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Short-term rentals - the big picture (Part 3)

by James Wilson
January, 2018

At the International City/County Management Association (ICMA) conference in San Antonio, consultant Ulrik Binzer gave a presentation on the challenges around short-term rentals. Part 1 of this series focused on the impacts of the short-term rental market, and some key strategies for crafting a local regulation to manage the issue. Part 2 shared a top 10 list of best practices for enforcing short-term rental regulations. This third and final article looks at short-term rentals from a broader perspective, and municipal revenue options on the horizon.

It can be a challenge for Canadian municipalities to collect taxes on short-term rentals; however, there may be a new option to allow that to happen, whether at the provincial level or directly for municipalities. AirBNB, the single largest player in the short-term rental market, offers agreement that will facilitate the website collecting local taxes and remitting it to the municipality.

But, as Binzer warns, this may or may not be the answer for communities. While there is revenue coming in, it comes with some very well-defined strings. Specifically, the municipality is not advised of where that money comes from. This can have a number of other potential drawbacks, including transparency, the accusation of favouritism to AirBNB clients, and the unfair treatment of other taxpayers. The message is simple: read the fine print, and decide whether the agreement is worth it in your specific context before blindly signing on the dotted line for more revenue.

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The major takeaway from Binzer’s presentation is this: always think through the consequences of your policy decisions. There is no “one size fits all” approach to policies for short-term rentals. It’s about creating something that makes sense within the local context, something enforceable in the community, and something that operates in such a way as to not penalize the people who are doing it properly. Likewise, enforcement is about acting quickly, consistently, and with transparency – it builds trust and confidence in your municipality, and ensures that no cries of favouritism are heard.

Tilting at windmills – whether an outright ban, or trying to address the challenge by taking on the websites that provide these services – might seem like the principled stand to make. However, the more realistic solution is one that addresses the challenge at the community level. There are more options and opportunities to tailor a solution to the unique circumstances, and to get input from residents (both renters and non-renters). There is a delicate balance that needs to be struck, helping to address issues of property rights, community safety and character, and of course taxes. With proper guidance and management, a system can be created that makes the community better; but, if handled incorrectly, the possibility of becoming a controversial political issue with no great solutions remains real. Whatever approach is adopted, the goal should be to find a local-appropriate solution – and one that is both transparent and enforceable.  MW

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