Expert: Vacation rental bill a ‘Trojan Horse’

Measure would require Clark County to lift ban

By: - May 4, 2021 5:49 am

A measure purporting to restrict short-term rentals, collect millions of dollars in lost lodging taxes, protect neighborhoods, and preserve affordable housing is a ‘Trojan Horse’ according to one expert who says vacation rental behemoth Airbnb is a driving force behind the effort.  

The measure, which targets Clark County alone, would “give Airbnb permission to make more money off of the STR industry and have more control over STR hosts in Nevada,” says Julie Davies, a vacation rental educator and host. “This actual intent is wrapped up in false standards that seem strict but that cannot be enforced.”

“Like Kleenex is synonymous with tissue, Airbnb is synonymous with short term rentals,” the bill’s sponsor, Assemblywoman Rochelle Nguyen said as she presented the bill to the Assembly Revenue Committee last week. Nguyen says the measure “came from my own personal experience.”

She says she and her multigenerational family prefer vacation homes to hotels. She also lives near downtown Las Vegas, where a dearth of HOAs and gated communities render neighborhoods “ripe for STRs” she says.    

“I don’t want my neighborhood to become a series of mini hotels,” Nguyen told colleagues as she presented the bill last week before the Assembly Revenue Committee.  

But Davies says AB 363 “is a dream bill for ‘no rules’ advocates” who will use what she calls vague language to evade enforcement. 

“This bill is a first step toward legalizing short-term rentals statewide which includes tax collection and licensing requirements,” says an Airbnb website.  

The legislation mirrors measures supported by Airbnb and the right-wing organization Americans for Prosperity in legislatures across the country in recent years. 

A proposal under consideration in Maine says municipalities “may not enact or enforce an ordinance, rule or order prohibiting a short-term accommodation rental rented through a transient rental platform.”

A bill that died last week in Florida “..would have preempted all regulations of vacation rentals to the state, including the inspection and licensing of vacation rentals,” according to a legislative update from the Florida League of Cities. “The (amended) bill would have protected existing vacation rental regulations but preempt cities from specifically regulating advertising platforms.”

Proponents argue millions of dollars in transient lodging tax is lost annually because of Clark County’s lack of regulation, which renders platforms such as Airbnb unable to collect tax on “illegal” operators.  

“I don’t believe bans work,” Nguyen told lawmakers. “I want to make sure counties and cities cannot ban them.” 

Nguyen declined to comment before the hearing and did not respond to questions submitted by the Current on Monday.   

Clark County estimates  6,000 short-term rentals are in operation in unincorporated areas.  Licensing them would require five additional fire inspectors and one deputy fire marshal.  Code Enforcement and Business License would require a total of 13 new staffers. The estimated cost of salaries, benefits, and equipment total some $3.5 million each biennium, according to a fiscal note submitted by Clark County.

Vacation rentals of entire homes are permitted in Washoe County, Henderson, and North Las Vegas. In the City of Las Vegas the property must also be occupied by the owner, in keeping with a traditional bed and breakfast.  

“The hosts want to end the ban. The opponents want to hear about regulation,” says Davies. “The trojan horse is all the bad stuff inside the bill.”

The measure puts platforms such as Airbnb in charge of collecting and remitting the transient lodging tax quarterly, which allows the company to put the money to use in the interim. Individual hosts are required to report and pay taxes monthly.   

They will make millions of dollars off the ability to collect and hold taxes. Airbnb is an online reservation contractor,” says Davies. “It is not a property manager, so it should not be remitting taxes.” 

Davies says making the business owner ultimately responsible for collecting and paying taxes is “one of the best code enforcement tools there is.”  The bill absolves the property owner of that responsibility. Additionally, she says Airbnb provides its hosts with no accounting of what it charges clients or pays in taxes. 

The company did not immediately respond to requests for comment. 

Strange bedfellows

The bill would prohibit STRs within 2,500 feet of hotels.  

However, Nguyen said “multi-family dwellings” in the resort corridor are “carved out” of the distance requirement.  

The Nevada Resort Association, which has long opposed STRs, supports regulating and taxing “these commercial operations similarly to other public accommodation facilities,” president Virginia Valentine testified.   

“Why would the Nevada Resort Association want to put something into play that would feed the illegal operators?” Davies asked rhetorically.  

Assemblyman David Orentlicher questioned the wisdom of prohibiting STRs in the resort corridor.  

“I understand why, if you’re a resort, you don’t like competition,” he observed. 

STRs in neighborhoods would have to be 500 feet apart. Properties that are currently registered would be grandfathered in, regardless of proximity. An amended version of the bill limits occupancy to 16 guests. The original version permitted two guests per room, not bedroom. 

The measure places a two-night minimum on all reservations in an effort to discourage so-called “party-house” bookings.   

“We need to hold the owners responsible when they are renting these properties,” Nguyen said.  

Adam Thongsavat of Airbnb testified against the measure because of the minimum stay and distance separations from resorts and between homes. He pledged Airbnb’s support if those provisions are removed. 

Nguyen said the current patchwork of regulations in Southern Nevada cause confusion for “those looking to invest in STRs or even stay in STRs.”   

Nguyen also said the bill would “protect Nevadans from rising housing costs associated with STRs.” 

“What we were trying to curb is like this proliferation of short term rentals,” she said.

AB 363 is intended to protect workers, according to Nguyen, such as members of the Culinary Union, which has also long opposed STRs but testified in favor of the measure.  

Culinary official Jim Sullivan testified the bill should place restrictions on landlords and other investors and limit how many a person or corporation can own. 

But the bill requires owners of multiple STRs to hold no more than five properties under one corporate name. It does nothing to limit ownership.

Nguyen said she learned multinational corporations “were coming in and buying hundreds of properties under one name. I think there is one of these companies that owns more than 250 companies in one area in our state.” 

She said limiting individual corporations to five properties is “a big enough hiccup” to dissuade investors from grabbing up multiple properties.  

The cost of incorporating is nominal in Nevada, as are annual renewal and business license costs of $325.  One night’s rental of an STR can reap thousands of dollars for the host.     

Assemblywoman Venicia Consadine said she opposed the measure because it would have a disproportionate impact on lower income areas that lack the HOAs to block STRs from operating.   

The committee took no action on the bill.

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Dana Gentry
Dana Gentry

Dana Gentry is a native Las Vegan and award-winning investigative journalist. She is a graduate of Bishop Gorman High School and holds a Bachelor's degree in Communications from the University of Nevada, Las Vegas. Gentry began her career in broadcasting as an intern at Channel 8, KLAS-TV. She later became a reporter at Channel 8, working with Las Vegas TV news legends Bob Stoldal and the late Ned Day. Gentry left her reporting job in 1985 to focus on motherhood. She returned to TV news in 2001 to launch "Face to Face with Jon Ralston" and the weekly business programs In Business Las Vegas and Vegas Inc, which she co-anchored with Jeff Gillan. Dana has four adult children, two grandsons, three dogs, three cats and a cockatoo named Casper.