St. Charles city considers new regulations, taxes for short-term rentals like Airbnb

The city of St. Charles could impose new regulations and fees for AirBnbs, Vrbos and other short-term rentals that are 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 in June.

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 this week during a 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 acknowledgment 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.

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 because 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.