EASTHAM — This town may follow in the footsteps of Provincetown and Nantucket and use short-term rental tax money to encourage owners to switch their properties to year-round rentals.
Eastham Community Development Director Paul Lagg described the “Lease to Locals” program that those towns are using to Eastham’s select board at a housing workshop on Oct. 7. Board members were enthusiastic and plan to discuss it further before issuing a formal request for proposals to companies that could implement it.
“Rental housing is the single biggest need we have in Eastham,” Lagg told the board. “This could be a key program to win back some of the rentals we’ve lost to the short-term market.”
The programs in Provincetown and Nantucket are administered by Placemate, a California company created by former Airbnb marketing director Colin Frolich. In addition to help with leases and tenant selection, the program offers financial subsidies to property owners who sign new year-round leases: in Provincetown, the incentives range from $4,000 for a private room in a house to $20,000 for a three-bedroom unit with three tenants, while in Nantucket, the incentives range from $4,500 to $27,000.
The incentives are designed to match the lost income owners face when they exit the lucrative short-term rental market, but the program is not limited to former short-term rental properties. Second homes that have never been rented, ADUs, and even extra bedrooms in the homes of empty-nesters could also qualify.
“The project is still in the development stage,” Eastham Housing Coordinator Rachel Butler told the Independent. A request for proposals would help the town learn which companies could administer a year-round rental incentive program and how much it would cost, she said.
Lagg said that Eastham is already communicating with Placemate about the potential outlines of a program and is also discussing a partnership with Orleans that might allow both towns to participate with a reduced administrative cost.
Provincetown allocated $348,500 for its one-year Lease to Locals pilot program in February and added another $50,000 in October. The program has resulted in 20 leases that are currently housing 35 people, according to Town Manager Alex Morse, with eight more leases due to be signed in November.
Community Housing Plan
The funds that Eastham is considering using for a Lease to Locals program come from a $900,000 allocation of free cash to the town’s Community Housing Plan at town meeting in 2022.
At that time, a year-round rental incentive program was not part of the plan for those funds. A total of seven projects were discussed as potential uses for the $900,000 in short-term rental tax money that the town dedicated to the plan in 2022, but two and a half years later, $450,000 of that money is still unspent.
One proposal that has not moved forward was a “buy-down program” that would have paid up to $150,000 to lower the purchase price of a home in exchange for a permanent affordability deed restriction. Another was a down-payment assistance program that would provide forgivable loans to help residents afford the down payment on a new mortgage.
“We felt we had to go another direction from 2022,” Butler said. “If we went through with the buy-down program, for instance, we’d only have been able to help one or two people.”
With an average incentive of $11,000 per one-year lease in Provincetown, Lease to Locals could potentially assist a larger group of residents. Lagg told the select board on Oct. 7 that a pilot program might cost $100,000.
“It’s hard to say what’s going to be spent on it because we don’t have any quotes or estimates yet,” Butler said. “The best-case scenario is that the pilot program would be successful and continue, but we would have to find funding to do that.”
Select board member Suzanne Bryan said she worried about the long-term viability of one-year leases.
“A year lease is not stable housing,” Bryan said. “I don’t want to put people in a position where they need to move again after finally finding a year-round rental.”
Town Manager Jacqui Beebe expressed optimism that property owners would continue to rent year-round after the incentive expires. “The hope is that people will realize they don’t need to deal with turnovers and cleaning and whatnot,” Beebe said. “We’ll see the statistics when we get them from other communities.”
Chase Janvrin, a general manager at Placemate, told the Independent in July that about 50 to 70 percent of landlords continue to rent year-round after their incentives expire.
ADU Assistance
Three of the programs that had originally been part of the 2022 Community Housing Plan have been funded — an increased cap for rental assistance, the purchase of Brackett’s General Store and the Beach Plum Motel for redevelopment into housing, and the renovation and construction of units on those properties.
A fourth program from the 2022 plan should begin soon. The town’s ADU assistance program will offer pre-development funds of up to $10,000 to help with the costs of designing and permitting an ADU along with another $20,000 if the owner accepts a deed restriction on the unit after construction.
“We’ve encountered a lot of folks who have the land and septic capacity for an ADU but not the financing,” Lagg told the select board. The ADU assistance program could give the financial bump that property owners need to begin construction.
Lagg said that ADU construction could be further assisted by the Cape Cod Commission’s creation of pre-approved building plans, which the town could endorse and then give to property owners.
The Cape Cod Commission says that they expect those pre-approved plans to be available around the summer of 2025.
Paul Benson contributed reporting.
