LEAD — Top city officials are considering how best to regulate a short-term rental industry that brought in $5.4 million in taxable sales and $108,000 in sales tax to the city in 2021.
In 2021, short-term rental sales tax revenue, which is defined by the state to include all hotels, motels, cabins, Air BnBs and other vacation rentals, vacation homes and other establishments that offer accommodation for 30 days or less, skyrocketing from the previous year. In 2020, SD’s Department of Revenue reported $3.3 million in taxable sales related to short-term rentals, including $33,000 from lead in sales taxes. That’s a one-year difference of $2.1 million in sales and $75,000 in taxes.
Officials and owners say the increase is partly due to the growing popularity of vacation home rental properties, and critics are calling for these properties to be more regulated. Critics of vacation home rentals cite a lack of property inspections, increased waste generation, parking issues and health concerns.
Because of these concerns, city officials say they want to have a way to identify and regulate these rentals, which has sparked a big debate among residents and landlords.
Mayor Ron Everett said the problem arose because when several residents asked the mayor and the commission about health and safety, parking and other concerns, the city commissioners didn’t have the answers. . Without some sort of permitting process in place, he said, the city has no way of knowing how the rentals are handled or where they are.
“That’s why we started with some public meetings to allow people to come and talk and say, ‘Here are the problems we have.’ Of course, there are those people who come and say “no problem and leave us alone”. We listen to all of this. No one really wants to eliminate them in town. I think we just need to figure out how many there are, and it’s a process to do that.
According to SDCL 34-18-10, all vacation home establishments are required to obtain a license from the Department of Health. Under the administrative rule, the Department of Health classifies all Air BnBs and similar properties as vacation home rentals. Under SDCL 34-18-32, failure to obtain a license from the Department of Health is considered a Class 2 misdemeanor, with each day the facility operates without a license being considered a separate offence.
Currently, the state reports 143 vacation homes that are licensed with a primary address. But on vacation home rental sites Airbnb.com and vrbo.com, there are at least 201 rentals available with a Lead address.
SDCL 34-18-24 also requires a minimum annual inspection for accommodation establishments, conducted by the Department of Health.
At Monday’s regular city commission meeting, city commissioners told a room full of short-term rental owners and concerned citizens that the city has no plans to ban short-term rentals. or vacation homes. However, Everett said the city may require a license in order to track rentals, and officials are gathering information on city requirements and regulations that would be prudent.
“The option of eliminating vacation rentals is not really on the table,” Commissioner Colin Greenfield said. “That’s not what we’re here to discuss. We value and value vacation rentals. We just want to make sure they are regulated and registered with the city. We are not here to take anyone away. We just want to make sure everything is done the right way. »
At Monday’s meeting, Everett acknowledged that concerns have been raised about parking, increased litter and health risks associated with short-term rentals, especially those located in residential neighborhoods. But landlords who rent their homes to visitors using sites like Air BnB say the properties generally generate less waste and are cleaned more frequently than long-term rentals.
“As far as trash goes, it doesn’t make sense to me that a vacation rental should be charged for extra trash because most of the time it’s only there for a weekend,” said Sherri Meidinger, who operates a short-term rental. lead property. “It’s not a full-time rental where you would accumulate trash much more frequently.”
Rick Wisser, who along with his wife Colleen operates short-term rentals in town, said he and his wife wanted to do the right thing and provide a quality place to stay for visitors. The best thing about offering a vacation rental through sites like Airbnb.com is that the landlord can set rules and if renters don’t follow the rules, they get a bad review that prevents them from rent again. Ultimately, Wisser urged the city to be reasonable with any additional fees or regulations. Charging extra for garbage, for example, just doesn’t make sense, he said.
“It would be like charging people a lot of money for Christmas because you have more trash,” he said.
Additionally, he said parking will always be a challenge in the city, regardless of how properties are used.
“I lived in a town where the neighbors have 12 kids and 12 cars, and it’s a parking issue,” he said.
Daniel Ward, who told the city commission he planned to offer vacation home rentals in Lead, also asked the city not to enact restrictive regulations that would impede the practice. “The state has a certified way to already have Air BnBs in place,” he said. “I don’t entirely agree with the city enacting more regulations. Air BnBs have saved many homes in the city. Caldeonia condominiums were saved thanks to Air BnBs. People aren’t going to invest the kind of money that needs to be done unless they expect to get a reward for their investment. If we wait 20 to 30 years, if we don’t save the houses we have now, there won’t be any more houses. There are already empty lots and abandoned houses in this town.
Meidinger pointed out that landlords who offer vacation home rentals pay 25% higher property taxes for non-owner-occupied homes. However, a check with Lawrence County Auditor Brenda McGruder found that while the county and town of Lead don’t levy a higher rate for non-owner-occupied properties, the Lead-Deadwood School District charges 9% more. McGruder said a non-owner occupied home valued at $100,000 would pay $2,448.90, while an owner occupying a $100,000 home would pay $2,111.20.
“The school levy is the only levy that changes,” she said, adding that 34% of an owner-occupied levy goes to school, while 43% of non-owner-occupied levies go to school. at school.
Dustin Heupel, a longtime Lead resident and president of the Northern Hills Recreation Association, asked the city to consider limiting the number of licenses available for short-term rentals, so the majority of properties are not occupied by visitors who have no connection with the community. “I would hate that we were 60-70% Air BnB and didn’t have real community members,” he said. “In your process, I hope you consider creating a community and having workers in our bars, gas stations, grocery stores and other businesses.”
Overall, Greenfield reiterated that the city wants to work with the community to establish regulations for vacation rentals. “It’s not us against you guys,” he said. “We understand that those of you in the room here are business owners in an emerging market, trying to do the right thing. It’s… something communities and business owners are trying to determine what is the best way to make this work. We understand that there are already taxes being paid and revenue coming back to the city. Our goal is not to try to find a hidden source of revenue We are on your side and we are not here to say that Air BnB is polluting our city, we see this as an emerging commercial market and we are looking for the best way to regulate and ensure that people who come to city are served the way they should be, so you can earn your money.
The Main Planning and Zoning Commission will consider regulations and possible fees for vacation rentals at its next meeting at 5 p.m. on Jan. 25. Public comments are welcome.
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