To combat Airbnb, Dewey Beach discusses increasing accommodation tax

Dewey Beach officials say rental sites like Airbnb are causing the town to lose revenue through their accommodations tax.

That prompted a discussion at Saturday's Dewey Beach Commissioners meeting about raising the accommodation tax.

"If the 200 or 400 people who rent their home on the black market and get a license and pay the tax, we wouldn't have to have this conversation," said TJ Redefer, Dewey Beach mayor. "If you're playing the game it us supposed to be played, and if we get them into the system, and they only rent to friends and family, 400 people paying as little as $500 is a huge impact."

The Dewey Beach Council discussed the possibility of an increase of the accommodations tax and holding a possible referendum on the topic in September.

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While no action was taken, the commission said there would be more conversation on the topic in coming meetings.

Dewey Beach has an accommodation tax of 3 percent that is applied to rental properties. If Dewey Beach was to raise the tax by 1 or 2 percent, Redefer said it could generate $135,000 for the town.

Already, the town collects roughly $500,00 from the tax, Redefer said.

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"We are at a crossroads," he said. "We could use the money to set aside for sea rise, bay flooding and infrastructure. We are getting by the skin of our teeth every year to pay our bills, to do the things we need to do to have the lifeguards and police."

It is a good thing people are discussing the issue of people who are renting out their properties and not paying an accommodation tax, said Dale Cooke, Dewey Beach commissioner.

The threat of having to spend more money on infrastructure because of issues such as sea level rise is a real threat, he added, and something needs to be done to increase funds.

"We need to raise money for the town, come up with our share, ask the county and state to come up with their share, to help with the flooding in this town," Cooke said.

The accommodation tax is important, said Gary Persinger, Dewey Beach commissioner.

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Persinger had concerns over the state implementing an 8 percent accommodations tax that would wipe out Dewey Beach's tax because it is capped at 8 percent in the Dewey Beach charter.

He also said it might be unfair to ask the entirety of Dewey Beach's voting population to vote on and approve a referendum that Persinger estimated would only impact 40 percent of the residents.

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Voters should also keep in mind that this would be a tax on visitors, he added.

"When I rented my place, it was a tax that was passed through to the renters that rented my house," he said.

Paul Bauer, Dewey Beach commissioner, said he is normally against taxes, which is what attracted him to Dewey Beach.

Dewey Beach has a $3 million budget, which has increased over the years, which might make an increase to the accommodations tax needed, Bauer said.

"Expenses grow as you get people here," he said. "Everyone needs service. As far as us sitting up here on a decision on a tax, that is a people’s vote. I have a hose in Wilmington, and we have a referendum every year or two. No one wakes up in the morning and asks to have more taxes."

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