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Airbnb and other short-term rental companies have become a fixture of Mountain View.
This cottage industry — now numbering more than 800 listings in Mountain View — has prospered thanks in part to the city’s hands-off approach. For years, city officials have mostly turned a blind eye to short-term rental hosts by declining to update city policies, levy hotel taxes or enforce zoning rules.
But this hands-off approach may be costing the city more than people realize. In 2016, the total revenues for Airbnb lodgings in Mountain View totaled $9.8 million, according to the data research site AirDNA. By not charging hotel taxes, Mountain View has forfeited nearly $1 million in annual revenues — even more, when other short-term rental companies are taken into account.
City finance staff members said they would be happy to levy taxes on Airbnb rentals, but taking that step opens up a tangled mess of other city policies that would need to be updated. Until that happens, they have actively avoided collecting so-called hotel taxes, and even sent back cashier’s checks from hosts who tried to pay. Accepting that money could be seen as the city condoning the activity, said City Attorney Jannie Quinn.
“We find ourselves in a unique circumstance where we’re waiting for direction and for the council to prioritize any short-term regulation,” she said. “It’s just like Uber, Lyft and the mobile-fuel businesses — it’s a new business model that doesn’t quite fit our existing code.”
Airbnb has had a presence in Mountain View since at least 2010. For years, Mountain View officials have acknowledged the need for new regulations, but they said that it had to be sidelined for other urgent issues.
Despite Airbnb’s popularity, hotels and other traditional lodgings don’t seem to be suffering from the competition. Over the last six years, revenue from citywide hotel taxes, called transient occupancy taxes, has more than doubled, growing from $3.3 million in 2010 to about $6.6 million last year.
But the city does have the significant problem of having a multimillion dollar industry that is technically illegal. Mountain View’s zoning for residential neighborhoods does not allow hotel uses. City staff say changing the city code to allow short-term rentals would be more complicated that it seems since it would broach difficult issues such as the availability of housing and parking.
But sites like Airbnb have been saturating Mountain View regardless of whether the city’s rules are accommodating. As a result, city staff have had to find their own balance for how to regulate the industry.
Over the last five years, Mountain View has received just under a dozen code-enforcement complaints stemming from Airbnb listings. These cases usually came from neighbors concerned that short-term rentals were taking up all the nearby parking or bringing in too many guests.
Records show that the city opened up 11 cases to investigate short-term rentals for code-enforcement violations. The cases are all listed as resolved but it is not clear whether any hosts were ordered to cease their business. A few complaints pointed city officials to the Airbnb web listings of nuisance homes, but when the Voice checked recently, all those rentals appeared to still be active on the site.
In internal notes, city planners commented that they had little recourse but to acknowledge the public concerns. They replied to most complaints with a statement explaining that they were examining other cities’s rules in order to draft local regulations.
But city officials took a harder line against anyone who asked permission before launching an Airbnb rental. Those homeowners were told that short-term rentals were strictly prohibited in residential zones.
The only time the city did take action to prosecute was earlier this year against a hacker-house located at 1012 Dana St. A neighbor alleged that the house was being rented out like a dormitory to dozens of guests at a time, complaining of parking problems, trash and people coming in and out at odd hours.
City code-enforcement officers in February cited the house for overgrown weeds, trash and inoperable cars, but they took no action against the owner for operating the site as a short-term rental.
Up to now, the city’s main approach has to try and resolve neighborhood problems resulting from Airbnb rentals without shutting them down, Quinn said.
“We’re not taking heavy enforcement action because we haven’t gotten any direction to do more enforcement, but it’s only a matter of time,” she said. “It’s challenging because we have limited tools at the present time to response to short-term rentals, as far as the city code.”
Some cities have managed to sidestep the complex mess of zoning issues attached to short-term rentals but still collect tax revenues from them. In 2015, Palo Alto officials last year decided not to draft formal regulations, but Airbnb still collects transient occupancy taxes on behalf of the city.
Having dealt with hundreds of cities facing similar problems, Airbnb officials have a default system for remitting taxes for local jurisdictions. Company officials say they can begin collecting taxes as soon as cities sign a “voluntary collection agreement.”
“We want to pay our fair share and work with cities to enact clear and fair legislation,” Marisa Moret, an Airbnb public policy manager, said in an email. “We have worked with 275 governments to help hosts pay taxes, and want to do the same with the city of Mountain View.”
Next week, the Mountain View City Council will hold its annual goal-setting meeting, when council members set their top goals for the year. Setting regulations for Airbnb and similar companies could end up on that list. If elected leaders go forward with that as a priority, city staff would produce a wide range of options for the council to consider, Quinn said.
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