity of short-term rentals made through platforms such as Airbnb, lawmakers in Putnam County are looking for ways to embrace visitors while making sure neighborhoods aren’t overrun — and also get a piece of the profits through a room tax.
According to Airbnb, hosts in Putnam County in 2019 earned $10 million from 57,700 bookings.
Eliza Starbuck, the president of the Cold Spring Chamber of Commerce, noted at the county’s Feb. 18 Economic Development Committee meeting that the issue of short-term rentals has been polarizing.
She told legislators that the Cold Spring Chamber supports regulating the rentals but says they must be “clearly defined” in zoning codes and “fairly taxed so they contribute to the region’s economic growth.”
She said the chamber is particularly concerned about homes being converted into short-term rentals because “such conversions deplete the residential building stock, erode neighborhoods and compete unfairly with the hotel industry.”
Starbuck said her organization would like to see a room tax collected at the county level on property rentals. She said neighboring counties that impose occupancy taxes of between 2 and 6 percent have not seen a major loss of tourists.
Sam Oliverio, a former county legislator who is now the Putnam Valley supervisor, said he would like to find a way to place limits on short-term rentals.
“What’s happening is that quite a few very wealthy individuals from the New York City area are buying up homes” to convert to short-term rentals, he said. “That destroys neighborhoods; it increases the prices of the houses.”
Oliverio said he was flabbergasted that a 700-square-foot home on Lake Oscawana recently sold for $1.5 million. “It was a cottage, and yet the individual paid that much money to have that property and the rights to it to rent it out as an Airbnb because they’re going to make their money back in a few years,” he said.
Oliverio said individuals rent these properties for parties and other gatherings and do not seem concerned about the quality of life in the neighborhood.
The supervisor recognized that short-term rentals could produce revenue if Putnam Valley implemented a permitting process that included a fee of, say, $1,000 per room and inspections, but said that landlords threatened to sue, with some claiming they only offered their properties to friends and family.
“Enforcement is the toughest thing,” said Oliverio, noting that his town cannot employ someone to patrol the internet for listings. “It’s a mess, and I wish there was some way to control it. They’re not our local residents, and that’s the thing that fires me up the most.”
How much to charge?
Starbuck acknowledged that enforcement is a problem, and suggested lower fees to encourage compliance.
“The more reasonable the fees are for your permitting, the more likely it is that people will actually permit,” she said. “So $1,000 per room — that almost makes it not worth it to do the Airbnb. If you make it a lower fee, at least that allows you to track it so they are on your radar.”
Legislator Amy Sayegh (R-Mahopac Falls) said the decision to regulate short-term rentals should be left to the towns and villages.
“I don’t think the county should have any say in it,” she said. “That said, I think the county should have some sort of room tax so they can be regulated.”
Legislator Nancy Montgomery (D-Philipstown) said she would support a room tax implemented at the town level. “I don’t know that the towns would favor the county taxing it,” she said, in part because the county doesn’t share sales tax.
Starbuck, however, said towns and villages can only collect permitting and other fees; taxing has to be imposed at a city, county or state level.
Oliverio said that if the county established a tax, the towns could go through the booking firms to discover which homeowners are renting out their properties, and then enforce the required permits.
“I’m not even asking to have that [room] tax shared with us,” he said. “All we need is the information.”
Bill Nulk, who chairs the Putnam County Industrial Development Agency and is president of the Putnam County Business Council, said the county and its towns and villages need to accept that people are going to continue renting out their properties. “Airbnb is here to stay,” he said.
Nulk also said it makes sense for the county to impose a tax on rental property and designate where the funds will go. “It could be well-designated so there could be significant fairness to the way it is doled out,” he said.
The room tax
With the opening soon of Putnam’s first major hotel — a Comfort Inn in Southeast, near the Connecticut state line — some lawmakers said it may be time to implement a room tax that would be paid by visitors.
Conrad Pasquale, the senior deputy county attorney, said at the Feb. 18 Economic Development Committee meeting that at least 48 of the state’s 62 counties have a room tax, and they are typically about 4 percent.
However, Pasquale cautioned lawmakers that a room tax must be approved by the state. He noted that Putnam could not get approval in 2012 for a 4 percent tax.
Pasquale also noted that the homeowner, as the “hotel operator,” would be responsible for collecting the tax on Airbnb and similar rentals. He said most counties have agreements with Airbnb to add the tax to its charges and send the proceeds to the county on an honor system.
“There’s not going to be a whole lot of oversight,” he warned lawmakers. “We’re going to have to be taking them at their word.”
Further, he said, Airbnb likely won’t disclose information about property owners.
“Airbnb — and I’m using them as an example because they’re the big one — is very, very protective of their clients’ data,” he said.
Another route the county could take — which Pasquale said he didn’t recommend — would be to follow Ulster County’s lead and keep track of short-term rentals. He said that Ulster either purchased the technology to “scrape” rental sites for data or outsourced the work, but that the task is daunting and costly.
“I don’t think anybody wants that to happen here,” he said.