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Vacation rental backlash ‘boils over’; assessment plan scrapped

By Christian Kallen

Faced with a backlash of objections from small overnight short-term rental operators and B& B hosts, the Sonoma CountyTourism(SCT)boardbacked away from a proposed Business Improvement Area (BIA) assessment increase and pulled the topic from the Board of Supervisors agenda just before the board’s Nov. 1 meeting.

“We most definitely underestimated the frustration of the vacation rental industry around a number of issues, and this seemed to be the straw that broke the camel’s back,” wrote Claudia Vecchio, executive director of SCT, in the announcement of the reversal. “Because of this, Sonoma County Tourism is suspending its initiative to include properties with an annual revenue of less than $350,000 in the BIA.”

The reversal came after two public meetings that Sonoma County Tourism held, on Oct. 25 and Oct. 27, to discuss the process and answer questions. A grassroots organization called the Sonoma County Coalition of Hosts, a loose alliance of about 250 hosts who say their rental properties do not provide the cushion to absorb the two-percent BIA assessment, held its own meeting on Oct. 30 to evaluate its options in light of the SCT discussions.

The Business Improvement Area assessment, a funding source for the county tourism agency, currently includes a two-percent assessment on all lodging businesses that report income of $350,000 or more annually. The current expected revenue from the BIA is over $6 million as it stands; the district includes the entirety of Sonoma County and every incorporated city except Sonoma and Healdsburg, which did not sign on to the BIA agreement when it was formulated in 2004.

On Oct. 14, Sonoma County Tourism formally proposed eliminating the threshold and requiring that all overnight rental businesses contribute, which would result in an estimated $2.1 to $2.5 million increase in assessments collected annually from approximately 3,800 operators with revenues below that $350,000 threshold.

The assessment change was on the Board of Supervisors agenda, but a note passed to Chair James Gore (Fourth District) asked that the item be removed from the agenda by Sonoma County Tourism. Robert Pittman, county counsel, stated, “It is our understanding Sonoma County Tourism, [which] requested the original modifications to the business improvement assessment, has now formally withdrawn [its] request.”

Gore invited the SCT members to comment, and Vecchio took advantage of the opportunity.

“When the letter went out announcing this change, we got feedback and I expected feedback. I mean nobody does a public process without feedback,” she told the board. Then they went “above and beyond the process” by holding two virtual town halls, to explain the proposed assessment change, during which, she said, “The frustration level of this industry sector really boiled over.”

She noted that, “It really seemed that moving forward would be a non-win situation for everyone, so we made the decision as an organization that we would pause this.”

Following the SCT’s virtual town halls, the Coalition of Hosts held its own by-invitation Zoom meeting to evaluate next steps. Vecchio was invited, and according to Carl Jaeger of the coalition, made a positive impression.

“It was a really good dialogue,” said Jaeger. “What I found was good, honest, intelligent dialog instead of people just screaming at each other.”

He was impressed with Vecchio’s receptivity to the input of the smaller operators. “They listened, they spoke, and then they made their decision.”

Vecchio’s revised assessment message, posted on the SCT website (sonomacounty. com/partners/sonoma-county-tourism-biarevision), went on to say, “While we’re suspending the initiative, we’re not ending it. We hope this effort will continue in a way that best meets the needs of our property owners/ managers and creates a more collaborative working relationship.”

What that meant for the SCT was access to a wider pool of property owners of vacation rentals who are willing to engage with them and were encouraged to add their information to the SCT’s “Hospitality Hub,” an online resource of available lodging in Sonoma County. In return, the county travel agency would create a vacation rental committee “to create sector-wide synergies.”

In general, vacation rental operations would have the opportunity to be featured on and have bookings taken through the site. “This will be integrated as SCT undergoes a website redevelopment during 2023.”

However, added as a caveat, “This group will not be able to advocate for policies or regulations, but will work on marketing and messaging that can help bolster business.”

One interesting fact that came out of the workshops was that no one was really clear why the original income threshold was set at $350,000. It apparently dates from 2004, a time prior to the tenure of any current member of the SCT’s leadership, so the institutional memory of how that number was reached is gone. Keo Hornbostel of Safari West said it had been set as a hotel initiative, not a lodging initiative, since the vacation rental sector was essentially unborn at that point.

Vecchio made it clear the SCT reserves the right to come back with the expanded plan, or a version of it, in the coming year, perhaps something the new constituency has a hand in crafting, even if indirectly.

The involvement of the vacation rental sector will also help the SCT build its leverage by representing a wider pool of overnight rentals beyond the larger, more professional lodging providers.

“This is a win-win scenario, where families can engage in this economic activity and bring professionals and guests and tourists to Sonoma County that need a temporary place to stay in an affordable way,” said Jaeger. “Let’s create economic activity in the county safely and without noise, and let’s all work together to make it happen.”