Leasing out Malibu homes and apartments on popular sites Airbnb or Craigslist is about to get more complicated — and expensive — if city staffers have their way.
At the upcoming City Council meeting on Monday, May 12, staff is recommending that the council “authorize the Mayor to issue subpoenas to websites advertising short-term residential properties located in the City of Malibu as well as to owners and operators suspected of renting such properties,” in order to collect unpaid taxes, according to a staff report prepared by Assistant City Manager Reva Feldman. The report lists more than 50 websites, including FlipKey and VRBO.
The report suggests issuing subpoenas to collect taxes from websites and homeowners who, in the eyes of the city, owe hundreds of thousands of dollars in unpaid Transient Occupancy Tax (TOT), according to Feldman.
But it’s unclear whether the city has the authority to issue subpoenas for information without any ongoing trail, lawsuit or legal proceedings. Attorneys interviewed by The Malibu Times said the city could be wading into murky territory.
“There is no particular case or any particular proceeding before the body,” said attorney Jim Ewert, legal counsel for the California Newspaper Publishers Association, who added that according to his reading of the California Government Code, a city only has authority to issue subpoenas with a legal proceeding.
“They’re looking to broadly construe this to allow them to issue a subpoena for just about anything,” said Ewert.
But Malibu City Attorney Christi Hogin does not anticipate an issue with the city legally subpoenaing information from the websites.
“Cities have subpoena power and have used it as required to gather information they need,” said Hogin. “If they don’t comply with the subpoenas, we’ll go to court and enforce them, and that will take some time and effort.”
The California Government Code in question states that a “legislative body may issue subpoenas requiring attendance of witnesses or production of books or other documents for evidence or testimony in any action or proceeding pending before it.”
Ewert also suggested that many of the websites that the city is recommended to subpoena may have no legal obligation to release information.
“I fail to see how the subpoena that they want to issue is likely to produce the information that they’re seeking,” said Ewert, adding, “Just because these websites offer or advertise these homes for rent, doesn’t mean that the website’s going to have any information as to whether they were actually rented.”
Peter Scheer, the executive director of the First Amendment Coalition, also raised some questions about the potential problems the city may face in issuing subpoenas.
“Any of these websites that are based outside of the state of California, I don’t know how they’re going to respond,” said Scheer.
“Many of those websites look that way to me — it’s just an advertising venture, in effect, where individual homeowners list the availability of the rental unit,” said Scheer, who added “if the website is in California, then they have to reply, but they reply, ‘we’re not selling anything that you can tax.’”
Ewert also suggested that, as far as he knows, no other city has attempted this type of broad subpoenaing for information from listing websites.
“I am not aware of any city who has attempted to do this, or any local agency attempting to do this. It doesn’t mean there may not be instances, but they haven’t been brought to my attention,” said Ewert.
“But then again, Malibu is pretty well known for pushing the envelope on what can be legally done,” Ewert added.