Our top story on midday edition, it seems like a great idea you have got an extra room or unused to do on your property, why not rent it out for a little while. Especially during the height of tourist season. With Internet rental host sites like Airbnb the whole process is so simple . Until the city of San Diego comes knocking and tells you you owe back taxes and penalties. It turns out San Diego rental tax structure is complicated and some say outdated. Now a city Council committee will look into ways to make the whole process clearer and more regulated. Joining me is San Diego city Council member Chris Kate. Thank you for having me. San Diego attorney Omar passes. Good to see you. Good to be here. Let me start with you Omar. You know quite a bit how Airbnb works in San Diego. You have been a Airbnb host, you currently stay in a Airbnb rental . For those who are not familiar with the Internet rental sites, can you explain how they work? Sure. The way the sites work generally speaking is it is an opportunity to go on your phone or laptop to a site and you type in the city you want to go to and it will allows you to look at a place that you can stay that are clean and well-maintained. On the flip side as a host, I have also been a host, you are able to screen the people that are coming. If you're in a single-family area and you have neighbors you want to be respectful you can screen people out. A lot of people don't know this you can send profiles to your neighbors to let them know there is somebody coming by, this is what they look like. The people that stay pay Airbnb and then Airbnb pays the host for the right of those people to come and stay. What is the advantage to using Airbnb instead of just booking a hotel or regular bed-and-breakfast? I think there are a few advantages. First it is very easy and accessible to regular San Diego and. This is a terribly unaffordable city and this is an opportunity for people who want to help supplement the childcare costs or make ends meet to rent out their space relatively easy and the poorly for their neighbors to really be careful. It should be possible for the people who are careful to be able to do this service. Is it cheaper? It can be. There are a fair amount of statistics that say you can get a whole home, really what I find and I have talked to dozens of host and part of the organization that works with a lot of hosts, in reality the cost is not the big factor it is the opportunity to explains communities like Northpark, South Park, and enjoy and immerse yourself in the culture. Or if you're in town for a baby being born or something like that you can stay close by and not have to be all the way downtown. Would you say, Omar, these host site rooms, condos, whatever they are operating like hotels? I would not say that. Anybody that hosts should have to pay tax is like hotel. It is a short-term occupancy, but it is not the same thing, it is not the same model or level of service. I would say anyone in the city of San Diego who is renting a room or part of their home in the single-family area should be very worried about the way the city is handling the issue. Councilman Chris Cate how does the city currently regulate these kinds of rentals? It is all in the hands of the development service department in terms of how you categorize current [Indiscernible] is a bed and breakfast or border and Lodger. There are different rules and regulations and permits associated with both of them. The one thing we want to make sure of is no matter what as Omar mentioned you are paying your tea OT tax in your unit tax. Whether you rent your room out for a day or year you still have to comply with the city tax and then make sure you pay your TOT and TMD assessment those are nothing new and you have to comply with. If you want to operate what rules do have to follow? It is very unclear and ambiguous as to what rules at the file -- followed. That is the challenge that councilmember Zapf said if you have ideas on how to clarify this , what are your ideas. You mentioned there are three taxes. People who rent any part of their home out and so forth and receive money for it they are liable for those taxes. Is it your understanding that not many people are doing Airbnb and other kind of rental host are where that . I am not sure. I do not want to make assumptions. I do not know how many are not. We are trying to make sure the word is getting out that you have to comply with these. That is unfortunate I think these folks want to comply with what the rules are. No one understands what the rules are. If you go forward and you apply to get your registration certificate to be able to collect and remit TOT there should be a packet associated with the saying these are the steps you should take to comply. Right now we do not have that easy navigate website that says these are the things you have to do. If you Google the city of Carlsbad Airbnb frugally as questions it is the most clear and concise plain language site you can possibly imagine . This is what you do, this is how you pay. They do not charge for the permit but you have to get one so the city knows where they are. You have to provide contact information. Councilmember Zapf concerns are well-founded in certain parts of the city and there should be harsh penalties for people who run afoul. You should not have to worry about loud partiers and things