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Moving forward, the City could update its transient lodging tax language to include short term rentals

PHOTO BY AIRBNB.COM - Short term rentals on sites like Airbnb aren't covered by the City's lodging tax, but officials and other community advocates are exploring how they can be addressed moving forward.
West Linn is commonly referred to as an "upscale bedroom community."

So while the city might not be a hotbed for employment centers or tourism, it stands to reason that the short-term rental craze would make its way into at least some of those expensive bedrooms. It's been a slow creep over the last several years, and West Linn Community Development Director John Williams estimates that there are currently between 20 and 40 West Linn dwellings listed on major short-term rental sites like Airbnb, which allow homeowners to rent out a single room or their entire house for guest lodging.

Historic Willamette Main Street Manager Rae Gordon looks at those numbers, however small or imprecise they might be, and sees opportunity.

Gordon, who spent 10 years working with Clackamas County's Mt. Hood Territory tourism group, is in the process of creating an inventory of short-term rentals in West Linn that will be posted on the group's website. She said property owners will have to show proof that they are certified with Clackamas County and compliant with lodging taxes before their rentals are listed, and the hope is to promote more overnight stays in the area — which could in turn provide a shot in the arm for local businesses in a city that doesn't have a hotel.

"A real healthy downtown area, and any area that has businesses, has an influx of visitors from outside 15 miles or more," Gordon said. "If we bring in the people who are 15 miles or more (away), we need to say we have lodging. It just makes for a healthier destination, whether you're a resident or visitor, to have those overnights available."

As Main Street's list of short term rentals grows, Gordon hopes to offer incentives for renters to shop and eat locally.

"It just helps the businesses to have that new money coming in," she said. "It would allow me to go after more tourism grants as well. I did 10 years in tourism, and they want overnights. ... People will 'linger longer' — that's the buzzword."

But Gordon emphasized that certification and tax compliance would be absolute necessities for rentals to be included on the list, and that she wasn't encouraging more people to open up their home for rentals.

"This is an opportunity to partner with the existing vacation rentals — the people who are already doing it," she said.

Both the state and Clackamas County collect revenue from short-term rentals through their respective transient lodging taxes.

West Linn's codes, however, do not address this relatively recent phenomenon, and the City's transient lodging tax — which currently goes uncollected in the absence of any hotels within city limits — specifically exempts private home rentals, according to Williams.

"What our code does right now is, if you're going to rent out the home you live in or rooms in it, you need a home occupation permit," Williams said. "It's pretty simple; it's like getting a business license on the city website. There's a list of rules you have to follow, and you basically agree to follow them and then you can get a permit."

Moving forward, the City could update its transient lodging tax language to include short term rentals — but that decision is more complex than it might seem.

"Collection of lodging taxes for these online sites has been a huge issue nationwide and statewide, because generally they're not all that interested in collecting taxes on our behalf," Williams said. "And then of course you've got a whole bunch of different companies; there's not just one ... and so for a small city that doesn't have a lot of lodging this way, it doesn't make sense to devote a ton of time to it."

House Bill 4120, which was passed by the 2018 Oregon Legislature, did give state and local governments more power when it comes to collecting those taxes — including the ability for local governments to subpoena information from short-term rental companies if necessary.

"The state law allowed local governments to get business records from providers to find out what's going on," Williams said. "We have not done that yet ... it's on our list, but because we're not a Cannon Beach or Astoria or a huge destination, it doesn't seem like a huge source of revenue here in West Linn."

The work involved with tracking and collecting lodging tax revenues from short-term rentals, in other words, might not be worth it for the City. Williams estimated that West Linn might generate between $5,000-$10,000 annually, based on his evaluation of Airbnb.

"And of course, the challenge of that kind of money is that it would take quite a bit of staff time to oversee this," Williams said. "It's unclear to me that it would be a revenue generator for the city in any significant way. But we are going to try to look into it as soon as we get some time."

In neighboring Lake Oswego, short-term rentals are banned in residential neighborhoods — though the Lake Oswego City Council may loosen that ban. West Linn has not considered a ban, largely because the City rarely hears from residents about the issue.

"We haven't heard much in the way of complaints," Williams said. "They're pretty invisible in the neighborhoods, especially if the use is only occasional."

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