In an effort to give all vacation rentals an equal chance to succeed, in September 2016 the County government set out to better enforce regulations on vacation rentals operating without a valid lodging business license in the unincorporated areas of San Luis Obispo County.
The County Board of Supervisors approved a service agreement on Sept. 20, 2016 with Host Compliance LLC to make it easier for County staff to collect Transient Occupancy Taxes (TOT) from residential property owners who rent out their homes or secondary dwellings. The services also allow the County to enforce important building codes. The agreement was proposed by County Planning and Building Director James A. Bergman and County Auditor-Controller-Treasurer-Tax Collector James P. Erb.
“Unlike licensed lodging businesses operating in the County, unlicensed vacation rentals don’t comply with land-use regulations and aren’t collecting or reporting required TOT and related assessments,” Erb said. “Allowing them to operate this way puts legally established vacation rentals in a competitive disadvantage, while also presenting code enforcement challenges.”
The agreement with Host Compliance will cost the County nearly $72,000 for the first year, but as a result the County could potentially receive $150,000 in increased TOT each year. Host Compliance’s services will also allow the County to enforce building codes related to these types of rentals.
In 2016, there were 1,147 licensed lodging businesses operating in the unincorporated areas of San Luis Obispo County. Of these licensed lodging businesses, 1,022 were vacation rentals. In fiscal year 2015-16, licensed lodging businesses reported and remitted more than $9.2 million in TOT to the County General Fund, helping the County provide vital services to the people of San Luis Obispo County.
With the growing vacation rental industry and associated online vacation rental platforms that offer booking for vacation homes, the number of available rentals in the region has increased. However, these rental platforms do not share information about the property (i.e., property owner name or address) with local governments.
For unlicensed vacation rentals, becoming licensed is usually a simple and inexpensive three-step process, which typically costs less than $100 and can usually be completed in one visit to the County Government Center. The steps to obtain a license can be found on the County’s website in the Tax Collector’s FAQs section.
Host Compliance is now working for the County to identify all potential vacation rentals in the unincorporated areas using proprietary software; providing statistics on vacation rental activity in the area; monitoring compliance for vacation rentals by notifying unpermitted rentals that they need to obtain permits and licenses; ensuring TOT compliance; and providing a 24/7 complaint hotline for neighbors.