in your single-family home. But depriving all citizens of the property rights because some actors or some people are bad actors it is bad public policy. It is important that councilmember Zapf have support and councilmember Cate proposal helps do that. The city recently sent out more than 250 you -- letters to Airbnb and other host telling them they owe taxes. I know that must have come to a surprise a lot of people. It really did. I have received emails from my next-door.com, I get people stopping me in my neighborhood on the street asking what's going on. Local congressman will come up to me and say what is going on do I need to be concerned? The difficulty is if you actually read the tax code there are a couple areas that suggest the tax is supposed to be collected at the time the payment is made. If payment is being made to Airbnb and not the host, you are kind of like what do we do ? It is good the city is tackling this issue. I agree people should be paying their TOT, we signed up to pay hours. I think we paid ours, but we will. In any case, the point is, it is a confusing process. I like that the city is taking this opportunity. And on the land use site in need to declare by. The city Council meeting is going to look at questions of these rentals. I know Chris Cate you have come out with proposed guidelines for short-term rentals. Give us the high points of your proposal. It is essentially three phases. First of format we want to make sure we defined a short-term rental property . That is not defined within our municipal code. Essentially if you rent out your room or your home for a period less than 30 days you are considered a short-term rental property. The next stage is making sure we can maintain a quality life and something Omar touched upon. When you are renting out your room or home you have to post within Plainview 24 hour a day seven days a week local contact if there are news -- new disturbances that a neighbor can call to alert that neighbor. If you do get a call, if you are hosting and you get a call, you have to respond within 60 minutes. You have to respond back then you have taking care of it. And third is the enforcement side. If you do not comply with these there are disturbances, if they are documented disturbances that there are those in forcing mechanisms whether it is fines, penalties, removing your TOT certificate in order to operate . Those are our potential opportunities to enforce and make sure we do weed out the bad apples. Those folks who are having loud parties, nuisances, illicit drug use, whatever the case may be. One thing I want to touch upon and Omar mentioned the ability of Airbnb or other hosting platforms to collect and remit. Our TOT ordinance is very restrictive on who is able to collect and remit. One thing we also want to change is that ordinance that allows for more pervasive language Ashman permissive language if a host like Airbnb wants to collect a TOT on behalf of the host they can do that and remitted to the city if there is an agreement in place. There are some that don't collected on the path of the host, but we want to make sure if you have these types of platforms it is easy to do, it is permissive and allows the agreements to occur that way it is not rolled into the host to the collected if they don't need to. In fact it is almost not allowed for Airbnb for the host asked for money at this point, isn't that right Omar? I am not clear. We never try to ask for money so I really do not know what the rules are. It is a funny situation. If you wanted to tell people about the charges everybody in the city in the county knows what is going on. But this open take rules and regulations is mystifying for the average San Diego. The city recently collected a whole bunch of back taxes from Airbnb, do you see the city of San Diego pursuing that option? That is one thing I want to make clear. From the legislative branch side we cannot get into that issue. That is an executive branch, mayoral issue, the mayor is aware that. Our hope in intention is through our proposal and whatever the proposal being considered is that it is perspective and we are looking into the future. I think the rush from our site is we are coming into the summer months, high tourist season, everybody wants clarity on this sooner rather than later. That is why we went forth with our proposal looking at best practices from other cities and what they have done up and down the West Coast. Summer very restrictive coming from property right oriented Flossie I have, I want to make sure they are all allowed and not to restrictive in terms of how many days a year they can rent out the property or having a cooling off period. We did not want to go that far. We want have a balance for quality-of-life standpoint to. Want to spend a few minutes talk about the land use part of this. Where the rentals might be allowed. Chris Cate are there areas in the city right now where it is not allowed for property owner to rent out a spare room or a condo or something else that they own? I think that is unclear. You can be categorized as a bed and breakfast, you can be categorized as border and lodger. I don't think it is clear if they are allowed or use permit depending on where you are. I think it is all ambiguous in terms of municipal code. I don't know. Omar I don't think has a clear answer either. I am a land use construction