Fewer rentals lead to less TOT funding

10/07/2020

Less revenue came in for emergency services and affordable housing from the transient occupancy tax last year than West Marin had hoped for, and next year will likely bring even less. 

Marin’s shelter policies, which blocked the short-term rental industry between March and September, are mostly at fault. The trend is expected to continue, as some short-term operators are changing their business models for the foreseeable future. 

Measure W, which voters approved in 2018, raised the transient occupancy tax from 10 percent to 14 percent for overnight visitors on the coast. While most of the tax’s revenue goes to the county’s general fund, the increase goes to emergency services and affordable housing in West Marin. 

Between July 2019 and June 2020, the tax generated $1 million for West Marin, compared to the projected $1.3 million. For the upcoming fiscal year, the county’s finance department estimates it will bring in as little as $700,000. 

Overall, unincorporated Marin last year brought in more than was expected, possibly due to increased compliance, for a total of $6 million. That number is expected to plummet to $4.2 million this year. 

“The pandemic-induced travel restrictions and the closure of short-term rentals reduced revenue opportunities for both the county and short-term rental operators, and there’s still a lot of uncertainty around this market,” said Aisha Ismail, the collections manager with the finance department. “We’ve seen a lot of the short-term rentals becoming long-term rentals, or else ceasing business operations until the imminent threat of the pandemic has been reduced.”

Short-term rentals have been highly restricted since the start of the pandemic, allowed only for housing essential workers, the homeless or those needing to quarantine. Some operations flouted these rules; all were legally allowed to resume at the end of August.

Not all operators reopened, however. Since March, about 125 of the 897 operators registered to pay the occupancy tax countywide submitted a close-out request, and Ms. Ismail suspects an even greater number of operators have converted to long-term rentals or else aren’t renting at all. Two-thirds of the remaining operators are on the coast, aligning with typical trends in Marin. 

Returning to the market by activating a certificate number is a relatively easy process, Ms. Ismail added.

Despite the uncertain future for the short-term rental market, Measure W funds have already helped buoy affordable housing projects and emergency services in West Marin. 

Since January 2019, funds for housing operations have gone to several local groups. The Bolinas Community Land Trust received $150,000 to rehabilitate a property, $10,000 to start an aging-in-place pilot program, $50,000 to assist in the purchase of a property in Stinson Beach, and $31,000 for a rental assistance program. The San Geronimo Valley Affordable Housing Association received $21,810 to help with energy efficiency upgrades, the San Geronimo Valley Community Center received $32,000 for rental assistance, and West Marin Community Services received $37,000 for the same purpose. 

A nine-person committee chosen by the Community Development Agency identifies ongoing priorities for the affordable housing funds.  

Leelee Thomas, a planning manager for the agency, said the Coast Guard property, which the county purchased last fall for the purpose of affordable housing, could be affected by the reduced revenue. “Obviously a major project coming up is the Coast Guard conversion, and less funding from Measure W will mean less funds available for the rehab of housing,” she said. 

Ms. Thomas added that conversions to long-term rentals could prove a silver lining in regard to affordable housing.

Local fire agencies have used the funds they received in myriad ways, but primarily to increase staffing. Local fire chiefs negotiated the distribution of funds. 

The Inverness Volunteer Fire Department expected to receive $90,000 for the recent fiscal year but was about $10,000 short in June. With the funds allotted from the occupancy tax, the district hired a new fire services officer position at 32 hours per week, tasked with assisting in volunteer training, equipment maintenance and chipper day management; next year, the district will reduce the hours for the position. 

Both the Stinson Beach and Bolinas fire departments hired an additional full-time position that the departments hope to retain, even if the money has to come from elsewhere. 

“We are so grateful for any T.O.T. money we get, because there is more being asked of the fire and emergency services than ever before,” said Will Mitchell, a board member of the Stinson Beach Fire Protection District. “Our call volume is through the roof. We intend to make every effort [to keep that hire].” 

Jason Weber, the Marin County fire chief, said his department used the monies it received to extend the hours of the seasonal ambulance based out of Stinson; the department also purchased new auto extrication equipment. “Until the economy rebounds, we will maintain a conservative approach to using the funds for one-time critical needs,” he said.