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    SHORT-TERM RENTALS

    A Stuttered Rollout for the Community Impact Fee

    Early returns were low, but summer receipts will be arriving soon

    By

    At their spring town meetings in 2022, voters in Provincetown and Wellfleet adopted a “community impact fee” on investor-owned short-term rental properties: a 3-percent surcharge on bookings.

    According to the explanation of Article 15 in Provincetown, it was intended to “discourage the ‘warehousing’ of apartments for short-term rentals, where developers purchase several units for the distinct purpose of renting them short-term, thereby removing them from the inventory of seasonal or year-round occupancy.”

    “This fee does not apply to licensed businesses, owners who rent a single unit nor someone who rents one or two units from a property listed as the owner’s primary residence,” the town meeting booklet advised. Property owners with two or more short-term rentals would need to charge the 3-percent fee to their customers starting in January 2023.

    The measure passed almost unanimously in Provincetown. In Wellfleet, articles 46 and 47 also passed, imposing the 3-percent fee and extending it to cover multiple short-term rentals that are located at an owner’s primary residence.

    (Eastham had also considered voting on a community impact fee that spring, but the select board decided not to advance the article. Town Administrator Jacqui Beebe said the impact fee could have punished historic cottage-colony owners who license their properties as short-term rentals.)

    A year-and-a-half later, implementation of the impact fee has been rocky. Multiple property owners wrote to the Independent to say that the state had told them, erroneously, that they should be collecting the fee, and Provincetown Assistant Town Manager Dan Riviello said that he had contacted the state Dept. of Revenue to try to learn how it was going about imposing the fee.

    “I interacted with two residents who reached out to me because they noticed the impact fee was being misapplied to their rental,” Riviello said. “Airbnb didn’t get back to us at all, but I got in touch with someone at the state Dept. of Revenue who was able to reach them.”

    Riviello said that, in those cases, a user-selected option that the homeowners had chosen years before when setting up their Airbnb account had somehow caused the impact fee to be triggered. “It’s in the sign-up process, and people don’t recall what choices they chose, they don’t recall what their options were, and there’s no reason to go back into those menus unless you’re setting up a new rental,” Riviello said.

    Riviello said he also asked how the state was identifying which taxpayers should pay the impact fee.

    “I went back to the Dept. of Revenue and said, ‘These are the people I see with multiple rental certificates. Aren’t these the people this should apply to?’ and they said, ‘Well, it’s not really that simple,’ ” Riviello reported.

    “I think the rules from the Dept. of Revenue were set up for Boston-type situations, where you have a triple-decker,” Riviello added. “I think it’s a little difficult for the DOR to understand how it’s supposed to work out here.”

    How Much Revenue?

    Before the impact fee was passed, a list provided by the town showed 128 properties were owned by people who had two short-term rentals in town — although it was not clear how many of them might also live at those properties and therefore be exempt from the fee.

    The list contained another 75 properties owned by people with between three and six short-term rentals in town. Those 203 properties represented about 20 percent of the registered and taxed short-term rentals in Provincetown at the time.

    According to Finance Director Rich Bienvenue, Eastham’s numbers were similar: 179 rentals might be covered by an impact fee, he said in spring 2022, or about 19 percent of the town’s short-term rental inventory.

    Wellfleet does not have a list of short-term rental properties, said select board member Ryan Curley.

    Based on that 20-percent proportion, and the fact that the impact fee is only a 3-percent surcharge on bookings while the town’s short-term rental tax is a 6-percent surcharge, it would be reasonable to look for community impact fee revenue to be around 10 percent of the town’s existing rooms tax on short-term rentals.

    That would be more than $200,000 per year in Provincetown, and about $160,000 per year in Wellfleet. Numbers like that have not happened, however — at least not yet.

    In the first quarter in which the community impact fee existed in Provincetown, which was the first quarter of 2023, the impact fee raised only $6,957 or about 2.5 percent of what the rooms tax on short-term rentals raised that quarter.

