Last updated: May 12, 2023

10 Ways Tax Revenue from Short-Term Rentals Benefits Communities

Learn how local governments across the U.S. are reinvesting tax revenue from short-term rentals back into their communities.
Posted by GovOS Team
Flowers Along Market Street in Downtown Denver, Colorado

Short-term rentals (STRs) have taken on somewhat of a controversial reputation in recent years, with residents and municipality leaders alike discussing the short- and long-term impacts on communities. But during these conversations, community members are also exploring the benefits to communties as they determine how best to manage STRs.

One major benefit that often comes up is the significant tax revenue short-term rentals generate, which can be reinvested back into the community for the greater good. If you are exploring the impacts of STRs on your municipality, here are ten ways tax revenue from short-term rentals can benefit the community in the long term:

1. Revitalizing Community Centers

One way tax revenue from STRs can be utilized is by funding the construction or improvement of community centers. These centers are great gathering places for residents and can bring communities together by hosting a variety of activities, including educational programs, fitness classes for all ages, and community events.

2. Going Greener with Environmental Conservation

Tax revenue from STRs can be allocated to initiatives focused on environmental conservation. For instance, funds can be used for trash cleanup programs, protecting natural habitats, or promoting sustainable practices within the community. The city of Aspen plans to use roughly 30% of its anticipated $10 million in STR tax revenue to fund environmental-protection initiatives and maintain water infrastructure.

3. Building Playgrounds and Park Enhancements

The revenue collected from STRs can contribute to the development and maintenance of playgrounds and parks, similar to the all-accessible playground built in Aiken, South Carolina. These spaces provide recreational opportunities for families of all needs and help foster a sense of community by bringing people together in shared outdoor spaces.

4. Say Hello to Visitor Centers

Investing in visitor centers can enhance tourism infrastructure and attract more visitors to the community. Tax revenue from STRs can be used to create welcoming spaces that offer information about local attractions, events, and accommodations; thereby promoting economic growth and supporting local businesses.

5. Increasing Lifeguards and Beach Safety

Coastal communities that rely on STRs can utilize tax revenue to hire and train lifeguards, ensuring the safety of residents and visitors enjoying the beach. Leaders in Brevard County, a popular Florida tourist destination, are looking to use STR tax revenue to hire more lifeguards and increase water safety.

6. Investing in Major Infrastructure Upgrades

By collecting taxes from STRs, local governments can invest in critical infrastructure projects that benefit the entire community. This includes improving roads, bridges, public transportation, and utilities, ultimately enhancing the livability and functionality of the area.

7. Sparking Creativity with Arts and Culture

Tax revenue from STRs can be used to support arts and cultural programs that enrich the community. The city of Austin is in talks with the City Council to start tapping into millions in uncollected STR tax revenue to fund its Music and Art Commissions and its local creative community.

8. Chalking up Educational Initiatives

Investing in education is paramount to a community's long-term success. Tax revenue from STRs can be channeled into educational initiatives, such as providing scholarships, supporting after-school programs, or upgrading school facilities and resources.

9. Focusing on Public Safety

Tax revenue from STRs can contribute to public safety efforts. It can be used to hire additional police officers, improve emergency response systems, or invest in crime prevention initiatives, ensuring that residents and visitors feel secure within the community.

10. Helping Build Affordable Housing

With the housing crisis affecting millions of Americans, some towns are looking to use STR revenue to help fund more affordable housing developments. The Martha Vineyard Commission on affordable housing recently met to discuss how to utilize its millions of STR tax revenue to make housing more affordable for year-round residents.

Accurate and efficient tax collection plays a crucial role in maximizing the benefits of tax revenue from STRs. By embracing the positive impacts of STRs, local governments can increase their revenue collection capabilities, enabling them to allocate more funds toward initiatives that enhance the community’s overall well-being.

Utilizing a dynamic and trusted STR management solution will allow your municipality to streamline the collection process, minimize errors on tax forms, and ensure the maximum amount of revenue is available for community improvements. Check out our STR video channel to see how the GovOS STR solution works or contact us for a live demo.

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