Is it time Air BNB operators in Sioux Falls start paying a BID tax?

The hotels in Sioux Falls of a certain size have to pay into the BID tax. If you are long term rentals you have to pay taxes. If you are an Air BNB operator you just pay sales taxes;

AirBnB owners must register their property with City Hall as a rental.

Renting out a private residence as a bed and breakfast in Sioux Falls comes with other requirements, including applying for a $250 conditional use permit, making the necessary accommodations for off-street parking, registering with the state health department and filing a site plan of their home with officials.

In 2015, city officials raised a red flag when they found about 30 AirBnBs operating as rentals while breaking the law.

Last year, the San Francisco-based tech company agreed to collect sales tax from South Dakota renters.

But as we are seeing, it is becoming a very lucrative business for those operating it in Sioux Falls. And who can blame them? You make much more money from short term renters AND they are pre-vetted before they stay. In fact Sioux Falls city councilor Erickson and her Realtor husband have continued to expand their Air BNB business since it has been introduced in Sioux Falls.

What do you think? Should there be a separate BID tax for short term renters since they really are NOT supplying housing like long-term renters and are acting more like a hotel.



9 comments ↓

#1 D@ily Spin on 10.19.18 at 8:19 pm

If you’re AirBNB and you pay any tax you’re a fool. Fees are collected tax free out of state then disbursed as refund compensation to property owners. Interstate services are not taxable. It’s how NE & MN contractors get bid advantage over local business. I favor the AirBNB process because it gives hotels subliminal competition. Many TH/Condo associations have amended their rules so that rentals must be at least 3 months. A better recourse is for chain hotels to sue the city as a class denoting unfair competition because of unfair and extreme lodging taxes.

#2 D@ily Spin on 10.19.18 at 8:26 pm

The best way to stop best buddy TIF’s is to occupy the city fighting litigation for interstate commerce and ACLU civil rights lawsuits. It’s sad but taxes that could be used for instructure must be used to stop political favors.

#3 neighbor on 10.20.18 at 9:39 am

I live in a core neighborhood where many of the residents have been here for decades. We are very familiar with who lives in our neighborhood.

We began seeing many new faces walking by our homes, they seemed to be here one moment and then gone the next. We were asking each other, who are all these new neighbors?

What we discovered is that City Councilor Christine Erickson and her husband had purchased two properties and quietly turned them into ABnB’s.

We began asking questions of local realtors and came to find out that many homes priced in the starter-price range are being bought up by realtors and turned into short-term rentals or ABnBs.

We are not happy this is happening in our neighborhood.

This is obviously an area which has been overlooked both for regulation and taxation.

If the City can literally spend months studying how many chickens a citizen can have in their backyards (better known as the Urban Ag Committee) then certainly this situation warrants to be studied and acted on by one of the City Council’s committees (ex: Land Use Committee).

#4 l3wis on 10.20.18 at 10:58 am

You are correct. There needs to be a separate set of regulations and taxation for the short-term rentals. But on a positive note, Air BNB I think does a good job of vetting these people, and you are probably much safer with short term renters than long term. But I would agree the homes she be sold as permanent residences in residential areas or long-term rentals. Of the 10 houses on my block, 4 are rentals. And two of them that are actually owned by the residents are in bad shape. One of them looks like it is abandoned. In fact the attached garage on the place caught on fire over a year ago and all the resident did was put up plywood on the front of the garage to cover up the damage. It has been like that ever since and city code enforcement or the SFFD has done nothing about it.

BTW, if anyone in the code enforcement office is reading the ‘BLOG’ the house sits on the NW corner of 16th St and 10th Avenue. Go check out the yard that has never been mowed, wild shrubbery, garbage on the front porch, downed branches, dilapitated roof, junk vehicle in driveway and plywood covering up a fire damaged garage. I can’t imagine what the interior looks like. The sad part is if someone put about ten grand into the place it would be the nicest home on the block (it is a brick structure probably built in the 60’s or 70’s.)

#5 l3wis on 10.20.18 at 11:07 am

Well the ‘rumor’ going around was that there was a ‘deal’ cut between the former mayor and Erickson to make the Air BNB rules more lax. Not sure if that ever happened because I have no proof. The state did crack down on them about sales taxes, which is good. But most other regs that used to be in place went out the door. I was told a few months ago by Erickson that the reason Bed and Breakfast rules don’t apply is because Air BNB’s don’t have a commercial kitchen. In other words the renters don’t pay staff to come in and prepare them meals. But I wouldn’t be surprised if some of them hired personal chefs from time to time.

#6 Anonymoose on 10.20.18 at 11:49 am

I’m a little confused by neighbor’s complaint. So we should add regulations on AirBnB units because you don’t recognize the people walking on the sidewalks near your house? It seems incredibly entitled to view the sidewalks as your personal secure area when in reality they are public sidewalks that belong to all of us.

I’m in agreement that they should pay taxes that are due for their chosen business, but I don’t see what people walking on a sidewalk has to do with this.

#7 neighbor on 10.20.18 at 7:32 pm

Homeowners invest in mortgages.

Renters commit to 12 month leases.

Short term renters contribute what to a neighborhood?

This has little to do with the use of public sidewalks and everything to do with the stability of residential neighborhoods.

This is a land use issue and a taxation issue. It’s way past time for the City to get involved.

#8 "Beach Week" on 10.22.18 at 5:01 pm

What about a TIF for an AirBNB? (There’s got to be some blight here somewhere….(Have you checked the mattress?))

#9 Anonymoose on 10.24.18 at 9:42 pm

Still confused, neighbor. I reread your comment and I still feel the same way. To me a distilled version of your complaint would go like this:

People in my neighborhood have lived here for a long time. We see people we don’t know walking on the sidewalks. Someone bought two houses and turned them into AirBnBs. We talked to realtors and they said sometimes people buy houses to turn into AirBnBs.

We’re not happy that people buy houses to run an AirBnB or that the people that rent them walk on sidewalks. We should create more regulations and taxes because people walk on sidewalks and have chickens.

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