Airbnb is popular in Bend.
The service, which allows people to find unique accommodations around the world, recently named Bend one of the Top 10 most hospitable cities in the U.S.
Airbnb has also caused the city to raise an eyebrow on who may be paying their portion of the 9 percent transient room tax and who isn't. As a result, the city has hired MuniServices of Fresno, Cal., to conduct an audit of residents renting rooms.
Sonia Andrews, chief financial officer for the city, asserts the tax is nothing new, and that funding collected goes to both the city's general and tourism funds.
"All cities across the nation collect a lodging tax," she says. "We've been doing it since the city existed."
What's new is the sheer number of people renting out rooms in their homes, a possible result of a perfect storm of Internet convenience and the recent recession. What's also novel about stepping up enforcement of the transient room tax is that the city has no idea what sort of cash flow this mean—both in terms of what it will cost to police the tax, and how much the city stands to reap from applying the tax.
Andrews goes on to say it is only fair that everyone follows the rules. If hotels and some residents are paying a room tax, the rest should be, too.
Currently, the city has about 180 vacation rentals complying with the code. It isn't sure how many more there might be.
"I don't have a sense of whether we're talking about 20 or 200," Andrews ruminates. MuniService was not only hired to find those not complying, but also to find out why.
At this point, the city isn't sure how much this service will cost. Depending on the scope of noncompliance discovered, the city will pay the out-of-state MuniServices somewhere between $10,000 and $100,000 for the audit; an amount that could have paid for an additional part or full-time city employee..
The city also doesn't know how much it stands to reap from additional taxes, but a generous estimate by the Source calculates the amount at $100,000 annually—that is, if currently only half the Airbnb and other informal rentals are reporting their revenue, and the other half begins to pay full taxes.
Andrews called that figure "irrevocably inaccurate," but didn't provide more precise numbers for current taxes or estimates for potential additional revenue.
She went on to say the city initially attempted to contact all the vacation rentals, but realized the challenges, which include determining if rentals are within the city's limits, matching them to rentals already on file and trying to locate owners who don't live in Bend.
Some properties don't even list addresses, Andrews adds (editor's note: although homeowners do, obviously, list contact information through which potential renters can connect with them.).
Once city staffers deemed the project too broad, they requested proposals from audit services. Each proposal is scored based on price, qualifications and prior experience. Andrews says no company exists in Bend that specializes in compliance audits. She adds that the company is paid on a sliding scale using the revenues gathered from the audit and at this point the city has no idea how much that will amount to.
The audit is expected to take place throughout August. Once it is completed, MuniServices will summarize its findings and make recommendations.
For more information about the TRT (i.e., if you're pirating your place right now and want to go legit), visit www.bendoregon.gov/roomtax, where you'll find the registration forms and more.