    In the second quarter, which ended on June 30, the impact fee raised $15,800 for Provincetown — 7.3 percent of what the rooms tax on short-term rentals raised.

    The vast majority of the Outer Cape’s rooms tax is received in the quarters that end on Sept. 30 and Dec. 31. It should be clearer when those payments arrive whether the impact fee is bringing in revenue in line with the town’s inventory of investor-owned short-term rentals or whether the collection of the fee is still lagging.

    In Wellfleet, the story is similar. Articles 46 and 47 became effective on Oct. 1, 2022, so the first quarter in which Wellfleet received community impact fee revenue was the one ending Dec. 31, 2022.

    That quarter, Wellfleet received $6,298 in community impact fees — only 1 percent of the nearly $600,000 in short-term rental taxes that came in that quarter.

    The next quarter, the impact fee brought in $4,165, but that was good for 4 percent of the town’s short-term rental tax revenue. In the quarter that ended June 30, 2023, the impact fee brought in $5,137, or 8 percent of the town’s rooms tax revenue.

    The quarter that ends this coming Sept. 30 should be a major signal as to whether implementation of the impact fee has stabilized or whether there could be significant revenue going uncollected.

    How Would We Know?

    The towns are not directly involved in implementing the community impact fee, Riviello said — that job lies with the state Dept. of Revenue. Nonetheless, both Provincetown and Wellfleet have dedicated 100 percent of their community impact fee revenue toward housing, so the revenue collected is a matter of public interest.

    A spokesperson for the Dept. of Revenue said that “a taxpayer or intermediary registering a short-term rental property on MassTax Connect is responsible for selecting fields that indicate the property is categorized as being subject to payment of a community impact fee.”

    Intermediaries include websites like Airbnb and VRBO that collect payments and taxes for short-term rental owners.

    The spokesperson also said that “municipalities that adopt a community impact fee may request that DOR verify a list of short-term rentals registered with the Department.”

    The Independent asked what that “verification” process would entail, but the agency did not provide a response by press time.

    Provincetown Independent summer fellow Elias Schisgall contributed reporting for this article.

    THE REOPENING

    Memorial Day Presages a Long, Complicated Summer

    Provincetown officials are getting 10 to 15 calls a day about rental violations

    By

    PROVINCETOWN — This week and next, town governments on the Outer Cape will be rolling out changes to traffic flow, restaurant rules, bathroom arrangements, and dozens of other adjustments to accommodate a smaller-than-normal flow of tourists safely.

    Nor'east Beer Garden
    Nor’east Beer Garden’s new contactless takeout window.

    Memorial Day weekend provided a dry run of what a lower-volume summer might feel like. There were certainly tourists here, despite the fact that the state is only in phase one of Gov. Charlie Baker’s reopening scheme. How the limited traffic flowed, where there was compliance, and where there was not, are all potential indicators of the summer to come.

    Who and How Many?

    Leisure accommodations are still officially closed in phase one, including hotels, guest houses, and short-term (fewer than 32 days) home rentals. Property owners can still enjoy their homes, of course, and they can let their friends and family enjoy them, too. But accepting paid customers looking for a vacation is expressly forbidden under the governor’s current order.

    “We’re receiving about 10 or 15 calls a day about Airbnb and short-term-rental violations — more on weekends,” said Steve Katsurinis, chair of Provincetown’s board of health. “If the complaint passes initial muster, then Aaron Hobart, the code enforcement officer, contacts the owner by phone or email. He starts with an education piece: this is the governor’s order, this is why it’s in place. Our main purpose is to get people to comply going forward.”

    Takeout window at Cafe Heaven
    Picking up food at Cafe Heaven’s new takeout window on Commercial Street. (Photos Paul Benson)

    If it becomes clear there was a commercial transaction involved, Hobart can assess a $300 fine, which goes to the commonwealth’s general fund, said Katsurinis. Repeat offenders could be required to appear before the board of health to explain themselves. A hotel or guest house breaking the rules could face punitive action by both the board of health and the licensing board.

