The city could rebalance some funding streams in the upcoming budget, including what it sets aside for farmland protection and buying land to be preserved as open space.
During its winter retreat, council members discussed following Norfolk by implementing a per-bedroom fee on short-term rentals. They also heard a presentation on programs that receive dedicated funding, including open space and the agricultural reserve program, or ARP.
Both have significant account balances, according to a presentation by Kevin Chatellier, the city’s budget director. Some members said they may be willing to change how much those programs get.
Councilmember Stacy Cummings suggested cutting the amount going to the ARP by half. The program aims to bring in 300 acres per year but sometimes takes in less.
Other council members said the city should review ARP's funding level, though they did not suggest such a large reduction.
“We do need, time to time, to make sure it is in line, but we have to make certain that we are not compromising the program as it was originally intended,” Councilmember Barbara Henley, a farmer and longtime proponent of the ARP, said during the retreat.
In an interview, she said she believed any changes to ARP or open space funding should be discussed with advisory committees for each program.
The ARP is estimated to have nearly $5 million in dedicated funding in the coming fiscal year and has a $26.6 million balance. The program is assumed to have enough money to meet its goals for years, according to the presentation.
Open space is expected to have an estimated $3.3 million in the coming fiscal year and has a balance of nearly $18.5 million. The fund has helped purchase nearly 3,000 acres for preservation and recreation.
ARP funding has been adjusted before or directed to other needs, such as stormwater projects, or, last year, to a major projects fund. This past fiscal year, the ARP surpassed the 300-acre target, enrolling 467 acres.
The council and staff also discussed a potential policy change related to a per-bedroom hotel tax, rather than a per-unit one. The city fee is now $2 per night, Chatellier said.
A fee could be charged for each bedroom in a hotel unit, and City Manager Patrick Duhaney wanted more council direction on whether to explore it further.
Councilmember Worth Remick said it came up during a recent Resort Advisory Commission meeting, where there was some support. He said short-term rentals benefit from city services and should pay their “fair share.”
“We’re just trying to level the playing field,” he said.
Council discussed how this might affect larger rental homes with more bedrooms, such as in the residential resort community of Sandbridge, and whether capping the number of rooms might alleviate the cost.
Norfolk recently updated its short-term rental policy to adopt a $3 per-room fee.
In Virginia Beach, there are 1,272 permitted short-term rentals totaling 5,185 rooms, according to a city presentation. A per-bedroom fee could bring in an estimated $1.7 million. Capping the fee at up to four bedrooms might generate $1.2 million.
“It seems like council is open to the idea, RAC is certainly open to the idea and there could be other folks in the community who could be open to the idea but want a little more clarity on it,” Duhaney said.
Vice Mayor Rosemary Wilson said the city would need to know how additional revenue generated might be used.
