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Farmington, Aztec amending ordinances to remove exemption for places with less than three rooms for lodging

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AZTEC — A law that goes into effect in January will require landlords who make money from short-term rentals to pay a lodgers tax, closing an exemption on Airbnb-style vacation rentals.

Municipalities across the state — including Aztec and Farmington — have taken steps this month to change their ordinances to align with this change.

Currently, the ordinances include an exemption for places with less than three rooms available for lodging. The Farmington City Council and Aztec City Commission are in the process of amending their ordinances to remove that exemption.

Lodgers tax is collected from hotels and can be used to promote tourism and develop attractions.

Entities are able to impose up to 5% in lodgers tax. The cities of Aztec and Farmington have a 5% lodgers tax rate while Bloomfield has a 3.06% lodgers tax rate.

Farmington also has a $2.50 daily fee that visitors pay to stay in a hotel in Farmington. Proceeds from this $2.50 fee were used to remodel and expand the Farmington Civic Center.

Currently, facilities with less than three rooms are exempt from paying lodgers tax, but that will change starting Jan. 1. This exemption was removed by Senate Bill 106, introduced by Sen. John Sapien, D-Corrales. The bill passed the state Senate on a 36-5 vote and the House of Representatives approved it on a 56-9 vote. Governor Michelle Lujan Grisham signed it into law on Feb. 4.

The City of Farmington is partnering with the Farmington Convention and Visitors Bureau to provide free training for people who own short-term rentals. This free training includes teaching the hosts how to obtain a city business license for their properties. The training starts at 10 a.m. Dec. 10 at the Farmington Civic Center, 200 W. Arrington St.

While no San Juan County entity has imposed lodgers tax on short-term rentals in the past, several New Mexico cities or counties have. Taos and Santa Fe have been collecting lodgers tax on short-term rentals like Airbnb properties since 2016. Albuquerque began collecting the tax in 2017 and Ruidoso followed in 2018.

More: Agreement with Airbnb aimed at ensuring lodgers tax collection in Ruidoso

During an Aztec City Commission meeting on Nov. 26, Commissioner Austin Randall asked how the property owners will know about the new tax collection.

On its website, Airbnb states that it automatically collects and pays the tax on behalf of hosts and its system uses addresses to determine which taxes are applicable. However, Airbnb still encourages hosts to become familiar with local taxes.

“Airbnb is aware of the taxation,” said City Finance Director Kathy Lamb. “It’s then working with those who are advertising through Airbnb.”

How local legislators voted on SB106

Rep. Anthony Allison, D-Fruitland, voted in favor of the bill

Rep. Paul Bandy, R-Aztec, voted in favor of the bill

Rep. Rod Montoya, R-Farmington, voted in favor of the bill

Rep. James Strickler, R-Farmington, voted against the bill

Sen. Steve Neville, R-Farmington, voted in favor of the bill

Sen. William Sharer, R-Farmington, voted in favor of the bill

Hannah Grover covers government for The Daily Times. She can be reached at 505-564-4652 or via email at hgrover@daily-times.com.

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