The city of St. Charles could impose new regulations and fees for AirBnbs, Vrbos and other short-term rentals that are currently unregulated within city limits.

Short-term rentals are not defined in the city’s zoning codes and no tax is collected from their operators. City Council members first discussed the topic during a June 9 Planning and Development Committee meeting.

Mayor Clint Hull questions how new standards, if approved, would be enforced. He stressed the importance of the city’s ability to revoke and withhold registration from operators.

With the goal of reducing short-term rentals’ impact on their neighbors, Council members advocated for adding measures that would give the city power to enforce violations, a power the city currently doesn’t hold.

“I think it’s important when we talk about these standards, that whoever is enforcing it, whether it’s police or code, they have to have very specific and delineated standards as to what our expectations are,” Hull said. “You can legislate whatever you want, but if you can’t enforce it, our credibility with the neighbors and anybody else is really shot.”

Taxing short-term rentals would also access untapped revenue for the city. Staff estimated that over $70,000 in possible tax revenue from short-term rentals went uncollected in 2024, based on a 5% tax rate.

Community development director Russel Colby proposed new operating standards, a registration program and a possible taxing method during a Sept. 8 Planning and Development Committee meeting.

Monitoring and enforcing

Colby also proposed creating a registration program that would be run through an online portal on the city’s website. The program would track the locations of short-term rental units within the city and establish contacts with their owners and operators, while providing them with a clear outline of their responsibilities.

When registering, hosts would be required to disclose the location of the rental, contact information and details about the owner and managers, as well as the type of unit and occupancy.

Proposed standards include the use of on-site parking when available, an occupancy limit based on unit size and other regulations on noise and refuse container storage.

Owners would be required to sign a responsibility acknowledgement agreeing to comply with the standards. The city would reserve the right to suspend or revoke registration or deny renewal for owners who fail to meet the standards or pay the tax.

Staff did not propose a registration fee. Any fines would be assessed to owners who operate without registering, however. The proposed fine amount and structure have not been decided, but plans call for the cost to increase with every repeat offense.

Committee member Ed Bessner suggested implementing a three-strike rule, where owners lose the ability to register after too many complaints or violations.

Colby said the registration program and violations would be connected to the city’s nuisance abatement procedures under city code. He said the registration program would allow the city to keep a record and address general complaints with the owners. Late-night complaints and reports of serious disruptions would be handled police.

Taxing

Colby said short-term rentals are subject to the city’s hotel tax as it is written. The city has not pursued collection from operators in the past, however, as the tax is self-reported and the city did not provide details on where the rentals were located.

“If we’re going to go down that path to start collecting, we’re going to need to make sure we have some kind of uniform system to do that,” Colby said. “We’re still working through the logistics of what the program would look like, in terms of how someone would register and how they would pay that tax.”

As proposed, short-term rentals would be subject to the same tax rates that hotels in St. Charles pay: 6% of 94% of their gross rental revenue.

The city would collect data on local operators through a third-party subscription analytics service, AirDNA, to determine what each individual operator should be paying the city.

Colby said 44 of the 47 short-term rentals staff identified within the city are run through Airbnb and the others are listed through Vrbo.

Colby said Airbnb will provide tools and resources to help operators register with the city and disseminate information about the tax between the city and operators, though it won’t assist with tax collection.

“The only way we would be able to collect that hotel tax is directly from the individual hosts, as a self-reported tax,” Colby said. “That’s going to make it a little more complicated, both for the city to collect and also for the hosts to track and pay.”

Committee member Ryan Bongard asked if the city could require those who register as a host through Airbnb to proclaim the tax, in order to avoid burdening staff with the responsibility of collecting it directly.

“Can you make [paying the city’s hotel tax] a requirement for somebody to have an Airbnb?” Bongard said. “You can’t sell alcohol in town without getting a liquor license. This is the cost of doing business. How does Airbnb get away with doing that?”

Colby said the way the city’s hotel tax code is written, the responsibility falls on the host, not on the site on which they advertise.

“There’s not a state statute that requires [Airbnb] to provide that service,” Colby said. “They would say that they are just a platform, and then the host or the operator is the business, and they’re the ones that are responsible for the tax liability.”

Committee member Ron Silkaitis suggested collecting a single registration fee rather than a tax in order to create less work for staff. Alternatively, he suggested a one-time registration fee in addition to the tax to offset the costs of creating the program.

“I fully support this, but as you said, it’s going to be hard to actually keep track of everything,” Silkaitis said. “Wouldn’t it be easier to just have a flat registration fee?”

Colby said without more data on the varying success of different rentals, it is hard for staff to determine a fee structure that would be fair for all operators.

Committee member Jayme Muenz suggested requiring business licenses for short-term rental operators, and emphasized the need for accountability among short-term rental owners above collecting tax revenue.

“It’s about the accountability of that property owner, who is operating that residential property as a business,” Muenz said. “It’s not about the revenue from the tax. ... It’s that accountability of knowing that there is a responsibility there and that the people that live around that home know that that accountability is there.”

Colby said there are still challenges that need to be explored, including how the city will track down owners to collect the tax and enforce the standards. He said the discussion will be brought back for further review within the next couple of months.