    “Most people, when they’re asked these questions, do one of two things,” said Katsurinis. “They apologize and say they won’t do it again. And then they immediately point out other people that they think are doing it also. We have a very engaged town.”

    Partial Occupancy

    The market-research website AirDNA.co aggregates information from Airbnb, VRBO, and HomeAway, showing both upcoming bookings and historical data. For the night of Sunday, May 24, there were 189 properties booked in Provincetown, 80 in Truro, 85 in Wellfleet, and 112 in Eastham. Using the maximum number of properties listed last summer as a reference, those numbers indicate that between 11 and 17 percent of each town’s short-term-rental capacity was commercially booked on Sunday night.

    With campgrounds and hotels closed, but with many home owners inviting family and friends to town, the net effect was a relatively low level of overall occupancy. So how did mask-wearing and social distancing play out?

    Shalom's Gift Shop
    Shalom’s Gift Shop offers curbside shopping.

    “Mask compliance seems to be very good,” said Katsurinis. “I heard a WBUR report that said we had the highest compliance rate they found in the commonwealth, like 98 percent.” Scott Kirsner of the Boston Globe conducted the informal survey in Provincetown, and found only two people out of 100 not wearing masks — and theirs were around their necks.

    The “wait outside” model of retail and take-out dining may have some kinks to work out, though. Curaleaf experienced a surge of marijuana customers when it was allowed to open on Monday. The lines of authority and responsibility on Commercial Street, it seems, aren’t always clear.

    “It’s the board of health’s responsibility to enforce the mask order,” said Katsurinis. “If something ends up in an altercation, that’s when the police are involved. The police are not going to walk around with a gun on their hip and tell people to put a mask on. That’s not their role. From the board of health’s perspective, it’s also not the business owner’s responsibility to police mask-wearing off their property.”

    Spiritus Pizza
    Spiritus Pizza slides pizza boxes through its new takeout door.

    How and where people gather is more complicated, though. “If people want to come onto a property, and they’re blocking a right of way, that’s always been a problem for a business,” Katsurinis said. “People can’t stand in the middle of the street while they wait for a table.”

    In a world where everyone has to wait outside and six feet apart, however, finding enough room for everyone isn’t easy. The logistics of where people can sit and stand still needs some attention — before the resumption of phase two tourism means there really are fights to break up.

     

    RECOVERY

    Gauging Town’s Population Key to Reopening

    Balancing occupancy against health resources requires knowing who’s here

    By

    PROVINCETOWN — The town’s Recovery Coalition is working on a phased reopening of Provincetown’s economy that depends on knowing how many people are here. That won’t be easy.

    CLOSING DOWN

    Provincetown Halts All but the Essentials

    Airbnb rentals, visitor parking suspended after 2 test positive for COVID-19

    By

    Editor’s note: This article has been updated as of Sunday, March 29.

    PROVINCETOWN — Town officials were notified of the first two positive tests for coronavirus on Sunday, March 22. Later that evening, the select board declared a state of emergency, and the board of health approved a detailed order for townspeople to shelter in place.

    That order specifies what classes of business may remain open, and what sorts of activities are permissible, for the duration of the emergency — currently until at least April 30. The new rules affect short-term leasing of homes and visitor parking; town staff also announced a slowdown on turning on water to seasonal properties.

    On Tuesday Town Moderator Mary-Jo Avellar postponed the annual and special town meetings scheduled for April 6 to Wednesday, April 22 “due to public health concerns.”

    The state had announced its own shelter-in-place rules on Monday, which varied somewhat from the town’s. “We have to determine how our order interacts with the governor’s order, and we do expect to make some changes,” said board of health Chair Steve Katsurinis. “We’ll be discussing that at our Wednesday meeting.”