attorney. That is what I do. The municipal code in the city of San Diego defines a commercial bed and breakfast as a visitor accommodation or residential structure where breakfast is typically provided for guests. To have any idea what is allowed or what is not allowed by what I just described you? Can you rent out the room? Can you rent out the house? It is potentially unconstitutional fake and it creates huge problems for people to know how to comply and how not to. I am seeing it the daily. As Council member Lori Zapf found out at one of the town hall meetings he attended there are a lot of people in the beach community who are very upset about how their neighbors are using their particular properties as rental properties for constantly changing stream of people. Sometimes too many people in the house. What to do about that? That is where we get to the local contact issue. People generally want to be good neighbors and want to make sure they are maintaining a quality-of-life because they live there to. They were -- we want to balance that with the balancing of not being too restrictive on what you can do with your property. An important distinction needs to be made, at this moment in the city of San Diego a single-family residential zone the city attorney position on this is if you rent out your entire unit you can have people come in on a short-term basis as much as they want to. Subject to regular terms in the residential use section in the musical code. If you stay in the home, if you are there and keep people under control then you are forced into a higher permitting costing five-$10,000. Or you can be a border and lodger in the amount of time that people can stay, the minimum that people can stay is changed. Code enforcement does not come out and say to people as my client is facing $250,000 in penalties they do not cannot and say if you want to comply you do this or that. In this situation it is so difficult for people to understand to be heavy-handed on my retired schoolteacher client is my test case is unfortunate. I really have to ask you this question Chris, public comments following the story on lines of the city crackdown on Airbnb host must have come after pressure from the hotel industry. Was that the case? I am not aware that at all. This is not under the office of the legislative branch this is the executive branch. I cannot speak on behalf of the mayor or anyone else on -- and what the process will be moving forward. Let me post the last question to you Omar. Right now we are in a process with the city is try to fix and clarify and regulate in a more comprehensive and saner way for people who want to do these Airbnb hosting things. Before these new regulations are in place, what do property owners need to know about renting out the properties? Be very, very, very careful. In all honesty I can't give legal advice on the radio, I would tell anybody in the city who is thinking about renting out a room in this -- in this -- in our house for any reason whatsoever they need to contact the city attorney office and code enforcement and demand clarity so they do not find himself on the wrong side of thousands of dollars a penalties inadvertently for trying to rent out a room for foreign exchange students or corporate short-term rentals. Things of that sort. I would encourage everyone to exercise extreme caution in renting out the places until this is clarified. So Chris Cate should get ready for phone calls. We have got them already. That is why we are working on this. Speaking with San Diego city Council member Chris Cate and city attorney Omar thank you very much.
It seems like a great idea. You've got an extra room or an unused studio on your property — why not rent it out, especially during tourist season? And with Internet rental host sites like Airbnb, the whole process is easy.
Until the city of San Diego comes knocking and tells you that you owe back taxes and penalties.
It turns out that San Diego's rules for short-term vacation rentals are complicated and some say outdated.
The confusion led the city recently to send 252 letters to Airbnb and other hosts telling them they owe transient occupancy tax on the rooms they rent.
City Council members Lorie Zapf and Chris Cate are looking into ways to make the whole process clearer and more regulated.
Cate said the process of regulating short-term rentals is under the responsibility of the Development Services Department, but the rules are cloudy.
“The one thing we want to make sure of is you’re paying your TOT tax — whether you rent your home out for a day or a year, you still have to comply,” Cate told KPBS Midday Edition on Wednesday. “Those things are nothing new. The issue is if you want to rent, what rules you have to follow. It’s very unclear.”
Cate said the city is lacking an “easy to navigate” website allowing San Diegans to understand the process of short-term rentals.
Omar Passons, a San Diego attorney who represents a host, said home rentals should be treated differently than hotels.
“I think there are a few advantages,” Passons said. “It’s very easy and it makes it very accessible to San Diegans. San Diego is a terribly unaffordable city. Anybody that hosts should have to pay tax, but it’s just not the same thing (as hotels).”
The issue will be discussed during the City Council's Smart Growth and Land Use Committee meeting in April, Zapf said.
