The Oak Park village board of trustees has directed village staff to draft an ordinance that could increase a tax on transient occupancy rental units, such as Airbnb.
The revenue from the suggested increased tax, in the amount of 3.5%, would be allocated to the village’s affordable housing fund, under the proposal by village president Vicki Scaman.
At the Jan. 23 board meeting, Airbnb owner Kettil Cedercreutz said he is against raising the tax in a public comment. Visitors bring additional money to the community, he said, despite Airbnb owners taking up a certain amount of housing.
“Don’t kill the goose that laid the golden egg,” Cedercreutz said.
The current tax on these types of units is 4%, matching the tax on hotels and motels. Those businesses would not be affected by this change as proposed, Scaman said. The burden of paying the increased tax would fall on visitors, not the Airbnb owners, she said.
Another Oak Park Airbnb owner, Anne Pezalla, said she thinks raising the tax would be unfair and could drive visitors, and potentially Airbnb owners, away.
“It’s already a huge tax when you go to checkout and I think there will be sticker shock, and I think people will start looking elsewhere,” she said. “It is short sighted.”
Scaman said the board has previously directed staff to find additional revenue sources to lessen the burden of property taxes as part of an economic vitality plan. The municipality also incurs a cost by having Airbnbs, Scaman said, because of services such as those provided by the police and fire departments. The tax, if approved, would not affect individual Airbnb owner profits, she said.
While hotels and motels’ tax would stay at 4%, the cumulative tax on Airbnbs would be 7.5% under the proposal. Airbnbs affect the affordable housing stock in the village more directly, Scaman said, as opposed to hotels.
“[The tax] is still appropriate because that’s a tax that then helps us as a community invest in ways that return those affordable units to our community,” Scaman said.
But the village already receives money from developers for the affordable housing fund, Pezalla said, and she said she doesn’t understand why Airbnbs should be responsible for contributing more.
“We’re not taking away from any affordable housing,” she said. “Oak Park is doing really well with affordable housing already.”
Airbnb visitors usually come to her six locations, Pezalla said, for big events in the city or local events such as a graduation. Visitors could opt to stay in nearby suburbs instead, she said, due to the increased tax.
“It just feels unfair,” she said.
Tourists are also great for local businesses, Pezalla said, which could also be affected by this potential increase. Most Airbnb guests want to know where to eat locally, she said, and if they don’t stay here, they likely won’t eat here either.
This proposed tax increase will not likely affect tourism, Scaman said, because the increasing tax amount is insignificant enough to not deter tourists.
“The number of Airbnbs in Oak Park has continued to flourish,” she said. “I do not wish to necessarily deter that, but I do want to have a plan and support a plan for our affordable housing fund.”
At the Feb. 6 board meeting, trustee Ravi Parakkat said he’s not supportive of the current proposal and would prefer slowly raising the tax and applying it to all related entities, including hotels and motels.
Trustee Brian Straw said at that meeting he agrees that Airbnbs affect the housing stock in the community but wants to examine how raising the tax on Airbnb owners might disadvantage community individuals compared to businesses like hotels.
An ordinance will likely come before the board for approval within the next few weeks, Scaman said, and would be implemented this year. The board could make changes to the proposal by lowering the tax, implementing it in hotels and motels as well or other decisions.