FAIRFAX TOWN COUNCIL MEETING
STAFF REPORT
MEETING DATE June 3, 2026
PREPARED FOR Mayor and Town Council
PREPARED BY Jeffrey Beiswenger, AICP, Planning & Building Services Director SUBJECT Receive Informational Update on the Short-Term Rental Program
RECOMMENDATION
Receive an update on the Fairfax Short Term Rental Program and provide input to staff on next steps.
BACKGROUND
Short-Term Rentals (STRs) or vacation rentals are common and are located throughout Fairfax.
Platforms such as AirBnB and VRBO make it easy for both hosts and guests to rent and find rentals. Like other cities and towns, Fairfax has adopted regulations for STRs, often using a service to assist with key aspects of a program, such as registration of units, payment of hotel user’s tax (HUT) and program compliance. The Town of Fairfax currently uses the company Deckard and the company’s Rentalscape software to help identify short-term rentals in Fairfax and assist with the registration and HUT collection.
An on-line registration portal has been established.
The service provided by Deckard includes a notification and code enforcement process. Up to three letters are sent to property owners who have been identified by Deckard as having active STRs and the letters encourage registration and the payment of the required Hotel User Tax (HUT). The on-line portal is easy to use and allows owners to self-register. Staff has actively helped those who need assistance or have questions.
Prior to 2022, the Fairfax municipal code was silent on STRs and the Town did not have a mechanism for identifying active STRs. Prior to the introduction of the short-term rental program, STRs were not permitted in any zone in Fairfax, but they were pervasive throughout Fairfax. The most recent code changes related to STRs went into effect on February 8, 2024. Listing platforms such as Airbnb and VRBO intentionally withhold exact locations of STRs from public view making it difficult to find addresses and property owners without the help of a specialist service provider such as Deckard (Rentalscape).
Since Deckard has been actively finding STRs, staff has focused on informing STR operators on the regulations and either encouraging operators to register or cease operating the STR altogether. Some STRs cannot qualify under the existing criteria and therefore cannot register.
Since the inception of the STR program, the Town Council has sought to balance competing interests:
(1) the ability of property owners to realize additional income from property, to offset high Marin housing costs; (2) the impacts to neighbors and the community from tourist accommodation within residential neighborhoods; (3) the impact of removing potential long-term rental units from the housing supply. The regulations as written are designed to allow STRs, only if they can meet the code requirements. 2 Recent changes to state law do not permit accessory dwelling units (ADUs), built after 2020 to be used as short-term rentals. As of January 1, 2026, use of any, and all junior accessory dwelling units (JADUs) as STRs is prohibited by state law.
AirBnB, VRBO and other websites, intentionally, do not provide addresses, so Rentalscape/Deckard identifies property addresses through other means. With the assistance of the Deckard software, Town staff would be unable to locate STRs. Despite best efforts, some STRs listed on the site have not been located by address and cannot be contacted unless a complaint from a neighbor is filed.
For discussion purposes STR hosts in Fairfax can be grouped into the following categories:
1. Currently registered and actively paying HUT quarterly, as required (approximately 15).
2. Lapsed registrations (approximately 22).
3. Not registered and not paying HUT (approximately 31). These can be divided into three subcategories:
a. Eligible to register but not choosing to do so, despite multiple letters from Town; b. Attempted to register and were declined due to zoning restrictions; or c. Not eligible to register and choosing to operate illegally despite letters from the Town.
The current system requires that STR hosts are actively re-registering every year and paying HUT quarterly. Even though the system is partially automated, an extraordinary amount of staff time is required to encourage existing STR hosts to register and/or re-register and pay HUT tax. Staff has not had the capacity to reach out to STR hosts with lapsed registrations or initiate code enforcement actions for the STR hosts who are not registered and/or not paying HUT.
Recommendation for HUT Collections
According to the Town’s financial records, the HUT collections have been modest over the past three years. The Town only has one small hotel, the Fairfax Inn, which results in approximately $16,000 of HUT each year. Anything above this amount can be attributed to STRs. Since the Town has launched the registration portal with Deckard and has been actively contacting STR hosts, the HUT collections have improved, recently reaching approximately $3,000 to 4,000 a quarter (up to $16,000 a year). Staff has investigated entering into an agreement with AirBnB for collection of the HUT. This strategy would significantly increase tax collection revenue.
