Agenda Item 6A
April 14,2015
Introduction
MEMORANDUM
April 10, 2015
TO:
FROM:
SUBJECT:
County Council
t
y
Jeffrey
L.
Zyon'{egislative Attorney
Introduction:
Expedited Bill 14-15, Taxation - Room Rental and Transient Tax
Expedited Bill 14-15, Taxation - Room Rental and Transient Tax. The Lead Sponsor is
the Council President at the request of the County Executive, is scheduled to be introduced on
April 14. A public hearing is scheduled for May 5 at 1:30 p.m.
This Bill would expand the current tax law by treating dwelling units that are renting for
any number of people, the same as a hotel. Currently the tax applies when compensation is paid
for places that provide sleeping accommodations for 5 or more transient guests.
Background
There are now multiple avenues by which owners can advertise their dwelling unit or part
of their dwelling unit for rent. Such internet sites as Airbnb, HomeAway, and Loft make it easy
to connect potential renters with people providing places to rent. The duration of these rentals
have more in common with hotels than with houses. Although these units may lack many of the
amenities of hotels, they share the same essential attribute of being places for unrelated and
unknown guests to reside for a very short term for a fee. Other jurisdictions, principally New York
City and San Francisco responded to complaints about unfair completion from the hotel industry
by taxing this activity. The District of Columbia will also be taxing short term residential rentals
of dwelling units even though such rentals are not legal in their jurisdiction. Short term residential
rentals (less than 30 days), except for hotels, and bed and breakfast establishments including
country inns, are likewise illegal in Montgomery County.
This packet contains:
Expedited Bill 14-15
Legislative Request Report
Executive Transmittal Memorandum
Circle
#
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F:\LAw\BILLS\! 5! 4 Taxation - Room Rental And Transient Tax\!ntro Memo.Docx
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Expedited Bill No.
...!..14..!...-...!.15~
_ _ _ __
Concerning: Taxation - Room Rental
and Transient Tax
Revised:
3/3/15
Draft No. _1_
Introduced:
April 14, 2015
Expires:
October 14,2016
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ __
Effective: _ _ _ _ _ _ _ _ __
Sunset Date: _ _ _ _ _ _ _ __
Ch. _ _ Laws of Mont. Co. _ __
I
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
Lead Sponsor: Council President at the Request of the County Executive
AN EXPEDITED ACT
to:
(1)
amend the defInition of Hotel or Motel to reduce the number of transients required.
By amending
Montgomery County Code
Chapter 52, Taxation
Section 52-16(b)
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double boldface brackets]]
*
*
*
Heading or defined term.
Added to existing law by original bill.
Deletedfrom existing law by original bill.
Added by amendment.
Deletedfrom existing law or the bill by amendment.
Existing law unq[fected by bill.
The County Council for Montgomery County, Maryland approves the following Act:
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ExPEDIlED BILL
No. 14-15
1
Sec.t. Chapter 52 (Sections 52-t6(b»
is
amended as follows:
(b) The following words and phrases, when used in this Section, have the
following meanings:
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Hotel or motel:
(I) Any hotel,
inn,
hostelry, tourist home or house, motel, apartment
hotel, rooming house, dwelling unit or other lodging place that
offers for compensation sleeping accommodations in the County
[to 5 or more transients at anyone time].
(2) A hotel or motel does not include:
(A) a hospital, medical clinic, nursmg home, rest home,
convalescent home, assisted living facility, or home for
elderly individuals; or
(B) a facility owned or leased by an organization that is
exempt from taxation under section 501 (c)(3) of the
Internal Revenue Code if the primary use of the facility is
other than housing overnight guests.
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Sec. 2. Effective Date.
The Council declares that this legislation is necessary for the immediate
protection of the public interest. This Act takes effect on the date on which it becomes
law.
Approved:
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George Leventhal, President, County Council
Date
®
f:\law\bills\1S14 taxation - room rental and transient tax\bill1.doc
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LEGISLATIVE REQUEST REPORT
Taxation
Expedited Bill 14-15
Room Rental and Transient Tax
DESCRIPTION:
This bill amends the defmition ofhotel or motel under the County's room
rental and transient tax statute.
The amendment removes the
requirement that a hotel or motel accommodate 5 or more transients and
adds "dwelling unit" to the defmition of "hotel or motel".
The purpose of the amendment is to be able to apply the County tax to
various businesses that rent, or facilitate the rental of, single rooms or
homes within the County. Typically these types of rentals would not
have sleeping accommodations for 5 or more transients at one time and
therefore, the County tax would not apply. These rentals compete with
hotels, motels, and other lodging places to whom the tax does apply.
The goal and objective is to be able to apply the County room rental and
transient tax to these various rentals of rooms and or homes within the
County.
Department of Finance; Visit Montgomery.
To be provided by OMB.
To be provided by Finance Department.
PROBLEM:
GOALS AND
OBJECTIVES:
COORDINATION:
FISCAL IMPACT:
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
APPLICATION
WITmN
MUNICIPALITIES:
PENALTIES:
To be requested.
Other jurisdictions including Washington, D.C. have either
implemented a similar law or are also exploring various options to
apply their hotel and transient
tax
to these types of businesses as well.
Scott Foncannon, Associate County Attorney, 240-777-8973
This law applies within municipalities in the County.
N/A
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...•
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i:
OFFICE OF TIlE COUNTY EXECUTIVE
ROCKVILLI!, MARYLAND 208S0
,
,
,
[;
Isiah
Leggett
County Executive
MEMORANDUM
March 23, 2015
TO:
FROM:
SUBJECT:
George Leventhal, Council President
~
"
:.
Isiah Leggett, County Executive
~JiiiI!-
Expedited
Bill
XX-15: Taxation - Room Rental and Transient Tax
I am attaching for Council introduction an Expedited Bill
to
amend the definition of
Hotel or Motel under the County's room rental and transient tax statute. The amendment
removes from the definition that a hotel or motel accommodate 5 or more transients and adds
"dwelling unif' to the definition of "hotel or motel."
The purpose ofthe amendment is to
be
able
to
apply the County transient tax to various
businesses that rent, or facilitate the rental of, single rooms or homes within the County.
Typically, these types of rentals do not have sleeping accommodations for 5 or more transients at
one time and therefore, the County
tax
would not apply. These rentals compete with hotels,
motels, and other lodging places to which the
tax
does apply.
My Recommended FY16 Operating Budget anticipates approval ofthis legislation which
we estimate will produce annual revenues of approximately $228,000. I urge the Council to
approve this legislation.
Attachment
cc:
Timothy
L.
Firestine, Chief Administrative Officer
Jennifer Hughes, Director,
Office
of Management and Budget
Bonnie Kirkland, Assistant Chief Administrative Officer
Kelly Groff, President, Visit Montgomery
:!
"