City of Lawton to begin enforcing occupancy tax on short-term rentals

The City of Lawton is ready to begin enforcing an occupancy tax on Lawtonians who operate short-term rentals.

Short-term is the designation given to Airbnb and similar rental establishments that are becoming increasingly popular among those who travel. In Lawton, more and more owners are adopting the “bnb” option for their vacant houses, local real estate agents say.

City Council members decided in 2020 that they would begin assessing an occupancy tax on such establishments, the same “hotel-motel” tax that hotels and motels in Lawton have paid since the tax was created in 1986. The proposal was included in the ballot proposition that Lawton voters approved in February 2021, setting a new 10-year, 7 percent Hotel/Transient Guest occupancy tax on those who rent rooms for a short term.

It’s a matter of fairness, said Community Services Director Charlotte Brown, of the intent of the City Council and city staff to ensure the tax is equally applied to traditional hotels and motels, as well as more modern short-term rental facilities.

It’s not a new concept.

“Other communities do these fees,” Brown said, adding Lawton officials have been looking at the concept for at least two years. Granicus (which operates the city’s digital system) came to them to discuss the idea and plans to identify those in Lawton who operate such establishments.

Those who operate short-term rentals are expected to register with the City of Lawton, completing an application and licensing process that will require them to remit the 7 percent occupancy tax just as hotels and motels do. While it’s been the requirement since May 2021, that requirement has been largely ignored by short-term rental individuals and entities, city officials said.

That will change Nov. 1 when the City of Lawton begins enforcing the requirement. In a press release issued last week, city officials warned short-term vacation homes will be expected to apply for licenses and remit their taxes on a monthly basis.

Brown said the city’s buildings division sent out 180 letters last week to those who own and operate short-term rentals, with Granicus estimating there are another 200 such businesses operating in the community. The digital system that such entities ultimately will use to register includes a program that is able to search the internet for those who advertise short-term rentals in Lawton.

Because the digital system is not yet operational — Brown said city officials aren’t certain when that will occur — operators must come to the building division office at Lawton City Hall to apply for licenses and make arrangements to pay their occupancy tax. Not many people are doing that yet, Brown said, saying about four people have complied.

Brown said city staff wants people to follow the rules and pay their taxes.

“We’re not looking for back taxes,” she said, adding the city expects taxes to be remitted “from this time forward.”

Under city code, those taxes are due on the 10th day of each month, and considered delinquent if not paid within five days. When taxes are delinquent for more than 30 days, the city will shut off water, sewer and refuse collection for that specific address, restoring city utilities only when all past due taxes, interest and penalties are paid.

City code provides an appeals process for those who have their licenses revoked for failure to pay. If the council upholds the revocation, the operator will not be re-issued a business license for three years. It’s the same appeals process used for all business licenses, Brown said.

Interim City Manager John Ratliff has said enforcing the provision is important because of the amount of potential revenue the city is losing. Finance Director Joe Don Dunham said while it is difficult to set exact figures on that loss without knowing exactly how many rental sites there are and how many nights they are occupied in a year, a conservative estimate is a $300,000 to $400,000 annual loss.

But council members continue to worry about how the process will work. Ward 4 Councilman George Gill said in July that the city’s largest obstacle to achieving its goal has been finding a way to identify those short-term facilities.

“We’ve talked about it for a year,” he said.

City administrators said that’s where the city’s new Granicus system enters the picture. The new computer system comes with a program that will comb through websites where bnb’s and other short-term rentals are advertised, identifying those in Lawton so the city has a list from which to work.

“It tells us who advertises,” said City IT Director Judy Franco, adding the program is providing the list from which city staff will work.