Table 1 – Estimated Hotel User’s Tax (HUT)
2023 2024 2025 2026
Deckard
only
(projected)
2026 2027
with AirBnB collections
(projected)
Fairfax Inn (approx.) $16,000 $16,000 $16,000 $16,000 $16,000 $16,000 STR (Deckard) -- $2,000 $11,000 $16,000 $8,000* $2,000* STR (AirBnB) -- -- -- -- $40,000 $82,000
Total HUT $16,000 $18,000 $27,000 $32,000 $64,000 $100,000 * Assumes most hosts will pay through AirBnB, but a small number will still pay HUT through the Deckard Rentalscape platform
3 Assuming AirBnB collections start in July, staff estimates HUT of approximately $25,000 a quarter or $100,000 per year. This is a reasonable estimate. According to Deckard data (see Chart 1), HUT collections could reach a lofty total of $200,234. However, for the Town to receive this much HUT, all STR units in Town would need to be rented close to full capacity according to the STR listing websites.
Note that many of the STRs current listed on the AirBnB websites are not eligible to register as a legal STRs in Fairfax. It is likely that many STRs currently operating in Town are owned by investors who do not live in Fairfax, or the unit is an ADU (built after 2020), or the unit is a JADU and are therefore ineligible to register. As code enforcement increases, the potential revenue from HUT will be less, as illegal units cease operations.
As referenced above, Staff has a strategy to dramatically increase HUT collections. The Town has contacted AirBnB and is in the process of establishing an agreement for the company to collect all HUT from users of its platform and remit directly to Fairfax. Since AirBnB represents 90% of all STRs in Fairfax, this strategy would collect most of the HUT and hosts would not need to be registered, since anyone on the AirBnB platform within the Town limits of Fairfax would be required to pay HUT. Once the Town enters into this agreement with AirBnB, no intervention from Town staff would be required to collect HUT when the AirBnB platform is used. The Deckard platform would still be needed to collect HUT from non-AirBnB users.
Chart 1 – Maximum HUT Estimates per Month
4 The downside of the collection agreement with AirBnB is that it would not be possible to identify which STRs have paid HUT through the platform. The HUT is collected by AirBnB from all hosts at the time of booking through the platform. The HUT would then be periodically submitted to Fairfax in a lump sum.
The Town would still require the registration of all Fairfax STRs, whether on AirBnB or any other platform.
As part of the registration process, proof of HUT payment could be required to help with tracking.
Recommendation for Code Enforcement (“Top 2”)
Fairfax staff levels prevent significant code enforcement activities related to STRs. However, Town staff does recommend a focused code enforcement effort on two of the most prolific STRs hosts in Fairfax that have been operating illegally in Fairfax for years (“Top 2”). Despite multiple letters encouraging registration, the Top 2 are still not registered and have been ignoring Town letters encouraging them to do so. The Deckard website indicates that over $200,000 in HUT revenue a year could be generated from these two users alone (based on revenue projections in excess of $2 million). Note that the Deckard has no way of determining that actual revenue received by the STR host, so the revenue projection assumes nearly full occupancy. Also note that the Fairfax residency status of the Top 2 is unknown at this time, it is likely that they are not eligible to register under Fairfax regulations, since they are likely out-of-town, non-resident investors. If this is the case, the Top 2 would be required to pay all past due HUT and cease operations.
Staff recommends the following actions related to the Top 2:
1. Secure detailed report from Deckard outlining potential HUT tax due since the inception of the Fairfax STR program (2022)
2. Send a code enforcement letter to the Top 2 requesting that the STRs are registered and that all past due HUT is paid. The letter will include a deadline for the STR host to either pay the entire amount or submit evidence that less is due based on actual revenue collected.
3. If deadline passes without resolution, pursue additional code enforcement compliance activities, including citations and fines.
4. Continue code enforcement activities as needed until case is resolved: all fines are paid; STR is registered (or discontinued); and all past HUT is remitted.
FISCAL IMPACT
Based on Town financial data and estimates from the Deckard, Rentalscape program, the Town currently collects $27,000 per year in Hotel User’s Tax (HUT). This could increase to a minimum of $100,000 per year by entering into a collection agreement with AirBnB. Additional revenue could also be collected by pursuing past due HUT from STR hosts currently operating illegally. Addition revenue would cover the cost of the monitoring software, staff implementation and enforcement activities.
Without the agreement with AirBnB, revenue generated is unlikely to be sufficient to cover the full cost of the STR program.