Two Santa Rosa ballot measures likely to lift cost of vacation rentals

Measure EE would modestly raise hotel tax, FF would require some operators to buy business licenses.

photo credit: Marc Albert/KRCB
The official state voter guide, county specific ones should arrive soon.

Measure FF, going before Santa Rosa voters this fall, would lift the city's transient occupancy tax from nine to 11 percent.

The tax impacts hotel rooms and short-term rentals. For a two hundred dollar a night room, the tax would rise to twenty-two dollars. In areas under the jurisdiction of Sonoma County, the room tax is 12 percent.

Another measure on November's ballot would also impact some short term rental operators, along with most other businesses. Measure EE would revamp the cost of a city business license, which Santa Rosa calls a Business Tax Certificate, for the first time in three decades.

The measure would require operators of four or more short term rentals to obtain one, at the cost of $200. If an operator manages to bring in more than half a million annually, they'd jump into a higher bracket, where a certificate costs $500.

While together the additional costs probably won't bring about a sea change in the popularity of vacation rentals, Gary Lentz, a mortgage banker who operates two in Santa Rosa, said the bloom is pretty much already off the rose.

"These new taxes couldn't come at a worse time for people in the industry," Lentz said. "The houses are sitting open occasionally on weekends now even, which never happened before, and we're having to lower rates quite a bit to lure people in," Lentz added.

In the business almost a decade, he said much has changed in recent years, including guest expectations.

"They now expect to be going to a five star hotel. they can give you a lousy review if somethings not completely clean or not the way they expect it or something's broken, it's become kind of the worst of all worlds," Lentz said.

The biggest impact on his balance sheet though, is the escalating cost renewing his two annual permits.

"They were charging $250-$260 bucks, now they've raised that to $1,137, something like that, it's nearly four times as much," Lentz said.

The City of Santa Rosa's fee schedule states the figure is actually $886, while a new permit runs a little over $1,200.

Lentz said he doesn't expect much sympathy for himself or other vacation rental operators, but says the rising costs are a death by a thousand cuts. He said a few bad actors who enabled noisy and inconsiderate guests, generating complaints, have colored public perceptions. He maintains local regulations have all but eliminated irresponsible operators.

When he first started renting his home over weekends in 2015, "It went really, really well, I mean it was a well oiled machine," Lentz said. What he charged for a three bedroom-two bath house rose from $350 to eventually $1,000. Over the years, the amount of competition exploded.

"Ironically, the pandemic really contributed to it, because people couldn't travel. If you were a wealthy person, and couldn't go to Paris or China or Japan or an African safari---you couldn't get on a plane---going to wine country was pretty good."

Now, with so many others in the game, the short term rental business has lost some of its luster. He says some operators have been giving up.

"They are changing the houses over to long term rentals. It's gotten to the point where it's close, especially when you throw in the hassle factor," Lentz said. .