Business owners from across the East End had two issues on their minds last night when they came to a joint chamber meeting on the county’s hotel and motel tax:
- Is the tax being imposed on owners of single-family homes that are being rented through popular websites like Airbnb and VRBO?
- Is the East End getting its fair share of the revenue generated for the county by the hotel and motel tax?
Homeowners who regularly rent houses for overnight lodging fall squarely within the provisions of the state law that gives Suffolk County the right to collect a 3 percent tax on every rental, Suffolk County Comptroller John Kennedy told the group.
“The enabling legislation has broad language in it when it defines taxable property and taxable event,” Kennedy said. “In essence, any room that is vended for the purpose of overnight lodging is subject to the tax,” he said, noting, “It is a tax on the consumer, in addition to sales tax.” The vendor is required ot collect it on behalf of the county, just as the vendor collects sales tax on behalf of the state.
Kennedy said he has established a tax compliance unit in his office that is focused on collecting taxes, penalties and interest from establishments subject to the hotel and motel tax. He said auditors routinely monitor the vacation rental websites and other sources to find vendors who might not be in compliance with the law. “We are on those sites every single day,” he said.
“The objective is to get vendors and operators enrolled in order to have them become reputable merchants — good merchants — and contribute to the tourist experience,” Kennedy said. “My office in no way, shape or form is looking to drive anybody out of business.”
Online reservation platforms like Airbnb, VRBO and Home Away, claim to have over 3,500 lodging establishments in Suffolk, advertising and conducting reservations through their company, according to the comptroller.
“We’re enforcing it in a very humane manner,” said Nerina Sperl, an investigative auditor in the comptroller’s office. “We’ve been operating for seven months and have registered over 50 establishments. We have assessed taxes, penalties and interest of $254,000. We’ve collected $124,000 of that amount. The rest are on repayment agreements.”
Proprietors of hotels and bed and breakfast establishments or anxious to have the same rules and regulations with which they must abide apply to homeowners who rent to tourists using the online platforms.
George Haase of Fig and Olive bed-and breakfast in Cutchogue said he would like to see those online rentals on “a level playing field” with registered, permitted bed-and-breakfast establishments. That means they should be subject to not only the tax but also to the same regulations that apply to a bed-and-breakfast, he said.
“As a B&B owner I don’t begrudge people the ability to make money, but they can’t have a leg up on me,” Haase said.
Bryan DeLuca, executive director of the Long Island Aquarium and Exhibition center, which operates the Hyatt Place East End in Riverhead, said hotels must comply with numerous regulations in place to ensure the safety of their guests. “these other, smaller operations don’t have to comply at all.”
But DeLuca said his main concern is increasing the amount of hotel tax revenues that gets spent to promote tourism.
DeLuca voiced objection to the $2 million cap on hotel tax revenues that may be disbursed to the Long Island Convention And Visitors Bureau.
“Something is seriously wrong for a county as large and diverse as ours to have only $2 million to spend on tourism and promotion,” DeLuca said. “There is no money to promote the airport internationally,” he said. “International travelers are the best tourists. They stay in our hotels. They eat at our restaurants. They attend shows, visit the wineries in shop at our businesses.”
The distribution of hotel and motel tax revenues is governed by a state law adopted in 1992. The law requires 24 percent, to a maximum of $2 million, be distributed to the Long Island Convention and Visitors Bureau. The rest of the funds must be divvied up according to mandated percentages, among several recipients or specific government budget lines:
- 10 percent to support cultural programs and activities designated by the county;
- 10 percent to support the Vanderbilt Museum;
- 8 percent to support the Walt Whitman house;
- 20 percent to care for and maintain other museums, historic sites and historical societies; and
- 2 percent to promote Suffolk as a film-friendly place.
The balance of the revenues generated by the tax goes to the county’s general fund to be utilized for general park purposes.
The county collected $8.9 million in hotel and motel tax revenues last year, Kennedy said.
That means, according to the statutory distribution:
- L.I. Convention and Visitors Bureau got $2 million;
- Vanderbilt Museum got $890,000;
- Walt Whitman House got $712,000;
- $890,000 was allocated to support cultural programs and activities throughout the county;
- $1.78 million was allocated for the care and maintenance of museums other than the Vanderbilt, historic sites and historical societies;
- $178,000 was allocated to promote the county to the film industry; and
- $2.45 million was allocated to the county’s general fund for general park purposes.
More aggressive enforcement is fine, DeLuca said, but it’s not going to help tourism because of the $2 million statutory cap.
“The 10 percent to the Vanderbilt and the 8 percent to the Walt Whitman are not putting heads in our beds. It’s not helping our industry. International tourists are not coming to Long Island to visit the Vanderbilt Museum,” he said.
The state statute would have to be changed to have the funds distributed differently, Kennedy said.
Southampton Supervisor Jay Schneiderman, a former county legislator said Assemblyman Steve Englebright carried in the Assembly that established the tax in 1992.
“Both LaValle and Thiele voted against it” originally, he said. “Englebright’s focus is in western Suffolk and that’s why you have an earmark for the Vanderbilt and an earmark for the Walt Whitman,” Schneiderman said, “while probably the biggest tourist attraction on Long Island, the Montauk lighthouse, receives nothing.”
The law establishing the tax had a sunset provision and was to expire in 2015. When discussions took place about extending it, there was discussion of changes to the allocations, Schneiderman said, but the State Legislature just wound up extending it for two years.
“There was a movement afoot to increase the tax from 3 to 4 percent. I was not in favor of it,” Schneiderman said.
Southold Councilman James Dinizio and Riverhead Councilman John Dunleavy attended last night’s meeting and both said they do not believe the East End is getting a fair share of the hotel and motel tax revenues.
The meeting was organized by county legislators Al Krupski and Bridget Fleming. Krupski said afterward its purpose was to open a dialogue between taxpayers and the comptroller “so they could get answers directly.”
