Palo Alto profiting from unauthorized short-term rentals

May 16, 2019

By Ashlyn Rollins,
Peninsula Press.

Palo Alto is collecting taxes on Airbnb rentals in the city even as a zoning ordinance technically prohibits their operation in single-family residential districts.

The city – which has collected between $800,000 and $1.6 million in transient occupancy taxes on Airbnb rentals in the past year, according to city officials – could profit even more if Measure E on the November ballot passes. The measure would increase transient occupancy taxes on hotel stays and short-term stays provided by vacation rental websites in the city from 14 to 15.5 percent. The transient occupancy tax is charged for lodging rented for 30 days or less and it is collected by Airbnb for the city.

“Essentially our rules and our practice are not currently aligned,” Councilman Cory Wolbach said in an interview. “We asked a couple years ago for this to come back on our agenda, and it just hasn’t gotten on our agenda, so I’m going to push our mayor and city manager to bring this up again.”

“Basically, we say you can’t do it, but we generally don’t enforce it, and we collect taxes on it,” Wolbach added.

Redwood City, Menlo Park, Mountain View, Half Moon Bay, Cupertino and Santa Clara have either considered or passed new zoning laws to regulate or began taxing short-term rentals. But while Palo Alto’s City Council talked about updating zoning ordinances in 2015, 2016 and 2017 no changes were made.

At an Oct. 4 Palo Alto City Council candidate forum, a questioner asked whether the city should have and enforce additional restrictions on Airbnb.

“I think somebody occasionally renting out a room is not a problem,” Councilman Tom Dubois said at the meeting. “What’s a problem are you know when an entire building is rented, and there are bunk beds put in and it’s basically a hotel.”