Expanded tax on Airbnb, short-term rentals gets North Little Rock look

Mayor leads proposal to collect on short-term rentals

Amid a growing trend of residents renting their homes to travelers, the North Little Rock City Council is likely to vote tonight on a proposal to collect hospitality taxes on short-term rentals.

Some property owners in the city advertise on websites such as Airbnb and Home Away for visitors to rent their apartments, houses or bedrooms for short stays.

The proposal before the council would apply North Little Rock's 2 percent Advertising and Promotion tax and 1 percent Parks and Recreation tax to such short-term rentals and to bed-and-breakfast businesses, condominiums, recreational vehicle parks and campgrounds. A city Advertising and Promotion permit would have to be acquired for short-term rentals.

The new rules wouldn't apply to rentals of longer than 30 days.

The ordinance also would have North Little Rock hotels and motels with fewer than 40 rooms collect the full 3 percent, instead of only the 2 percent Advertising and Promotion tax that the smaller hotels collect now.

Mayor Joe Smith, who is sponsoring the ordinance, said he expects to call a vote on the issue today.

Expanding the collection of the hospitality taxes would bring in an extra $25,000 for the Advertising and Promotion Commission and $5,000 for city parks, estimated Bob Major, executive director of the commission. The commission oversees the management and finances of the city's Convention and Visitors Bureau.

"It's not anything that would impact local citizens paying taxes," Major said of the proposed change. "It's all tourism. No business is actually paying these taxes. They agree to collect these taxes on behalf of the city and state and county and the A&P tax."

Little Rock has always applied its hospitality tax to the type of short-term rentals North Little Rock is considering adding, said Gretchen Hall, president and chief executive officer of the Little Rock Convention and Visitors Bureau. But with the increasing popularity of renting out residences to city visitors, the task is to be sure the city knows about all of the rentals.

"We look for them on those sites, and if we find one we will let them know they are running a business and are subject to the hospitality tax for renting or leasing lodging premises," Hall said. "They would need an A&P permit. If they file for an actual business permit, we find out about it that way."

There are only about 10 vacation rentals known in North Little Rock, with no complaints received about them, Major said. However, he said requiring them to collect taxes would "level the playing field" with established hotels.

"I just don't want to see anybody cutting corners and not playing by the rules that everybody else has to follow," Major said. "I was at a conference where the Airbnb folks made a presentation, and they don't consider this to be in competition with hotels. Our point is, they are providing a lodging facility in a city, and by doing that they are just like the hotels that provide lodging accommodations. Obviously, they should be collecting the tax as well."

North Little Rock City Attorney Jason Carter said business models have been changing with new technology, resulting in a need for governments to update their laws.

Airbnb and Uber -- which allows a person to use a smartphone app to request and pay for a ride in a driver's personal vehicle -- are examples of technology requiring such updates.

"I think there are new business models being developed constantly between sites like Uber and Airbnb and various other business models that allow people to get value out of their personal property and real property that they couldn't before," Carter said.

"From a regulation standpoint, it's hard to keep up with. Part of the challenge is keeping our regulations current with the changing business environment.

"Like anyone else engaged in a business, you have to tender tax," Carter said. "The tax man always gets his cut."

Metro on 04/11/2016

Upcoming Events