Senate Passes Bill Regulating Short-term Rentals

Within the Short-Term Rental Legislation, Senator Cyr Establishes the Cape Cod and Islands Water Protection Fund to Address Critical Wastewater Projects

On April 4, 2018, the Senate passed S. 2381, An Act regulating and insuring short-term rentals. The bill 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 would 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 that have already adopted the local room occupancy excise to date.

Short Term Rental Legislation Reaction:

“The short term rental economy is the latest example of a rapidly growing, technology-driven industry that is changing the way business is run in the Commonwealth,” said Senator Michael J. Rodrigues (D-Westport). “In addition to leveling the playing field in the lodging industry, this legislation ensures each city and town maintains local control, and balances innovative opportunities for the community with the need to regulate and permit safe, secure, and reliable transient accommodations.”

“This bill levels the playing field for operators of short-term accommodations, finally adapting to the realities of this changing market and ensuring that our tax laws no longer favor one type of accommodation over another,” said Senator Karen E. Spilka (D-Ashland), Chair of the Senate Committee on Ways and Means. “We also allow municipalities the flexibility to tax and regulate these operators in the manner best suited for each community to address housing affordability, public safety and consumer protection issues.”

The Cape and Islands Water Protection Fund:

Senator Julian Cyr (D-Truro) successfully added language to the short-term rental legislation that established a Cape Cod and Islands Water Protection Fund (CCIWPF) for Barnstable, Dukes, and Nantucket Counties to provide funding for critical regional water pollution abatement projects. The CCIWPF will be funded by an additional 2.75% occupancy excise tax in these municipalities that is applied on all short-rental and traditional lodging accommodations equally. This was done through amendment #17 to the bill.

“With the steep price tag for wastewater management plans, the Cape and Islands bipartisan delegation searched for a way to fund the Commonwealth’s $1 billion commitment to help clean up the excess nitrogen pollution in our bays and estuaries,” said State Senator Julian Cyr. “I believe that in terms of fairness, the financial burden of wastewater should not be solely on Cape and Islands property taxpayers; this 2.75 percent excise tax will be paid by those who visit and vacation so everyone does their part to preserve our beautiful coastal region.”

“It takes a village to save a village, which reflects the amazing amount of time and effort in the last seven years of so many people who have been steadfast in their determination to reverse the damage to our bays and estuaries here on Cape Cod,” said Wendy Northcross, CEO of the Cape Cod Chamber of Commerce. “Preserving our water quality on the Cape is fundamental to a healthy and vibrant economy.”

“The Cape and Islands Water Protection Fund is the most consequential piece of legislation for Cape Cod, Martha’s Vineyard and Nantucket in over twenty years. Water is our entire way of life on Cape Cod - whether we use it for recreation or for our coastal economy, we need good water quality,” said Andrew Gottlieb, Executive Director of the Association to Preserve Cape Cod. “Clean water is APCC’s highest priority and I want to thank Senator Cyr and the entire Cape and Islands delegation for their leadership on creating this fund.”

“Water, both marine and fresh, plays a critical and unique role for Cape Codders as we are surrounded by 550 miles of coastal ecosystem and we live on top of a sole source aquifer – the source of our drinking water,” said Richard Delaney, President of the Center for Coastal Studies. “The Cape and Islands Water Protection Fund is a strong step forward to help vital wastewater projects receive funding to clean up the nitrogen pollution in our waterways.”

“I want to thank my Senate colleagues, in particular Senators deMacedo, Rodrigues, Spilka, and Senate President Chandler for their support and wise counsel to get this legislation passed,” said Cyr. “I would also be remiss in not thanking every single member of the Cape and Islands legislative delegation – especially Representative Sarah Peake, dozens of town managers, select board members, business leaders, Wendy Northcross, Andrew Gottlieb, Richard Delaney and the entire Cape Cod Chamber for their help in making today’s legislation a success.”

S. 2381, which includes the Cape and Islands Water Protection Fund, will now be reconciled with a version passed by the House of Representatives.

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