SB 584 is expected to be heard in Sacramento by the Assembly Housing and Community Development Committee on June 28th at 9:30 am.
We encourage you to reach out to the members of the Housing and Community Development Committee TODAY to share your opposition to SB 584. To quickly contact the committee members, click the button below.
Contact the Assembly Housing Committee
If passed, Senate Bill 584 (SB 584) would impose a 15% tax on all short-term rental bookings, hosted and non-hosted, and all other applicable taxes and assessments.
A 15% tax on short-term rentals is not a balanced approach and would be devastating for short-term rental owners and managers across the state, the network of small businesses that depend on them, and the state’s tourism community at large. This bill would bring the effective rate paid by short-term rental guests to 27%-30% or more in Sonoma County, depending upon the jurisdiction.
This bill will have significant consequences beyond vacation rentals. Just imagine the consequences for the tourism and hospitality industry in Sonoma County if this bill passes.
Vacation rentals provide an important option for traveling families who may not otherwise be able to afford comparable accommodations. By imposing this unfairly steep tax, SB 584 puts this important lodging option out of reach for many travelers, disproportionately affecting lower-income travelers and homeowners who use their home to augment their income or plan for retirement.
Recently, SB 584 was approved by the California Senate. The next step is for the bill to be considered on the Assembly side. First, the bill will be heard by two of the Assembly policy committees. If it passes those committees, it could eventually make it to the Assembly Floor for a vote. That is why we encourage you to take a moment to make your voice heard now!
Explanation of the bill
The bill, if approved and signed by the Governor, will impose a tax on the occupancy of short-term rentals in California of 15% beginning January 2025. The 15% tax is over and above all current taxes and assessments and will be used exclusively to create a labor force housing fund. The bill defines "short-term rental" to mean the occupancy of a home, house, a room in a home or place, or other lodgings that are not a hotel, inn, motel, or bed and breakfast in California for 30 days or less.
SB 584 would require a short-term rental facilitator (i.e., Airbnb, VRBO, etc.) to collect the tax if the facilitator processes the payment for the rental. The operator (property owner) would be required to collect the tax where no facilitator processes payment for the rental. Although the bill exempts “facilitators” who did under $100,000 in total rental revenue the prior year from collecting and remitting the tax to the state, in reality, this will not be the case because the bill requires on-line marketplaces (Airbnb,VRBO, Expedia, Vicasa, Avant Stay, etc.) to collect and remit the tax.
The California Department of Tax and Fee Administration would collect the 15% tax which will go directly to the Labor Force Housing Fund. The bill was sponsored by the State Building and Construction Trades Council of California, NOT affordable and workforce housing advocates.
SB 584 – Regressive “Sin” tax
The total of taxes and assessments on vacation rental stays is akin to a regressive punitive sin tax. Lower-income people will pay a higher amount relative to their income. Many travelers, especially families, prefer to stay in a rental which is often less expensive than a hotel stay. Overnight guests staying at STR’s locally already pay their fair share of lodging taxes, which are among the highest in California and the US.
What is the current Visitor tax impact on Sonoma County + its residents?
2022 Visitors paid $72 million in local Transient Occupancy Tax (TOT) 2022. Every dollar of TOT stays directly in our local municipalities and is reinvested into infrastructure like roads, parks, and schools. So, every dollar of TOT collected from overnight guests saved each Sonoma County household $688 in taxes.
Damaging Impacts on Tourism
SB 584 is a punitive tax targeting a single industry that is one of the most beneficial to the overall health of our County. The combined 30% tax on overnight guests will effectively place Sonoma County vacation rentals' non-competitive position, thereby reducing revenues to other small local businesses that need overnight guests to spend in restaurants, retailers, wineries, and more. SB 584 creates an extraordinary level of tax and assessments on visitors to Sonoma County, which will cause visitors to consider other destinations and sets a dangerous precedent.
Grim Forecast
The total overnight tax and assessment rates will rise to 27% - 30% or higher in Sonoma County, visitation will dive, a number of STR’s rentals will not be sustainable and with reduced transient occupancy tax collected, residents will pay a higher tax.
STRs with lowered occupancy would immediately impact vacation rental "service teams" (landscapers, housekeepers, pool technicians). These workers who are employed by or are vendors to the short-term rental sector are disproportionately Latino in Sonoma County and will see their employment and income reduced or eliminated.
Local authorities are undermined by the state imposing a tax on an area of tax revenue and public policy that was historically the sole purview of local governments- this is a tax on Californians when local communities have already established protocols to manage STRs. California residents make 117.4 million leisure trips within California and account for 51% of all leisure trips within California
Reducing overnight guests due to a 30% tax rate will result in less Transient Occupancy Tax and sales tax collected by local municipalities. Local governments depend on those undesignated funds in their General Fund budget to pay for road repairs and public safety and other public services which benefit Sonoma County residents. Reduced visitation directly impacts small retailers and wineries, which hits the municipality budgets with reduced tax collection.
Increasing affordable and workforce housing is extremely urgent and important
Increasing the supply of affordable and workforce housing is vital to the future and sustainability of the hospitality and tourism industry in Sonoma County, however, SB 584 is not the solution. Other funding options exist including the proposed North Bay Housing Bond Measure, together with low-income tax credits, commercial mortgages, and additional local, regional, and state funds, which will help fill the gap between the cost of development and financing secured through debt and equity. Equally important is the need to reduce the cost and speed of bringing units to market.
-Sonoma County Coalition of Hosts