The Eureka Springs City Advertising and Promotion Commission is looking into developing a contract with a short-term rental company to better ensure that property owners are submitting the required tourism tax.
At a workshop held Wednesday, Aug. 14, the commission learned how other cities in the state are benefiting from an agreement with Vrbo (Vacation rentals by owner), formerly known as HomeAway.
“What we have discovered … is that a lot of our collectors today are getting bookings from Vrbo…,” CAPC Executive Director Mike Maloney said. “Vrbo does remit taxes to municipalities that are in their system, which most are. We have not, however, done that.
“Some of our sister cities such as Bella Vista, Rogers, Little Rock and so forth have taken advantage of this over the course of time, but we have not.”
Sandy Martin, chairman of the Mayor’s Task Force on Economic Development and Recovery, said she recently worked with Bella Vista on a contract with Vrbo and explained the process to commissioners. She said the difference in Vrbo and competitor AirBnb is that Vrbo primarily rents out whole homes.
“They have a tendency to have a higher quality stock of rentals, which means more revenue, which means more taxes, which is good,” Martin said. “They don’t do single rooms, they don’t do campsites or any of that stuff like AirBnb does.” Bella Vista’s advertising and promotion commission used Bill Watkins, the same attorney that the CAPC uses, to assist in the agreement with Vrbo, Martin said.
“We started in Bella Vista in October of 2022 … and we collected $1,445,” Martin said. “In 2023, we collected a little under $38,000. Right now, through April we’ve collected a little under $19,000, so it’s going to probably be about a $40,000, $45,000 increase in revenue [this year].
“It’s a fairly simple process [to draw up the agreement]. … I researched several of the agreements, and for the most part, … all of them did one version of pretty much the standard voluntary agreement.”
Homeowners who use a property as a short-term rental are already required to collect and submit their tourism tax; however, some stay under the radar, commissioners were told.
An agreement with Vrbo would be a better way to manage the issue since Vrbo would be collecting the tax and submitting it regularly to the CAPC, like AirBnb currently does, Martin said.
“I kind of love the idea of Vrbo actually skipping the homeowner and just paying the taxes for them,” commissioner Kolin Paulk said.
New commissioner Robert Schmid said he knows of a hotel that lists on Vrbo. If signing a contract with the company ensures everyone is paying their taxes, he’s for it.
“I’ve noticed there’s one hotel that used to be a hotel and all of a sudden it’s not a hotel anymore,” Schmid said. “It’s advertised on Vrbo. … They use that platform and they would completely circumvent any taxes paying to the city, to the state, to us. We definitely have to stop it if there’s legal ways. We should demand it.
“If we have to sign a contract with them, well, we should have done it yesterday.”
Paulk agreed, saying the partnership would help identify those businesses that are “hiding.”
“It’s already illegal for people to have Vrbo and not pay their taxes,” Paulk said. “If you run a business in Eureka Springs, whether it’s Vrbo or anything, you have to have a business license. You have to pay your taxes. If you’re not doing that, you’re breaking the law, right? So, us doing this Vrbo contract doesn’t change that. What it does is, say that little hole that people have been hiding in to avoid the law, to avoid paying the taxes that they’re supposed to be paying. They’re just hiding in this little void. What we’re doing is, we’re saying, ‘all right Vrbo, tell us who it is that’s not paying ….’” “…. We already have it in our bylaws that if you have lodging and overnight lodging, you have to pay 3 percent to the CAPC, no matter which shape and form you post your listing. It doesn’t matter. If you’re lodging, you have to pay this tax. This is just simply saying we’re not relying on the trustworthiness of the homeowner. We are strictly saying, hey Vrbo, here’s what’s happening. Send us a check.”
Commissioners agreed to have Maloney work with Watkins and develop a contract proposal to be discussed at a future regular CAPC meeting.
NO FINANCE DIRECTOR HIRE Before the Aug. 14 workshop, the CAPC held a special meeting to discuss the vacant finance director position.
The meeting included a 36-minute executive session to discuss the credentials of Ty Reed, one of two candidates who applied for the role that was left vacant with the sudden departure of Scott Bardin in late June.
The other candidate didn’t meet the minimum qualifications, CAPC chair Steve Holifield said.
Holifield, along with Maloney and city finance director Michael Akins, previously met with Reed and recommended him for the position.
“We went over with him what the job entails and what his qualifications are, and we felt really good,” Holifield told commissioners.
Using an outside accountant to handle the commission’s finances has also been discussed, and after the executive session, the CAPC voted to have Maloney get costs of various local accountants to consider before making a decision.
Reed is still in the running for the position, it was also announced.
“I move that we have our executive director reach out to all of the local firms, financial agencies in town, to get quotes, on being our financial agency,” Paulk said. “But, that does not disclude any individual applicants.”
A unanimous approval followed.
“For clarification, we just want to see what our other options are,” Holifield said. “We’re not saying no to any applicants at this time. We just have two weeks to make a decision to see what other options we might have as for agencies.”
The topic will likely be discussed at the next CAPC regular meeting, scheduled for 6 p.m. Wednesday, Aug. 28.
“If we have to sign a contract with them, well, we should have done it yesterday.”
— Commissioner Robert Schmid
