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Cape Cod Chamber of Commerce

    THE CRISIS

    Leaders Issue Call to Action on Housing

    Cyr wants ‘a fundamental reimagining of what we are willing to do’

    By

    PROVINCETOWN — State Sen. Julian Cyr and Cape Cod Chamber of Commerce CEO Wendy Northcross convened a panel of housing experts last week that focused on what individual towns can do about the housing crisis.

    “I am really pushing the 20 communities I represent in the Cape and Islands to commit to a fundamental reimagining of what we are willing to do on housing,” said Cyr. “If we don’t, we will not have sustainable year-round communities. It’s really incumbent on local officials, region-wide, to recognize our own agency in solving this crisis.

    “There are some policies we can take up and pass on Beacon Hill that will make a difference,” added Cyr, “but, broadly, this is a problem that will be solved — or not — based on actions taken at the municipal level.”

    “Our people are being depleted,” said Northcross. “They are leaving the Cape, they are moving to Maine, because they can’t stay here.” The business community is worried, Northcross said. “You are going to be hearing more in the coming weeks and months from the Cape Cod Chamber, because the lack of housing is crushing our small businesses.”

    The panel, conducted by phone, included Hadley Luddy of the Homeless Prevention Council, Philippe Jordi of the Island Housing Trust on Martha’s Vineyard, Nantucket Housing Director Tucker Holland, and Chris Flanagan of the Homebuilders and Remodelers Association of Cape Cod.

    They called for multiple strategies, including action on funding, housing production, zoning changes, and conversion of underused properties.

    “The problem is very well documented,” said Northcross. “What I want to talk about is the way forward.”

    Dedicated Funding Streams

    A common starting point for many of the housing experts on the panel was the need for specific, dedicated funding streams for housing initiatives.

    “We fought like heck to get short-term rental tax parity,” said Northcross. “Now it outweighs what hotels are generating — it’s actually dwarfing those numbers. That is newfound money for our communities, and it needs to be directed into some kind of housing fund, protected from other uses.”

    In an interview, Jay Coburn, CEO of the Community Development Partnership, agreed. “I think all of that short-term rental tax money should be used for housing purposes,” he said, unless opponents of using it all can articulate “compelling needs that can’t be met with other sources.”

    “Let’s be real,” Coburn added. “It’s the short-term rentals that are the number-one driver of our housing affordability problem. We ought to be using the taxation of them to help solve that problem.”

    Jordi of Martha’s Vineyard and Holland of Nantucket both argued for a real estate transfer tax on residential homes that sell for more than $2 million. Such a tax is already allowed for the purposes of funding municipal land banks for conservation purchases, but to set up a transfer tax for housing would require an act of the state legislature. Provincetown and Nantucket have repeatedly asked the legislature for such legislation, and Wellfleet is considering a similar measure at this Saturday’s town meeting.

    “In terms of raising the necessary capital, it’s not going to just fall off the back of a truck,” said Jordi. “The median sale price has increased by 58 percent on the Vineyard since 2019. We need to capture some of that value and put it back into the community in a way that is going to maintain the viability of the community.”

    Coburn pointed out that local funding is especially needed for housing efforts aimed at middle-income people. “There are a lot of different pots of state and federal money,” he said, “but they really start to dry out at 60 percent of Area Median Income.”

    If towns want to secure housing for people who earn 80 to 120 percent of Area Median Income (AMI), they won’t be able to count on federal money to get the job done, Coburn said. Barnstable County’s AMI for 2021 is $77,750 for a two-person household.

    Housing Production

    “We need many more projects on the scale of what Patrick Patrick is doing, or Harbor Hill, or Cloverleaf,” said Cyr. “Actually, you need them much bigger. We need to see 100 units at a time.”

    Patrick’s proposed building in Provincetown is for 16 year-round rental apartments and 112 dormitory-style seasonal beds. Harbor Hill, also in Provincetown, includes 28 year-round rental apartments, and the Cloverleaf plan approved in Truro is for 39 year-round apartments.

    New development isn’t easy on the Outer Cape, though, when so much land is already developed or is preserved in park or conservation land. Luddy of the Homeless Prevention Council raised the idea of redeveloping or winterizing older motels for habitation. In Yarmouth, a developer is working on a plan to convert the 128-room Cape Cod Irish Village motel into a 120-unit retirement community.

    On Nantucket, a developer wants to build 156 condominium apartments at Surfside Crossing, said Holland of the Nantucket Housing Office.

    “Their original proposal met with strong opposition,” said Holland. “The developer is appealing a ZBA decision now, but they’ve also changed their formula. Twenty-five percent of the units are affordable-ownership, as before, but they’re now proposing that another 25 percent be, I guess you would call it ‘market-rate,’ but with a year-round restriction.

