Short Term Rentals to Be Taxed in LG
The City of La Grange wants AirBNBs and other short-term rentals to start paying hotel occupancy tax (HOT).
During their meeting Monday night, Feb. 24, the La Grange City Council passed the first reading of an ordinance that would allow the City to collect the tax. City ordinances currently exempt short-term rentals from the seven percent local HOT tax.
La Grange Main Street Manager Caleb Parks said the City could be missing out on tens of thousands of dollars in revenue.
City Secretary Janet Bayer said online rental sites like airbnb.com and vrbo.com automatically collect state HOT money. But when it comes to local hotel taxes, operators have to set up their accounts to comply with municipal or county levies.
Parks said he believes there are about 20 to 22 active bed-and-breakfast accommodations in La Grange. City Attorney Angela Beck advised Parks to inform the owners about the possible new tax once it passes.
AirBNB operator Wendy Anderson spoke at the meeting. Anderson said she has no problem paying the tax. But she wants the City to make sure those funds are spent according to state law.
“One of the things I think is truly important is making sure you’re following that two-part test, which is required by statute – you’re putting heads on beds and the funds are not just being dispersed to local festivals or things you can’t really prove is putting heads on beds,” Anderson said.
Anderson has operated a four-unit bed-and-breakfast near the La Grange Ice Plant wedding venue for the past year.
“In my year of doing business here, what puts heads on beds at our facility are weddings, anything in Round Top puts heads on beds, the Fair puts heads on beds, and the MS 150 has put heads on beds,” Anderson said. “There is no other event in La Grange that has put heads on beds for us. So if you’re going to tax me and my business, I would ask when you disperse those tax dollars that you give special consideration to what is truly putting heads on beds, not necessarily festivals that are local and have day travelers.”
Anderson said the City could also use hotel occupancy tax revenue on a local tourist attraction. For example, she said, Washington County and the City of Brenham, where she lives, pools hotel occupancy tax revenue to help fund The Barnhill Center, an event venue that includes the historic Simon Theatre. It hosts live music performances and other entertainment throughout the year.
“So if you’re going to expand your HOT tax umbrella, I’d encourage you to look more holistically and invest into something that will actually bring people into the community and put heads on beds,” Anderson said.
Mayor Jan Dockery said the City Council’s general services committee will consider possible regulations for short term rental accommodations. City Attorney Angela Beck said some cities require a license or permit to operate a bed-and-breakfast – something not currently required in La Grange. Those issues will be addressed separately from the proposed ordinance on HOT collections for shortterm rentals.
The City Council will need to pass a second reading of the new tax ordinance and publish a notice in the newspaper before it becomes effective.