New Airbnb taxes have generated $13M—some of it’s helping house LA’s homeless

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According to a new report from Airbnb, Los Angeles hosts have generated more than $13 million in tax revenue for the city since this summer. The company claims the “vast majority” of that money is going toward homeless assistance, but that’s a bit of an overstatement.

Assistant City Administrative Officer Benjamin Ceja tells Curbed that $5 million is actually going to homeless support in the form of rapid re-housing vouchers that can be used to provide homeless residents with temporary lodgings while awaiting placement in permanent housing developments. The rest was deposited into the General Fund, a catchall account for all types of services, including police and fire.

Still, the additional revenue will likely be welcomed by city officials facing a predicted $245 million budget shortfall. Tax revenue from Airbnb is a fresh source of income for the city, as LA officials only reached a deal with the company to collect taxes from hosts this past July.

Under the agreement, hosts are are hit with Transit Occupancy Taxes, the same 14 percent levy paid by hotels. That money is collected by Airbnb and then handed over to the city. Local leaders evidently underestimated the amount of revenue these taxes would produce. Though the city included less than $6 million from the taxes in its annual budget, the new arrangement has yielded more than twice that amount since going into effect in August.

Ceja says the city is working with Airbnb to get a better sense of how much tax revenue to budget for in the future.

Though it has the potential to provide badly needed revenue for homeless services and other city programs, the tax agreement has received its fair share of criticism. Mainly, that’s because Airbnb rentals aren’t technically legal in Los Angeles. Though city officials are working on a plan to legalize—and regulate—short-term rentals, current city rules restrict rentals to periods longer than 30 days.

Citing concerns that the service encourages landlords to take units off the long-term rental market, exacerbating a statewide housing shortage, other Southern California cities—including West Hollywood, Santa Monica, and Palm Springs—have imposed harsh restrictions on short-term rentals. Regulations being discussed by Los Angeles officials would be far less strict.

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