    “This is kind of new ground — a year-round-only deed restriction, without an income restriction associated with it,” said Holland.

    Trading deed restrictions for project approvals is not an entirely new strategy. In Provincetown, Patrick agreed to a “covenant deed restriction” when he requested nearly 10,000 gallons of sewer capacity for his dormitory project. The 16 apartments in that building are rentals, however.

    “We really are talking about creating a bifurcated market — a pool of year-round-only market properties, and then regular market properties,” said Holland. “We don’t need more short-term rental options out here. We need year-round housing.”

    Trusts, Deed Restrictions, Incentives

    Nantucket is also working on a land trust model in which the town would buy the land underneath a property, and an individual or family would buy just the building standing on it.

    This would allow the town to impose a permanent year-round occupancy restriction and be in a position to see that it’s enforced, Holland said. It would also make the purchase more affordable for those buying the home.

    Coburn said he has seen this approach work. “In fact,” Coburn said, in Provincetown “there are some units on Nelson Avenue that were done by Ted Malone on land that’s owned by a housing land trust.” Coburn has also studied the nonprofit Champlain Housing Trust use of this model.

    One other idea floated by the panel: a town could try buying year-round-occupancy deed restrictions on properties that are currently rentals. An elderly landlord, for instance, might be willing to accept cash now in exchange for restricting the use of a property for decades to come.

    That’s something Kristin Hatch of the Provincetown Housing Authority would like to see happen, she told the Independent. “I’ve said for years that the town needed to approach folks like Napi Van Dereck, who housed a whole lot of longtime year-round people,” she said. “The town didn’t do it.” Van Dereck died 18 months ago, at age 87.

    “What incentives can we do for the existing landlords we have?” asked Cyr. “If people agree to keep the property in some sort of restriction for a certain period, could we pay their sewer betterment? Could we discount their property taxes even further? How can we preserve those properties as year-round affordable rentals in some way?”

    Vacancy Fees

    There is also the thorny problem of residential property that is left empty and decaying. How these might be seen as assets to devote to affordable housing was not discussed by the panel.

    One of nine decaying structures on a Provincetown parcel. So far, vacant property laws that might spur action have not been enacted here. (Photo Paul Benson)

    “We can’t force anyone to redevelop — we can just ensure it’s not a public safety hazard,” said Provincetown Assistant Town Manager David Gardner.

    There are decaying residential units scattered around the Outer Cape. One such parcel, owned by the late Chuck Silva and his wife, Helen Silva, at 39 Ship’s Way in Provincetown, has nine buildings on it containing 23 apartments — nearly as many units as Harbor Hill. All of them are empty, and at least one of them is open to the elements. Last year, Provincetown’s water dept. confirmed that, while there are still “active service accounts,” there is no water usage at the property.

    “Some communities in Massachusetts have a vacant property bylaw,” said Gardner. They can actually charge an annual fee as an incentive to do something with the property.

    A Drumbeat of Sales

    The discussion about action is taking place against a steady drumbeat of properties selling. “We get calls on a daily basis,” said Luddy of the Homeless Prevention Council. Callers say, she reported, “my rental is sold, and I have to be out in 30 days. Where can I go?”

    When properties in resort communities sell, the market price is largely defined by the potential to earn revenue from short-term rentals. Someone who wants to buy or rent a house to live in full-time is essentially bidding against its value as a hotel room. It’s a hard contest for local incomes to win.

    Still, there does not appear to be a strong call for direct regulation of the short-term rental market. The state law that established the short-term rental tax in December 2018 also includes provisions that allow municipalities to cap the number of short-term rentals in their towns or to draw a zoning map that would exclude short-term rentals from certain districts or to limit the number of days per year a property can be rented short-term. No towns on the Cape or Islands have made use of these provisions, however.

    Cyr said he is skeptical those steps will be effective, because “people are going to go around it.

    “We saw this in the pandemic, when short-term rentals weren’t allowed last spring,” Cyr said. “If you rent it for a month and a day, you get around any restrictions that the law has.”

    “The role of government is to regulate the market,” said Coburn. Unbridled capitalism has unintended consequences, he said. But so would banning short-term rentals. “If people don’t have income coming in and can’t keep up with their mortgages — I don’t think we want to crash real estate values,” said Coburn.

    At this point, it would seem, market forces are making short-term rental, technically, at least, the “highest and best use” of residential property.

    Cyr’s call to action makes clear that reserving some units for actual residential use is on Cape Cod’s agenda now. With what tools and what funding, and on what timeline, is our post-pandemic problem.

    Editor’s note: Because of a reporting error, an earlier version of this article misidentified the director of the Nantucket Housing Office. He is Tucker Holland, not “Hammond.”

