Documents show that the city of Portland expects to collect nearly $500,000 from hotel taxes on Airbnb rentals in the coming year.
As reported this week in WW, the San Francisco-based startup has been successfully lobbying the City Council to allow its clients to rent out rooms in their homes to tourists. Mayor Charlie Hales has suggested also legalizing Airbnb's rentals in apartments and condos.
Airbnb began collecting an 11.5 percent lodging tax from its clients on July 1—making Portland the first city in the country where the company is collecting taxes.
If the City Council approves rule changes on July 23, it will give Airbnb a legitimacy it has nowhere else in the nation.
In return, local governments will get tax dollars: 6 percent of each rental goes to the city, while another 5.5 percent goes to Multnomah County.
And the city has already calculated its potential share: $460,992 in the first year after Airbnb's operations are legalized.
That's hardly a jaw-dropping amount—the city's general fund budget this year is $515 million—but it could grow as the room-sharing service becomes more popular.
An email sent by city Revenue Bureau director Thomas Lannom to other city officials on April 22 explains how he reached that result, using Airbnb's own figures:
1. Airbnb reported 1,120 hosts in the past year ;
2. Airbnb reported average annual host income of $6,860, presumably all or nearly all is taxable;
3. (1) x (2) = $7,683,200 taxable gross room receipts (total host revenue) attributable to Portland;
4. (3) x 6% (City @ 5% and Travel Portland @ 1%) = $460,992.
Lannom tells WW he hasn't changed his estimate since April.
Portland has already included those dollars into its budget projections for the next five years, city officials tell WW.
In the April email, Lannom notes that legalizing short-term rentals might cut into traditional hotel and bed-and-breakfast receipts, but not by much.
"Clearly there is some cannibalization going on," Lannom writes, "but we don’t think it’s material given that Airbnb has been operating in Portland for years and our… revenue from traditional hotels remains at an all-time high."
Read more about Airbnb's unprecedented deal with the city—and the powerful interests opposing it—in WW's examination of the controversy.