Sonoma County pauses tourism fee for vacation rentals

Leaders of Sonoma County’s publicly funded tourism agency have paused a plan to apply a tax assessment to vacation and short-term rentals following outcry from those smaller lodging operators.

Sonoma County Tourism announced plans in October to tack on a 2% Business Improvement Area assessment to nightly rents that vacation rentals charge guests. The move would have brought the county’s growing number of vacation rentals under Sonoma County Tourism’s funding umbrella.

The 2% assessment was estimated to generate an additional $2.1 — $2.5 million in tax revenue per year, according to a report by the county’s Economic Development Board.

The agency’s 2% assessment already applies to larger properties generating revenue greater than $350,000 annually, according to its website.

Sonoma County Tourism intended to use the funds to increase marketing for vacation rentals, said Claudia Vecchio, Sonoma County Tourism president and CEO.

The Sonoma County Board of Supervisors was set to hold a public hearing Tuesday on the proposed assessment, but pulled the item at Sonoma County Tourism’s request.

“We don’t want to cause greater angst among our partners,” Vecchio said in an interview Monday. “There seemed to be a high level of frustration that we had not heard prior to this.”

The move comes as the demand for Wine Country vacation rentals continues to grow, especially amid the market and migration shifts of the past two years.

Data provided by Sonoma County’s permitting department shows there are 1,822 vacation rentals with completed permits, 72 rentals in process, 111 on hold and 15 with incomplete permit applications.

However, Sonoma County Tourism estimated there are 3,800 vacation rentals in unincorporated parts of the county, Santa Rosa, Petaluma, Rohnert Park, Sebastopol, Cloverdale, Cotati and Windsor that are required to pay lodging taxes.

During public comment, Eric Fraser, a member of the vacation rental community, used that discrepancy in numbers to illustrate what he said were challenges impeding communication between Sonoma County Tourism and vacation rental operators.

“The main obstacle, I think, of really coming together and working together has to be the conflict over facts,” Fraser said.

The tourism agency held two online town hall meetings where frustrations from vacation rental operators “boiled over,” Vecchio told the board Tuesday.

Vacation rental owners have objected to the new charge, contending it would harm bookings. They have also questioned how the tourism agency benefits small operators compared to larger lodging businesses like hotels.

“Lots of these very small operators were citing price kinds of sensitivities,” Vecchio said in the Monday interview. “We don’t see that across the board. They operate a bit differently than we get general insights into when they’re that small.”

Sonoma County officials continue to grapple with balancing the growing vacation rental industry with the concerns of neighbors who say the increasing number of vacation rental homes is sapping local housing stock and quality of life while complicating emergency plans for big disasters like wildfires and floods.

Vecchio told the Board of Supervisors that vacation rentals now make up 46% of lodging stock in the county, explaining why the agency wants to include that sector in the tourism charge.

Through the business assessment, the tourism bureau collects approximately $6 million annually from lodging operators who meet the $350,000 minimum revenue threshold, according to the county’s Economic Development Board.

Sonoma County Tourism’s projected $9.9 million budget for 2022-2023 also is supported by hotel-bed charges, or transient occupancy taxes, collected from lodging operators countywide.

The nonprofit agency is responsible for marketing the county’s tourism industry by promoting leisure, events and tour and travel, according to its website.

Vecchio said the bureau has been working on the new funding initiative for two years and plans to resume conversations with vacation rental operators about the assessment in 2023.

“We have some go-forward plans about trying to get this group together and map out a course,” Vecchio said.

You can reach Staff Writer Emma Murphy at 707-521-5228 or [email protected]. On Twitter @MurphReports.