HdL: STR COMPLIANCESERVICES
HdL delivers Short-Term Rentals (STRs) compliance services to the City of Pacifica in partnership with Deckard Technologies. While some of the details about how HdL identifies non-compliant STRs are trade secrets, HdL can share general steps with the public. The purpose of this document is to provide a general overview of the process HdL employs and good-to-know information about how STR compliance services work.
An important place to start is the relationships among business licensing, transient occupancy tax filing, and STR permitting. An owner can only legally operate a STR after securing a business license, preparing to collect, file, and remit transient occupancy tax, applying for and paying for a STR permit, receiving City approval, and then receiving the STR permit. It takes an owner who is motivated to operate quickly and legally about 30 days or less to go through the complete business license, TOT, and STR application processes and to receive approval from the City’s code enforcement staff to begin operating a STR.
While some owners know this process, others are unfamiliar with it. HdL’s service supports all owners in their efforts to legally operate a STR. Generally, HdL’s STR service to Pacifica includes:
• Daily monitoring of the online STR advertisement market. • Identification of non-compliant properties.
• Compliance activities to help STRs register and obtain a business license, prepare to file quarterly Transient Occupancy Tax (TOT), secure a STR permit, or cease advertising and renting. • Ongoing analysis of quarterly TOT filings by STRs.
• STR TOT delinquency collections.
• STR Permit and Business License annual renewals.
Some may be surprised to learn that there are many more online ads for STRs than there are actual STRs. One reason is many hosts post more than one ad to market their STR to the public. A rule of thumb is there are twice as many ads as STRs in a community.
There is a constant fluctuation in the STR market. Understandably, new owners enter the market, others leave, some post new ads, others take down ads, some sell properties, or others decide to live in rather than rent a home. HdL performs ongoing compliance efforts as it tracks these changes through daily updates.
When an owner operates a non-compliant STR, HdL sends a series of letters intended to educate the property owner and help the owner comply with code requirements. HdL finds that roughly 70% of discovered STRs respond to the first two letters. STRs who fail to respond to the initial letters receive an estimated assessment of back taxes going back three years. Often, the remaining 30% of STRs respond to the assessment letter. If a STR disputes the assessment, HdL requires them to report and pay actual taxes owed, bringing the STR into compliance.
The compliance process is a cycle that repeats every quarter. The objective of the cycle is to help each noncompliant STR achieve compliance by the end of the quarter’s cycle. Sometimes, there are outlying STRs who fail to respond to HdL’s outreach and compliance efforts. In those cases, HdL supports the City in its additional enforcement activities.
Here is a general timeline of the compliance cycle:
Month 1
HdL sends
multiple letters
to each noncompliant STR
owner.
Month 2
HdL prepares
and sends
assessment
letters to each
non-compliant
STR owner.
Month 3
HdL prepares
evidentiary
packets for
each noncompliant STR
owner.
Month 4+
City takes
enforcement
action using
the evidentiary
packet as
support.