Legislature Establishes Cape and Islands Water Protection Fund

Within the Short-Term Rental Legislation, Representative Sarah Peake and Senator Julian Cyr Spearheaded Amendments to Create Fund Dedicated to Protect Regional Water Quality

(Boston, Mass.) – Today, the Massachusetts Legislature passed H. 4841 An Act Regulating and Insuring Short Term Rentals, which is the conference committee report that reconciled the House and Senate versions on this issue.  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 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.

 “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,I want to thank Senator Cyr for his tireless and expert work reaching out to the communities on the Cape and Islands and for convincing to his Senate colleagues to make this happen. This was a great team effort. Sometimes ‘it takes a village’, in this case it took a united Cape & Islands Delegation!”

“It has been a long road to pass short term rental legislation and I want to commend Representative Sarah 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,” said State Senator Julian Cyr (D-Truro). 

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 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.”


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