Apr 7, 2022 - Business

Artists and Airbnb team up over short-term rental agreement

Photo: Carl Court/Getty Images

Two dozen local arts organizations are urging Austin officials to allow short-term rental companies like Airbnb and Vrbo to directly collect hotel occupancy taxes and fork over the money to the city, a move the groups say could bolster funding for cultural arts programming.

The big picture: A portion of hotel occupancy tax revenue goes toward funding and supporting cultural arts programs, and Airbnb has renewed its push in recent months to streamline the collection.

ZACH Theatre, the VORTEX and Red River Cultural District are among the groups arguing that the move could help them amid declines in hotel bookings and COVID's continued spread.

  • "As arts programs in our city continue to endure the negative effects of the pandemic, creating a short-term rental (hotel occupancy) tax ordinance will provide direct funding to community-based arts events that celebrate Austin's culture of creativity," says a draft letter obtained by Axios and addressed to council members and Mayor Steve Adler.

State of play: The state of Texas, city of Houston and other cities have entered into agreements with short-term rental companies, allowing Airbnb and Vrbo to automatically collect and pay occupancy taxes on behalf of hosts.

Yes, but: Austin officials have been reluctant to make the change. Local hosts currently collect hotel occupancy taxes on their own, and arts organizations argue that leaves millions on the table each year.

  • Airbnb estimates the city collects between $4-$5 million dollars annually in hotel occupancy tax on short-term rentals, which could balloon to $15-$20 million if streamlined through their sites.
  • Those who only host during SXSW, ACL "or otherwise don't have the wherewithal to know exactly what forms to fill out," skip the hotel occupancy tax collection, Airbnb spokesperson Luis Briones told Axios.
    • "What we are looking to do is take that whole bureaucracy out of the equation," Briones added.

What they're saying: Arts groups argue that if the city were to form an agreement similar to those already across Texas, Austin could become a more affordable city for artists.

  • "One way to help address affordability is to collect that tax and then pay artists and musicians and other working creatives in Austin," Cody Cowan, executive director of the Red River Cultural District, told Axios.
  • "We don't have a problem. We have a crisis," Cowan added.

Of note: Airbnb has financially supported the Red River Cultural District and some of the groups that signed onto the letter, according to Cowan.

The other side: The city's Music Commission was on the fence about the plan at a Monday meeting and held off on making a recommendation to City Council as members gather additional information.

  • "The corporation doesn't do things to be nice," Commissioner Graham Reynolds said. “What is the profit motive, and why do shareholders support this?"
  • Commissioner Scott Strickland urged commissioners to ask more questions, saying he feared that watering down the rules would allow corporations to "come in and buy up a bunch of houses, and then all of a sudden, you've got an entire neighborhood that is sponsored by Airbnb."

Adler told Axios the city should "absolutely try to find a way to recover uncollected tax revenue" from short-term rental units but was noncommittal about the way forward.

  • He added that the city needs to balance collecting the tax revenue while "avoiding prejudicial impacts on housing cost and supply that could arise from an unregulated short-term rental market in desirable residential zones and areas."

What to watch: Local arts groups plan to send the letter to City Council in the coming weeks.

The Music Commission moved to take up the short-term rental discussion, along with a possible recommendation to the council, in its May 2 meeting.


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