Loudoun supervisors have set county staff members to work writing an ordinance that will require short-term residential rental owners to register with the local government.
The same tax laws that apply to traditional bed-and-breakfast operations and hotels apply to short-term rentals, such as those offered on VRBO and Airbnb. However, often the county regulators don’t know they exist. That has also led to concerns around safety and effects on neighbors.
Supervisor Ron Meyer (R-Broad Run) said the ordinance would be a “slippery slope” to putting a heavier tax burden on bed-and-breakfast and Airbnb owners, an argument which he simultaneously acknowledged is a logical fallacy.
“A slippery slope is actually a logical fallacy until you’re actually proven correct,” Meyer said.
Instead, Meyer said, he wants to look at possibly lowering the county’s tourism taxes, such as the transient occupancy tax on stays in hotels and bed and breakfasts. He called the registry “reactionary regulation to the new economy.”
Other supervisors argued that is beside the point.
“Where they [short-term residential rentals] hurt B&Bs is if they are not properly regulated and taxed on the same level as the B&Bs are,” said Supervisor Geary M. Higgins (R-Catoctin). “So you’ve got one bunch that’s collecting a bunch of taxes and paying them, and someone else that’s operating under the radar.”
Meyer also said the ordinance, which was advanced through work by Visit Loudoun, represents a conflict of interest because that organization represents tourism interests in the county, including hotels and bed and breakfasts.
He asked the board to send the question to the board’s Transportation and Land Use Committee, of which he is a member. Board Vice Chairman Ralph M. Buona (R-Ashburn) pointed out questions of taxation are generally sent the county’s Finance, Government Operations and Economic Development committee.
“The fact of it is, sending it to TLUC is just an attempt to stall this,” Buona said.
Supervisors voted 5-4 against sending the issue to that committee. Meyer was joined in that idea by supervisors Tony R. Buffington (R-Blue Ridge), Koran T. Saines (D-Sterling), and Kristen C. Umstattd (D-Leesburg).
However, supervisors on both sides of that vote said concerns about costs and the burden on small businesses are valid.
“When I look at millennials and all the articles about the difficulties they have making it financially in our economy, I don’t want to cut off affordable places where they or others can stay for short periods of time, so I’ll be approaching this from that standpoint,” Umstattd said. “I don’t want to so regulate these units that accommodate one or two people that we drive the price up to where it’s unaffordable.”
But the real target of the regulations, according to other supervisors and Visit Loudoun CEO Beth Erickson, are people operating houses with many rooms that they use only for rentals—like under-the-table hotels.
“If we think about what is hurting our bed and breakfasts, it’s probably those,” said County Chairwoman Phyllis J. Randall (D-At Large).
County staff members will now begin crafting new rules around short-term residential rentals with a zoning ordinance amendment, which will involve a public hearing and subsequent vote at the Board of Supervisors.
“That’s all stuff that should be part of that process, and I don’t disagree with some of the concerns that should be raised when you start down this path, but the only actual item that we’re asking for tonight is registration, and that’s a pretty simple thing,” said Supervisor Matthew F. Letourneau (R-Dulles).
County staff members’ current concept would have short-term residential rental owners registering online annually with the Department of Building and Development. They could receive information about safety and zoning requirements with that registration, and copies of their registration would be distributed to other offices like the Commissioner of the Revenue, the fire marshal, and the health department. Supervisors plan to make registering free.
Businesses renting rooms to fewer than four people at a time are exempt from the transient occupancy tax. Above that, the tax is 5 percent.
Those renting out fewer than seven bedrooms and showing less than $4,000 gross receipts are exempt from the business, professional, and occupational license tax. With seven or more bedrooms and up to $200,000 gross receipts, businesses pay a $30 license fee, and above that, 23 cents per $100.00 of gross receipts.
The county staff anticipates around 30 percent of short-term rental owners will have to pay the transient occupancy tax.
The board voted 7-2 to start that process, with Meyer and Saines opposed.