WELLFLEET — As year-round housing becomes less available and affordable on the Outer Cape, housing advocates argue that one cause of the problem — the use of a large share of the housing stock for short-term rentals — should help pay for solutions.
A citizens’ petition certified for the April 28 town meeting warrant asks the select board to dedicate 80 percent of the revenue from the rooms tax to the affordable housing trust starting in fiscal 2027, which begins on July 1, 2026.
The rooms tax, currently set in Wellfleet at the state’s legal maximum of 6 percent, applies to any hotel or rental stay of 31 days or fewer. According to figures from the state Dept. of Revenue, in the fiscal year that ended June 30, 2024, Wellfleet brought in $1.46 million in taxes on short-term rentals, with another $270,000 from bookings at hotels, motels, and campgrounds.
Unlike some other revenue-generating programs in Wellfleet, such as beach-sticker fees that are routed to the beach fund, the rooms tax isn’t earmarked for a particular purpose, housing authority chair Sharon Rule-Agger told the Independent. The money currently goes to the town’s general fund.
“There’s a long history of the town dedicating revenue to things that give rise to that revenue,” Rule-Agger said, pointing to the beach fund and the ambulance and marina enterprise funds. “We think housing is just as important as these other things.”
Although Rule-Agger and housing trust board members Gary Sorkin and Elaine McIlroy all said they had hoped the select board would “adopt” their petitioned article and put a similar select-board sponsored item on the town warrant, the board declined to do so at its March 11 meeting.
Select board members Sheila Lyons, Barbara Carboni, Ryan Curley, and Michael DeVasto all said they wanted further discussion of the idea.
Lingering concerns about the town’s finances were a reason for caution, said Town Administrator Tom Guerino.
“We’re using every nickel we have available to fund this budget this year,” Guerino said. “Taking $850,000 or $1 million, depending on the year, out of that operational budget in one fell swoop, without doing something else, is concerning, and we have to work together on a way to make that happen.”
“I just hesitate to bind future select boards to a particular number,” Carboni said, referring to the 80-percent figure.
Years of Discussion
The proposal to earmark rental tax funds for housing is not a new one. Advocates were calling for the money to go to housing almost as soon as the state created the tax in 2019.
In March 2021, Harry Terkanian, then chair of the affordable housing trust, asked the select board for an 80-percent earmark for housing.
The board put off Terkanian’s request that year but expressed support for it in October 2021 and asked town staff to work on a tax allocation plan — but that never became policy.
Terkanian proposed the idea two more times over the next two years, to no avail.
DeVasto was on both the select board and the affordable housing trust in 2021. The problem, he told the Independent this month, was that “Wellfleet was running a structural deficit, hadn’t passed a general override in 15 years, and was using every new revenue source — including the short-term rental tax — as a stopgap just to keep up.
“After years of work to fix our budgeting practices and stabilize our finances, it’s imperative that we finally act,” DeVasto said.
At the March 11 meeting, DeVasto said he supports the eventual allocation of rooms tax money to housing.
Housing Coordinator
The housing trust also submitted a formal proposal to use Community Preservation Act money — which comes from a surcharge on property taxes that can be used only for housing, open space, and historic preservation — to fund a new town housing coordinator position.
Article 23 on the warrant would allocate $250,000 in CPA money to fund the housing coordinator for two years.
“All of our projects need outside funding,” McIlroy said. A full-time housing coordinator would help the town get access to state and federal funds, she said.
McIlroy pointed to a $6-million project on Paine Hollow Road, where progress on eight affordable rental units has been stalled since 2007.
McIlroy said the town had applied for a MassWorks grant to finance the project in June 2024, which required a commitment of 10 percent in matching funds from the town. Wellfleet found out in November that it didn’t get the grant — and McIlroy said state officials told her “some questions weren’t answered as fully as they should be.”
A full-time housing specialist would have helped craft a stronger application, McIlroy said — and “without a doubt,” having dedicated rooms tax money would have also helped, she added.
Lyons said on March 11 that the select board should commit to funding the housing coordinator position beyond the two years allowed in Article 23 — possibly with operating budget funds rather than CPA dollars. “We should say that, in two years, we’re going to pick that up or at least match” the Community Preservation Act contribution to the position, she said.
Town Meeting Floor
The rooms tax petition is nonbinding — it asks the select board to allocate money to the housing trust.
Nonetheless, trust members plan to be “a little more assertive” about it at town meeting, Rule-Agger said. “We’re trying to say, look, we know Wellfleet is struggling with the budget, but we’re tired of waiting, and we see that we’re going to the bottom of the pile on a continuous basis.”
“We feel such urgency right now,” said McIlroy. “It’s a critical time because of how we’re losing our workforce, jeopardizing our health-care services, businesses, everything. But it’s also an incredibly opportune time, maybe the most opportune in my 20 years of volunteering.”
McIlroy said the state’s Affordable Homes Act would lead to streams of new funding for housing and that Wellfleet needs to sort out its ability to contribute to new projects.
“To get outside funding you need to show local will and local support,” she said.
This is “not an after-school program we’re looking for,” said Kathleen Nagle, another member of the affordable housing trust. “We are looking to fund housing, and housing is the root of all problems in this town. Until we acknowledge that, I’m all in.”
Paul Benson contributed reporting.
