Joint press release from State Senator Julian Cyr and State Representative Sarah Peake:
Yesterday, the House and Senate passed a compromise amendment to House Bill No. 4841, “An Act Regulating and Insuring Short-Term Rentals”. The amendment is the result of bipartisan collaboration between the Senate, House, and Governor Baker to reach a compromise between the conference committee agreement from July 30, and the Governor’s amendment, which was sent back to the legislature on August 1. The agreement further amends the conference committee report, which updates the existing room occupancy tax structure to address previously untaxed short-term rentals in the Commonwealth.
H.4841 expands the scope of the state’s room occupancy excise tax and local option excise tax to include short-term transient accommodations. This legislation will level the playing field, preserve local control, and support the emerging short-term rental industry. The legislation will generate an estimated $34.5 million and $25.5 million in state and local revenues, respectively, based on the most recent Senate Ways and Means Fiscal Impact Report. The expanded tax base will automatically apply to all 175-plus cities and towns in Massachusetts that have already adopted the local room occupancy excise to date. The bill, as amended, will now head to Governor Baker for his signature.
Included in the legislation for short-term rentals is a landmark amendment establishing the Cape Cod and Islands Water Protection Fund (CIWPF). State Senator Julian Cyr (D-Truro) led the successful effort to establish the CIWPF in the Senate and State Representative Sarah Peake (D-Provincetown) spearheaded the CIWPF in the House. Both Cyr and Peake had the full support of the Cape and Islands Delegation, along with business leaders, environmentalists, the Cape Cod Chamber of Commerce, municipal officials and numerous community stakeholders who worked together to envision and support the establishment of the fund.
As the result of a 2011 lawsuit filed by the Conservation Law Foundation, Cape Cod towns are legally mandated to develop and build wastewater management systems to clean up nitrogen pollution. With an estimated price tag of $4 billion to clean up and maintain good water quality on Cape Cod, the CIWPF was developed for Barnstable, Dukes, and Nantucket counties to provide funding assistance for critical municipal or regional water pollution abatement projects. The CIWPF will be funded by an additional 2.75% occupancy excise tax applied equally to both short-term rental and traditional lodging accommodations in the region.
“Christmas came early for Cape Cod, Martha’s Vineyard and Nantucket,” said State Senator Julian Cyr (D-Truro). “It’s been a long road to pass short-term rental legislation and I want to commend Rep. Peake for her dogged determination to finally realize this critical priority was passed on Beacon Hill. This legislation addresses the popular online vacation rental market on Cape Cod, Martha’s Vineyard and Nantucket by making sure that it is held to the same standards as the traditional lodging industry and will also generate much needed local revenue for all the towns across our region.”
Cyr added, “The creation of the Cape and Islands Water Protection Fund within this legislation is an essential step to fund the Commonwealth’s $1 billion commitment to help clean up the excess nitrogen pollution in our bays and estuaries. I want to thank the entire Cape & Islands Delegation who strongly believed, as I do, that the financial burden for wastewater management plans should not rest solely on the shoulders of Cape and Island property taxpayers, but that it should be shared by those who visit to our shores and contribute to the nitrogen problem.”
“The short-term rental legislation levels the rental market playing field, provides consumer protection and public safety measures, and most importantly for every homeowner on the Cape and Islands, it’s a local aid bill that will provide real property tax relief,” said Representative Sarah Peake (D-Provincetown). “The 2.75% wastewater surcharge provides the mechanism to have our thousands of visitors who come here to enjoy our beautiful beaches, harbors and ponds help pay for the clean up. The local excise tax will now be accessed across all rental platforms substantially increasing the flow of revenue into every community‘s general fund. Without this, many would see their real estate taxes rise beyond what they could afford.”
Peake added, “This was a great team effort. Sometimes ‘it takes a village’, in this case it took a united Cape & Islands Delegation!”
“Our ecology and environment are the reason people from all over the world flock to the Cape & Islands,” said Representative Randy Hunt (R-Sandwich). “Given the mandate of the Section 208 Plan and its accompanying $4 billion price tag for managing and improving our water quality, the 2.75% excise represents $1 billion of tax relief for property owners in Barnstable County. We will appropriately share the cost of protecting our natural resources with our guests who join us each year.”
"The creation of the Cape and Islands Water Protection Fund is APCC's highest legislative priority and is the most significant legislative achievement for Cape Cod in a generation," said Andrew Gottlieb, Executive Director of the Association to Preserve Cape Cod. "Funding water quality protection and restoration is the greatest fiscal challenge facing Cape communities and we applaud the Cape and Island's legislative delegation, and especially Senator Julian Cyr and Rep. Sarah Peake for their exceptional leadership, for pushing through a very real and important property tax relief bill for Cape taxpayers."
“Passing this legislation is a crucial step forward in ensuring that Cape Cod and its waters remain national treasures,” said Bradley Campbell, President of Conservation Law Foundation. “Wastewater from septic systems is plaguing bays and streams with noxious nitrogen pollution, threatening to make swimming, fishing and sailing impossible. Towns now have the resources to begin solving this problem, and they must take action as quickly as possible. The Cape’s residents and visitors deserve nothing less.”
“This new, steady, very significant revenue stream is absolutely critical to support the collective efforts of all Cape and Islands towns to address the growing water quality threats to our priceless bays, estuaries and beaches. The Fund will also allow us to conduct the needed water quality monitoring and watershed planning that will enable the Cape and Islands to implement the most cost-effective, science-based comprehensive wastewater management plan,” said Richard Delaney, President of the Center for Coastal Studies and Chair of the Cape Cod Chamber’s Wastewater Task Force. “The Chamber of Commerce has long understood the nexus between a healthy environment and a healthy economy and we all express our gratitude to the entire Cape and Islands legislative delegation which, under the leadership of Senator Cyr and Representative Peake, made the Cape Cod Water Protection Fund a reality.”
“Cape Cod’s water is at the foundation of its economic prosperity. We applaud all of those who have worked for clean water and property tax relief through the establishment of the Cape and Islands Water Protection Fund in the short term rental tax bill,” said Wendy Northcross, CEO of the Cape Cod Chamber of Commerce. “We especially thank our elected delegation to the State House who unanimously supported this action and who have assured Cape Cod’s future prosperity with their votes.”
More detail on the compromise House/Senate amendment:
The Governor’s amendment originally exempted those operators who rent their properties for 14 days or less in a year as a short-term rental from the requirements to register, and collect and remit taxes.
The new compromise amendment requires operators to register with DOR and collect and remit room occupancy excise tax on day one. However, they may file a declaration, signed by the operator, to rent for no more than 14 days in a calendar year. This would exempt operators from required taxes and fees unless they exceed 14 days.
Any operator who rents a short-term rental for 15 days or more, or who fails to register and file a declaration, will be required to pay fees and excises under state law, including the required taxes and fees on the first 14-days that the short-term rental was rented in the calendar year.
Additionally, the compromise amendment accepts Governor Baker’s recommendation to balance the need to preserve confidentiality with transparency. The amendment accomplishes this by ensuring that the registry publishes only the street name and the city or town where the property is located, and not the street number of the property.
The amendment also strikes a balance between the conference committee agreement and the Governor’s amendment, which sought to maintain covenants to bondholders on the Commonwealth’s outstanding special obligation bonds issued under the Convention Center Act. The amendment adopted today maintains the existing definition of “occupancy” in order to preserve the revenue stream supporting the Commonwealth’s bonds, while including a 31-day carve out threshold for short-term rentals.
In addition, the compromise amendment delays the diversion of short-term rental related convention center fee revenues until the Commonwealth has satisfied the covenant on the Convention Center bonds.