The housing crisis is so widely recognized on the Outer Cape that it feels elemental, like the sun, wind, or tide. It’s behind the second question most employers ask in interviews: “What’s your name? Do you have housing?” Tenants pray for the good health of their landlords; owners are proud of the tenants they harbor. Voters have affirmed the importance of affordable housing for two decades, and nearly every select board candidate campaigns on it.
This article is the first in a series, “The Housing Puzzle,” by Paul Benson, exploring the strategies local governments have developed to address the problem. Some are well known, some are not. Others have yet to be explored. The series will also examine where the money for housing comes from and how it’s used. Understanding what we’re spending now, and on which strategies, can help inform a conversation about what should come next.
Everyone has a story about housing. If there’s something you think we should cover, email us at [email protected]
PROVINCETOWN — The Year-Round Market-Rate Rental Housing Trust — it’s quite a mouthful. It doesn’t abbreviate well, either: YRMRRHT looks like you fell asleep on your keyboard. It’s no wonder people mostly ignore it and talk about Harbor Hill instead.
What exactly is the trust? It’s a strategy — a new, locally developed strategy that is responsive to one of Provincetown’s unique problems. Harbor Hill was the first project the trust took on to implement that strategy.
A Provincetown Problem
The trust had to be created by special state legislation, because it addressed a problem that didn’t really exist elsewhere — the nearly complete disappearance of market-rate rental housing. The popularity of internet-brokered short-term rentals (such as Airbnb) blew a hole in Provincetown’s housing market. The money from short-term rentals was so much better than seasonal and year-round rentals — more than double, according to UMass Dartmouth’s 2018 study — that long-term rentals became scarce.
“We had a crisis, not just in the affordable range, but in the middle, market-rate range as well,” said Doug Cliggott, a trustee and an economist, last summer. “There just weren’t any. We actually had a hard time figuring out what market-rate prices are anymore, because hardly anything is ever listed.”
Provincetown’s physical situation was a factor. It’s an attractive place to vacation with hardly any free land on which to build. And since both Truro and Wellfleet are also experiencing short-term rental booms, there weren’t many alternative sources nearby.
The flood of money from weekly rentals had another effect: it could support heftier mortgages. Real estate prices rose in tandem with the income from weeklies. This meant that those who bought when prices were high had to rent weekly just to break even, and that renting out a recently purchased property at year-round rates no longer made financial sense. A rental market with high prices and low inventory is the context in which the trust came about.
“This may not be widely understood,” said Cliggott, “but we are buying property on the open market, where the sale price is basically set by what you can make on weeklies, and then turning around and renting year-round. If a reasonable year-round rent was enough to cover a mortgage around here, none of this would be necessary, and the market would take care of it.”
The trust is designed to pull property out of the weekly market, turn it back into year-round rentals, and subsidize the difference. The new tax on weekly rentals has always been a possible source for that subsidy.
“There’s something in economics called a Pigouvian tax — the idea is 100 years old — where you tax the thing that’s generating a problem in order to pay for the solution to that problem,” said Cliggott. “It doesn’t have to be that, though. It could be just an annual line item at town meeting. Or a slice of the marijuana tax, or whatever else people decide. But we think we can show that, first of all, this is the least heavy-handed way to intervene in this broken housing market. And second, that the cost to the town is not that large and is sustainable — and is outweighed by the public good of having this housing available.”
Springtime for Harbor Hill
Harbor Hill was not in the trust’s original plans: they imagined beginning with three or four condos and building from there. But when the 28-unit, 53-bedroom former timeshare hit the market, many people felt the town shouldn’t pass it up. The 2017 vote to buy it was one of the most crowded — and lopsided — in recent memory.
It hasn’t been a smooth journey since. Title issues and a lawsuit delayed the closing; the first RFP for property management yielded no bidders. The trust had to ask a 2019 town meeting for an extra $492,000 to cover a year of bond payments with no rental money coming in.
Now, however, renovations are almost done and renters are signing up. Building 5 was finished first; its six apartments were filled by last fall. There are currently six more signed leases, and 10 more applications pending approval, for the 22 apartments that come online in February, March, and April. Applications are being accepted on a rolling basis and can be found on the website of the Community Development Partnership (CDP), the Eastham nonprofit that won the management contract.
All the remaining units have two bedrooms, with the exception of one A.D.A.-compliant ground-floor studio. The studio is $1,000 a month; the two-bedrooms range from $1,450 to $2,100 a month, depending on floor plans and views.
“Most of the applicants for the two-bedroom units have been couples, some with children, although we’ve also had some applications from friends forming a household together, each taking a bedroom,” said Jay Coburn, the CEO of CDP “We’d like more people to know that they can form a household with a friend, go through the application process together, and share the rent for the two bedrooms.
“It is a market-rate project — we’re looking for people with incomes between 80 and 200 percent of area median income,” Coburn added. “It’s nurses, nonprofit employees, town staff, people with a documented ability to pay these rents. It’s a very different kind of housing project — no one in the commonwealth has done anything like this before.”