OCEAN CITY — Hearings were held this week on legislation in the General Assembly that would tighten regulations for online short-term rental operations such as Airbnb, for example, and the local community was sure to make its support for the bills known.
Ocean City officials, for at least two years, have been monitoring the proliferation of short-term vacation rentals in the resort brokered by online platforms such as Airbnb, for example. The concern has largely been on two fronts including the apparent lack of room tax collection on one hand and the sanctity of the neighborhoods in which the short-term rentals are located.
Airbnb and similar Internet sites enable property owners to rent homes, apartments and even single rooms to visitors searching for accommodations by bypassing the traditional rental companies. Just as Uber has changed the transportation industry, Airbnb has rocked the traditional rental industry with millions of available accommodations in thousands of cities across the U.S. and worldwide.
While it has been around for nearly a decade, the impact of Airbnb and similar companies started to make their presence felt in the resort around two years ago. State and local jurisdictions have been wrestling with how best to regulate the growing on-line rental industry to ensure it is one a level playing field with the traditional rental industry.
Senate Bill 463, introduced in the General Assembly, is an attempt to do just that and it has the support of the resort community. In advance of a committee hearing on the bill on Wednesday, both the Mayor and Council and the Greater Ocean City Chamber of Commerce fired off letters to Senate Finance Committee Chairman Thomas Middleton making their support for Senate Bill 463 known. The two letters include nearly identical language.
“We have seen a dramatic increase in rentals in Ocean City through these platforms and want to ensure they are held to the same standards and requirements as other rental agencies and properties,” the letter reads. “This legislation emphasizes the need for compliance with state and local licensing, zoning and other requirements.”
While much of the bill focuses on the licensing, zoning and other requirements for short-term online rentals, the legislation also attempts to address the tax collection and submission issue. The short-term online vacation rentals have become a major concern in the resort because of the impact on room taxes. For example, Worcester County collected over $13 million in room tax last year, derived largely from Ocean City, but that figure could take a substantial hit if Airbnb and similar companies come in and take a sizable portion of the rental market without collecting and remitting the requisite sales and room taxes.
Ocean City officials have pointed out the property owners are responsible for remitting the appropriate room tax to the county for rentals under six months, but because there are so many and because of the proliferation of online rental companies and even vacation rentals by owner, many are likely not acquiring rental licenses or paying the required sales and room taxes.
With the sheer volume of vacation rentals of all shapes and sizes in the resort, ensuring they are all remitting the appropriate sales and room tax is paramount. The letter in support of Senate Bill sent by the Mayor and Council and the Chamber this week points that out.
“It also empowers county and municipal governments to notify hosting platforms of the need to cease renting individual units until a specified violation is rectified,” the letter reads. “With Ocean City hosting nearly 10,000 hotel rooms and 30,000 condo units, in addition to the single-family dwellings with the potential to be placed on these platforms, we need to ensure that all rentals are bind conducted fairly and on an even playing field.”
The Maryland Hotel and Lodging Association (MHLA) also weighed in in support of Senate Bill 463 in advance of the committee hearing on Wednesday. While the MHLA acknowledged short-term online rentals are likely here to stay and voiced support for the companies, it also expressed a desire to ensure the playing field is level with traditional accommodations.
“At the same time, it is only fair that new lodging operators follow basic rules when it comes to tax collection, local zoning, public safety and non-discrimination obligations,” the MHLA statement reads. “Hosting platforms can and should easily facilitate compliance as part of doing business in Maryland.”
The MHLA statement particularly addressed the sales and room tax issue with Airbnb and other short-term rental platforms.
“Of particular concern, it appears that to date the vast majority of short-term rentals continue to occur without collection of any applicable sales or hotel taxes,” the MLHA statement reads. “To simplify things for both hosts and guests, hosting platforms are already free to collect and remit sales tax on behalf of individual rental operators in Maryland under existing law. This means tax collection could be easily automated and hosts need not deal with collection.”
