AB 1220 = T.O.T. threat
On February 27, California Assemblyman Matt Harper introduced AB 1220 to the California Assembly—a bill proposing the prohibition of local governments from collecting Transient Occupancy Tax (T.O.T.) for short-term residential rentals. The bill defines these rentals as any single-family residence, apartment, residential condominium unit, or other residential real estate unit that is rented for 90 days or less.
Harper, a Republican from the 74th district including Huntington Beach, Costa Mesa, Newport Beach, Irvine, Laguna Beach and Laguna Woods, introduced the bill to stimulate tourist activity and boost economic growth in his district and throughout the state.
“Assemblyman Harper believes the bill will boost economic growth because more people will have more accommodation options from which to choose in Mammoth Lakes and Mono County – just as Huntington Beach and Orange County,” said Harper’s Legislative Director Madeleine Cooper. “Those tourists will boost spending in the local small businesses. Also, families who elect to rent their unit or home will be able to boost their income and who, in turn, will increase spending in the local economy.”
The bill was written in response to the “innovative phenomenon” of rental websites such as airbnb and VRBO which allow property owners to rent their own homes or rooms in their homes to vacationers, Cooper said.
The legislation argues that these T.O.T. taxes are of “statewide concern” because “Anytime taxes are imposed, it is a manner of state-wide concern because taxes are too high in California,” Cooper said. Although T.O.T. tax collections are already specified in the California tax code for residential rentals under 30 days, Cooper said hotels and homeowners are different. “The Assemblyman wants to encourage more tourists to visit his district and for more homeowners to enjoy additional income for their property investment,” she said.
Both Mono County and the Town of Mammoth Lakes will be greatly affected if AB 1220 passes. While Accounting Manager for the Town, Susan Cash, was unable to give specific numbers for residential rentals, the Town collects T.O.T. from 48,000 units in Mammoth, including hotel rooms, which generated $10.3 million last year alone.
“We’re aware of [AB 1220] and it is obviously something we will oppose,” said Town Manager Dan Holler. He admitted the financial impact of such legislation on the Town would be severe although he said he highly doubts the bill to pass given that it, “will affect larger cities who collect a lot more [T.O.T.] than we do frankly.”
Mono County Supervisor Stacy Corless also expressed doubts that the bill will “go very far with the democratic-controlled legislature,” she said. CAO Jim Leddy said he will be discussing the bill with Assemblyman Frank Bigelow and the Board of Supervisors “as this legislation is contrary to aspects of our General Plan.” Mono County currently collects roughly $2.6 million in T.O.T for short-term residential rentals.
AB 1220 is expected to go before the Local Government Committee in April, Cooper said.