    At Wednesday’s meeting, the board of health voted to suspend its own order in deference to the governor’s similar statewide shelter-in-place order.

    Among the restrictions Katsurinis did not expect to change: prohibiting the leasing of homes.

    “It was our intention that people who don’t have connections to the town, like people who stay in Airbnbs, wouldn’t come here during this COVID-19 epidemic to ‘ride it out,’ ” said Katsurinis. “Our health care system is limited,” he added. Existing bookings remain valid, but bookings made after March 23 will not.

    Airbnb rentals
    A reporter’s screen shot captures an array of Airbnb rental offerings currently showing available for the month of April.

    Enforcing this provision might not be easy. The health dept. has authority over hotels and short-term rentals, but for years only a few people have signed up for the department’s short-term rental certificates. Recently compliance has improved, and there are now about 700 certificates for short-term rental properties, according to Aaron Hobart, the town’s code compliance officer.

    The Provincetown housing study conducted by UMass-Dartmouth in 2018, however, estimates that 2,300 units in Provincetown are seasonally vacant. As of Tuesday, Airbnb.com showed 118 properties in Provincetown that could accommodate four people and were available for the whole month of April. On Homeaway/VRBO, there were 189 properties available that could accommodate four people for the whole month. Collectively, that could be a lot of people, but with the health dept. tracking actual coronavirus cases, it could fall to the owners themselves to comply with the new order and take down their listings.

    Parking Rules

    A ban on visitor parking in town was part of the initial announcement of the state of emergency on Sunday night. The press release banned “nonresident vehicles” from parking in town — a turn of phrase that seemed to also ban cars with nonresident parking stickers. Those stickers are purchased by people who work in Provincetown but live in neighboring towns, and people who own property in Provincetown but have a primary address elsewhere.

    On Monday, the police dept. issued an expanded statement. “The intent of the parking ban is to make clear that Provincetown is not business as usual during a state of emergency,” it read. “We are not barricading our borders, but anyone coming to Provincetown to conduct essential business needs to comply with the shelter in place order and must practice social distancing.”

    The statement went on to explain that the parking ban only applies to Commercial Street between Pearl Street and Central Street. At municipal parking lots, all of the various town permits from 2019 are still valid until May 1. Additionally, “all employees and customers of essential businesses and services” may use the municipal parking lots as well, even if they don’t have town permits.

    Water Service

    On the Friday before the emergency order, Provincetown stopped taking new reservations for water turn-on service for seasonal homes. Some interpreted this as an effort to keep people from relocating here, but town staff insisted that was not the case.

    “We are doing this to protect our staff, the local plumbers, and the residents,” said DPW Director Rich Waldo. “Sometimes our service techs have to go into small crawl spaces with the plumber, or inside the house where the residents are. Every situation is a little different, but they often have to go into tight quarters to get the water on.”

    Essential employees are currently being separated, with some at home and some at work, so they do not all get sick at once. Departments like DPW are effectively at half of normal crew. That, plus a backlog of existing reservations for water service, led the department to request a pause in taking new reservations.

    Truro resident Barbara Kearney, who lives in a 250-square-foot cottage at Beach Point from April to November, was informed by her management company that her cottage would not get water in early April as planned. “Not everyone who lives at Beach Point is a second-home owner,” said Kearney. “I bought a cottage at Beach Point only because I couldn’t afford a year-round place. I move twice a year like a lot of people, and I housesit for someone all winter.”

    To Kearney, the slowdown represents a “rush to judgment, and no transparency.” She added, “If they’re not going to turn on the water, they should explain themselves, make the case.”

    “If there are extenuating circumstances, and people call us, we will see what we can do,” said Waldo. “I can tell you this has nothing to do with the Connecticut people and the New York people and all that. Our goal in town is to protect the public,” he said. “There’s a lot of elderly people here. We’re trying to limit those exposures.”

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