Mamie Pound, who owns the Rothschild-Pound Inn on 7th Street, and Ernie Smallman, a local real estate broker, say they are following the city’s rules about running a business. And they want others to do the same.
Pound said she was disappointed to learn that only 30 of the 180 short-term vacation rentals in Columbus are 100% compliant with the new regulations.
Those regulations impose an 8% hotel-motel tax on short-term vacation rentals like Airbnb or HomeAway, just like on hotels and bed and breakfasts.
“If I don’t pay my taxes, I go to jail,” Pound, who operates the bed and breakfast, said.
She said the city’s requirements for her inn include inspections by the fire marshal and health department, in addition to combined fees of about $700 per year, which vacation rentals aren’t subject to.
“I’m not against Airbnb, I just wish the playing field were leveled more,” she said.
With cities and counties across the country struggling to regulate popular short-term vacation rental businesses, Columbus too is trying to level the playing field.
City officials are working to enforce rules put into place by council last year to help bring in more taxes, ensure fairness with other hospitality providers, and see that the lodging businesses are following city building codes and standards.
Smallman has five rental units in the historic district and two in uptown. He was among the first to apply for permits from the city, and said there really isn’t an excuse not to comply with rules.
“The tax money goes to the convention and visitor’s bureau, which uses it to promote Columbus, which you would think would help increase your occupancy and your Airbnb units...,” he said.
Peter Bowden, president and chief executive officer of Visit Columbus GA, said Savannah, which has more than 4,000 rental units compared to Columbus’ 180, is probably the best example of how to impose and enforce regulations.
“But that’s because they have a whole department geared toward that and they’re trying to protect the integrity of the historic district,” Bowden said.
Leveling the playing field
For many local business owners like Pound, the presence of unregulated short-term vacation rental units is frustrating.
After receiving complaints last year, then-councilman and current Mayor Skip Henderson requested the ordinance to ensure the rentals would be subject to similar rules and regulations as others in the hospitality industry.
Bowden said during that meeting that with no regulation, there was no mechanism for those offering short-term rentals to pay taxes or fees that other hospitality providers pay. He said that having those regulations would bring in revenue for the city.
The room tax in Columbus is 16%, with 8% being in sales tax that is distributed to the state, city and school district.
The remaining 8% hotel-motel tax is divided between Visit Columbus GA (4%), the civic center (2%), trade center (1%) and RiverCenter for the Performing Arts (1%).
Rental units that are not in compliance with the city’s new regulations aren’t paying that 8% hotel-motel tax.
Smallman said it will be interesting to see how long people wait to come into compliance, because they will technically owe back taxes for the time they have been in operation since the ordinance went into effect.
Short-term vacation rental owners will have to pay any outstanding taxes, including unpaid hotel-motel taxes from November and December 2018, before receiving a permit from inspections and code.
“It’s not like this has happened in a silo. We’ve been talking about this and it’s a topic that’s drawn some interest, so it’s hard to say you were unaware,” Henderson said earlier this month.
Regulated units bring income to city
According to the city finance department, the hotel-motel tax collections between November 2018 and August 2019 totaled $4.4 million. Of that, $26,172.78 was collected from short-term vacation rentals.
Bowden said his office supported the regulations because almost 100% of the visitor’s bureau’s funding comes from the hotel-motel tax, and that money isn’t being collected when rental owners aren’t following the rules.
“Everyone who’s in business looks for new revenue streams, and it certainly helps us because it allows us to offer the visitor one more experience in the destination, so if they don’t want to stay in a hotel or if the hotels are full because of a city-wide event and they can’t have the hotel of their choice, then a short term rental becomes an alternative for them,” he said.
Bowden said the community needs to be able to adapt to and embrace new technology in order to stay competitive as a tourist destination.
“For us, we want to be all things to all people. There (are) some people who won’t stay in a hotel and would rather camp or do a short-term rental,” he said. “It is a way of travel, it is a way for a certain demographic to experience a city, and if people feel comfortable having that kind of experience, there’s certainly a market.”
Haley Lyman, who manages Smallman’s short term rental properties, said that the demand for Airbnbs is due in part to people increasingly traveling in larger groups.
“Families are traveling more, they’re more mobile now and they want a kitchen, they want space to relax and let the kids run around and they don’t want to get four hotel rooms for the family,” she said. “This is an easier avenue for them.”
While visiting military families are the “bread and butter” of her clientele, Lyman said she’s also seen an increase in people between the ages of 50 and 70 renting the units.
“They’re coming not to just see the museums, but also explore Providence Canyon and bike on the RiverWalk; they’re doing a lot more active things, that’s surprised me,” she said.
How the city is enforcing the rules
Last November, the city began requiring owners of the rental units to complete background checks, obtain business licenses, permits, collect taxes and follow other city codes.
Bowden’s office tracks the number of short-term rental units in the Columbus area and provides the data to the city building inspections and code enforcement department, which in turn is in charge of enforcing the city’s rules.
As of September 30, there were 180 short-term vacation rental units in the city, 111 of which were not in compliance with city regulations at all, 55 of which were in the permitting process and only 30 that were fully compliant, according to John Hudgison, director, inspections and codes.
Letters sent to property owners in March encouraged a few to become licensed, and some are currently in the process of becoming compliant.
As early as next week, Hudgison’s office will begin placing neon yellow signs on the doors of non-compliant properties in an effort to reach more owners.
Issues arise from the fact that 32 of the city’s short-term rental properties are owned or managed by out of town owners, and many are renting out a whole house and no one is present during the day other than the renters.
“We are sending (letters) to the mailing addresses, but these mailing addresses may not be in town. We have some that are in Texas, Colorado, California, so it’s not as easy as just going to their house,” Hudgison said. “We want to tag the buildings to hopefully notify these tenants who are renting these properties.”
The ordinance states that operating a short-term rental without a permit and business license could result in fines up to $1,000.
“Luckily, we have yet to have to take people to court, but in May we did issue citations,” Hudgison said. He said eight citations were issued, but that the owners came into compliance before they went to court.
“So we’re just going to continue with our processes and hopefully we’ll get as many of these people into compliance as we can,” Hudgison said.
The permits issued by the inspections and code department expire Dec. 31 and must be renewed annually like the business licenses. There is a $75 administrative fee for the initial business license and for renewals.
The background checks must also be redone annually.
Rental units that were operating prior to November 2018 will have to obtain a 2018 business license and a 2019 business license if they apply this year.
“We’re just kind of feeling our way through it. This is our first year of this permit, we’re not sure what works and what doesn’t, we’re just trying to go through it and we’re following everything that’s listed in the ordinance,” Hudgison said.
The permit process
Lyman, who has been through the permitting process several times, offers some advice how to navigate the city’s permit process:
- Visit the front desk of the inspections and code department, Government Center Annex, 420 10th Street.
- Ask questions on how to proceed based on whether you are an owner or a manager.
- Determine all the documents and other items needed to get started.
Once a permit is obtained from that department, short term rental owners or managers will be directed to the city’s finance department, located in the city services center at 3111 Citizens Way off Macon Road.