PCB seeks missing tax revenue
VALERIE GARMAN
PANAMA CITY BEACH � If the website Vacation Rentals by Owner (VRBO) could qualify as a hotel chain, it would be the third largest in the United States and the eighth largest in the world.
It�s a trend that has pushed Panama City Beach officials to spearhead a movement to ensure independent renters through sites like VRBO are playing by the rules.
The city is in the first stage of a comprehensive survey that will canvass the 18,000-plus rental units within the city limits, with a goal to uncover independent renters who are not paying the required 12.5 percent tax for short-term rentals.
On Panama City Beach, the 12.5 percent tax is required for any unit rented for less than three months, 6.5 percent of which is Florida sales tax, 5 percent is Bay County Tourist Development tax and the remaining 1 percent is collected as the city�s established business tax. State and county taxes are collected for any short-term rental less than six months.
The process began in August with Edgewater Beach and Golf Resort and asked owners how they classified their unit. Owners picked whether the unit was licensed and rented with a management company, rented independently, homestead exempt, for personal use only or rented long-term.
Of the 998 units at Edgewater, the city received responses from 83 percent of condo owners and is working to collect response from the remaining 17 percent, or 166 units.
Three months into the Edgewater survey, officials have managed to uncover an additional $14,000 in revenue by signing up 48 unit owners that rent independently to pay the city tax. Only about 8 percent of owners reported renting independently, while 45 percent said they used a management company.
If those same 48 units also failed to pay on the county level, even larger figures, about $70,000, could be on the way for the Bay County Tourist Development Council.
�If we get a penny, the county gets a nickel,� said Panama City Beach Councilman John Reichard, who pushed for the city to fund the survey to help garner unpaid fees for the city. �Our purpose is to inform these folks that they�re liable to pay these taxes.�
The project has cost the city about $3,500 so far and also required the promotion of one part-time licensing department employee to full time.
�Quickly looking at the amount of money collected from one unit, the money we put into it will pay for itself very quickly,� said Mel Leonard, director of the city�s building and planning department. �It�s a very viable project; it�s very much worth doing.�
Leonard also said he expects cost to go down for the project as it progresses. Officials will survey the 744-unit Shores of Panama condo development next.
�You start to do the statistics on it and this could be a significant contribution to the (city�s) general fund,� said City Manager Mario Gisbert. �We�re not trying to penalize anyone; we�re just trying to get them on board. � This is truly an overall community benefit, but it has to be an ongoing effort.�
Panama City Beach is the only municipality in the state with a business tax as its primary source of tax revenue, Gisbert said, and is one of only a handful of municipalities that does not collect property tax.
It�s not only the city budget that will benefit from the survey.
Paul Wohlford, vice president of sales and marketing of Resort Collections of Panama City Beach, said independent renters need to pay the fees to level the playing field for large management companies that can�t compete with the lower price.
�The playing field is not level because the Internet has allowed anyone to get into the rental business,� said Wohlford, who recently founded a website to educate consumers on the benefits of staying with a professional company rather than an individual.
Wohlford said independent renters do not represent the industry well because they do not provide any services for guests. Visitors with a bad experience at an independently rented Edgewater unit also could leave bad reviews for the condominium as a whole.
Wohlford said the situation in Panama City Beach reflects a nationwide problem.
�It�s a beast that affects people all over this country,� Wohlford said. �We�ve been talking about it for a long time, but these guys actually did it.�
Panama City Beach officials said the next step would be to reach out to the Bay County Commission to see if they would be interested in similar surveys in unincorporated areas.
�The state has been talking about it, property management has been talking about it and it�s finally all starting to come together,� Wohlford said. �We�re helping the industry as a whole.