The owners of illegal vacation rentals are paying up.

The City of Santa Barbara has collected $596,000 in back taxes, interest, penalties and fees from vacation rental owners who previously were not paying.

The information was revealed as part of a report to the City Council after 12 months of enforcement actions. The city launched a pilot program a year ago. The council voted 6-0 on Tuesday to extend it another year.

The council members hailed the program a success. Initially, the city budgeted $1.17 million for the enforcement, but so far less than $100,000 has been spent.

There are still about 1,147 unlawful short-term rentals in the city.

The City Attorney’s Office hired three hourly special investigators and a financial analyst for the pilot program. The investigators gather evidence, interview witnesses and visit the properties.

The investigators, according to the city, also contact violators to obtain cooperation and voluntary compliance to pay back taxes. The city considers short-term vacation rentals to be hotels and charges them 12% occupancy taxes.

If the city is unable to reach voluntary compliance, the case is referred to a prosecutor. The city prosecutor has filed 25 cases in court.

Santa Barbara Mayor Randy Rowse said he supports the program but expects it will get more costly in the next 12 months.

“I know the low-hanging fruit comes first,” Rowse said. “I am sure the expense vs. revenue side is going to change dramatically in the next year, so I am glad we have a cushion because they are going to get harder and more expensive to do.”

Community Benefit Improvement District Moves Forward

The Santa Barbara City Council unanimously approved initiating a ballot vote to create a Community Benefit Improvement District for State Street.

The council’s 6-0 vote paves the way for distribution of the ballots to all property owners. If the assessment district receives protests representing 50% or more of the properties’ assessment value, it will fail.

The city is expected to count and reveal the ballot results at the July 25 City Council meeting.

If it passes, the assessment will raise about $2.2 million from property owners within the district.

The money will go toward cleaner and safer sidewalks, graffiti removal, marketing, administration and reserves. If formed, a nonprofit board will oversee the CBID.

The proposal almost didn’t make it this far. To qualify for City Council approval, it needed 30% support from property owners in the district. Heading into the meeting, it had only about 28.6%.

The City of Santa Barbara, however, owns property on State Street, about 26 parcels. The council directed the city administrator to support the CBID, which pushed the total support above 30% to 36.6%.

Robin Elander, executive director of the Downtown Organization, supports the project and called the CBID an “important milestone.”

“The CBID will finally allow us to create a very high-quality, safe, beautiful, thriving space that our entire community can be proud of,” Elander said. “The CBID will help create the environment to support existing businesses and attract new businesses.”

Developer Peter Lewis said he supports the CBID.

“We are overburdened as local California taxpayers,” Lewis said. “There’s no doubt in my mind about this significant challenge, but this is one additional burden that I will accept and support.”

He said the CBID, if approved, will be for a five-year period. If it is ineffective, the property owners can halt it.

“The status quo is no longer acceptable,” Lewis said. “The CBID is a proven strategy that raises funds through a self-imposed assessment by majority vote of all property owners.”

Check out the video below to learn more about the CBID effort.