Woodstock council directs staff to extend hotel-motel tax to short-term rentals and remove hotel exemption for nonprofits

Mayor Turner opened a public hearing and then invited council discussion on proposed amendments to Chapter 3.2.8 of the city code governing the hotel-motel occupancy tax. Staff explained the redlined changes are intended to modernize the code language to remove ambiguity about who must collect and remit tax revenue, particularly for short-term rentals such as Airbnb and VRBO.

Jessica, a city staff member, told the council staff was not recommending eliminating the nonprofit exemption as a starting position but that the redevelopment agreement for the proposed downtown hotel prevents that property from being used as emergency housing under the exemption. “We did include within the redevelopment agreement for the proposed downtown hotel that they are not able to enter into those agreements to use the downtown hotel for emergency housing,” Jessica said. She also said staff had identified about 14 short-term rental units in the city using commercial data sources and that business-registration coverage is incomplete (roughly 4–500 registered businesses compared with an estimated 1,000 businesses in the city limits).

Several council members argued the tax code should be clearer and more equitable across lodging operators. One council member urged removing the hotel exemption that allows rooms used under written agreements with nonprofits or government entities to be exempt, saying Woodstock may be serving as a default location for emergency placement because nearby towns limit or tightly manage exemptions. Another council member said removing the exemption would not change who the hotels may choose to house but would require those room nights to collect and remit tax. “So by removing that exemption, we're not changing who's allowed to stay where and when,” a staff member said.

Council members expressed a range of follow-up expectations: tighten language to require charitable organizations that use hotel rooms to register or be approved (as Crystal Lake does), consider eliminating exemptions entirely for hotel-operator arrangements, and preserve the exemption for nonprofits that operate their own facilities (for example, Turning Point, which runs its own building). The council indicated unanimous guidance to staff to proceed with drafting changes that explicitly include short-term rentals and to remove the hotel exemption for nonprofit-arranged lodging while retaining exemptions for nonprofit-owned facilities and working out administration and emergency-waiver procedures.

The council asked staff to return with reworked ordinance language and suggested possible registration or refund mechanisms (for example, a process to refund tax for disaster response or authorized emergency placements upon city approval). The hearing itself closed with no public testimony; discussion and direction occurred during council floor discussion.

Next steps: staff will draft ordinance language reflecting the council direction, including options for a registration or oversight mechanism for charities using hotel rooms, and return those drafts to the council for further review and formal action.