KANSAS CITY, Mo. — Only a fraction of the people making money off short-term property have the permit required by Kansas City, Missouri.

The City Auditor’s Office determined that the owners of just 11% of the 1,800 properties had the proper permit. The rest just didn’t bother to get the permit to operate according to the office.

The city council passed the short-term rental program in 2018. But, since the program’s inception just 7% of the owners paid the fee for the permit.

The issue caused the city to miss out on collecting more than $1 million in permit fees and renewals according to the audit. That money should have been used to help enforce regulations, among other things.

Auditors also determined that without the required permits, the city does not have information about who owns specific properties or where short-term rentals are located.

The auditor determined the city’s approach to permitting short-term rentals is ineffective because a violation only happens after a guest stays in the property, not when it is listed without a permit.

Most of the short term rental transactions occur on intermediary websites, hosts have little incentive to comply with city requirements.  Other cities we reviewed prohibit either hosts or intermediaries from listing, booking, or collecting fees from unpermitted units.

City Auditor’s Office

The audit also found the City Planning and Development Department could better communicate with platforms that help market short-term rental properties. It also suggests the city define the information companies and hosts should keep, and come up with a process to get that information.

Last month, a separate audit determined Kansas City missed out on $2.3 million in taxes on short-term rental properties because of the way a state statute defines hotels in Kansas City.

The audit is expected to be presented at the City Council’s Business Session Thursday, Dec. 8.

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