     

    WINDOW TO A WINDFALL

    DOR Releases Numbers on Short-Term Rental Tax Revenue

    Bounty can now be channeled toward specific local initiatives

    By

    PROVINCETOWN — After more than a year of telling town officials that it could not be done, the Mass. Dept. of Revenue has released data on the new tax on short-term rentals. This new tax, which is technically an expansion of the existing “rooms tax” — applying it to short-term vacation rentals, which have dramatically increased due to online services such as Airbnb — has been a long-sought source of revenue for Cape Cod towns.

    Provincetown has voted every year since at least 2010 to tax short-term rentals this way. (That year, the vote at town meeting was 236 to 7.) The tax could not be collected, however, until the state passed comprehensive enabling legislation, which finally happened in December 2018.

    The tax expansion was put into effect on July 1, 2019 — more than 20 months ago. But as recently as January 2021, the state was telling Provincetown officials that it was not possible to say how much revenue was coming from short-term rental properties as distinct from the “traditional lodgings” covered by the rooms tax, such as hotels, motels, and bed-and-breakfasts.

    This breakdown in revenue sources is significant, because many advocates and community leaders have hoped to use the funds gained from the short-term rental tax to support housing, infrastructure, and other specific needs.

    The Housing Assistance Corporation and the Cape Cod Chamber of Commerce had advanced town warrant articles in all 15 towns on the Cape to allocate the new money to housing, wastewater solutions, infrastructure, and marketing. (The articles were scheduled for annual town meetings in spring 2020, but they were withdrawn when the pandemic delayed those meetings across the Cape.)

    The Homeless Prevention Council of Cape Cod and the Community Development Partnership asked towns to dedicate 50 percent of the new money specifically to housing, in an op-ed essay in the Jan. 27 edition of the Independent.

    Meanwhile, the state was refusing to confirm what the new revenue actually amounted to.

    It was possible to analyze tax receipts from before July 1, 2019 and compare them to receipts after, in order to see roughly how much the tax expansion was generating. The Independent conducted just such an analysis, and found about $1.7 million in new revenue in Provincetown, $600,000 in Truro, $700,000 in Wellfleet, and $800,000 in Eastham, over a one-year period.

    But to actually allocate money requires more than a rough comparison — it requires official data.

    “We have been asking for that information since the tax was enacted,” said Tony Fuccillo, Provincetown’s tourism director. “It’s been an ongoing request. At first, they said they were going to do it in a later year. Then they just started saying they don’t have it. I had the impression they couldn’t do it.”

    And, in fact, the Dept. of Revenue initially told the Independent that “due to taxpayer confidentiality, DOR cannot offer a breakdown” of the tax receipts.

    This turned out not to be true. The DOR can indeed offer that breakdown, at least for the two most recent fiscal quarters, which make up the second half of 2020. That breakdown, which the DOR provided to the Independent, is published in the chart on this page.

    (The DOR still maintains that it can’t separate the revenue for the first four quarters of the tax’s expansion, from July 2019 through June 2020.)

    “This is the first I’ve heard that they’ve broken out those numbers,” said Fuccillo. “It was just back in late January that they told me they couldn’t.”

    Provincetown’s tourism budget depends partly on the rooms tax. For 10 years now, Provincetown has split rooms tax revenue four ways: 35 percent to the tourism fund, 13 percent to the wastewater enterprise fund, 27 percent to a capital improvements fund, and 25 percent to the general fund. Truro, Wellfleet, and Eastham all deposit their rooms tax revenue into their general funds.

    Assistant Town Manager David Gardner has previously pointed out that Provincetown might want to maintain the existing funding streams into those four funds, while dedicating the new revenue from short-term rentals to other purposes, such as the affordable housing trust fund or the year-round market-rate rental housing trust. The DOR’s insistence that it couldn’t report the numbers that way had prevented the town from dividing old money from new.

    A quick look at the new numbers from the DOR shows why advocates are interested in the money.

    Provincetown had $1.4 million in tax revenue from short-term rentals in the last two quarters of 2020. Truro had almost $600,000, Wellfleet almost $700,000, and Eastham almost $800,000.

    It should be noted that these two quarters correspond to Cape Cod’s high season, and, historically, they account for 90 percent of annual rooms tax revenue. Even so, to paraphrase an old expression: “A million here, a million there, and pretty soon you’re talking about real money.”

    HOUSING RELIEF

    There’s Financial Help for Tenants and Landlords Hurt by Covid

    But a hot real estate market threatens year-round rentals

    By

    PROVINCETOWN — First, the good news: checks of up to $5,000 are available to help vulnerable Cape Cod tenants with up to three months of rent payments.

    The Housing Assistance Corp. (HAC), a nonprofit that disburses local, state, and federal housing money, has a unified application for assistance that can be used for several different sources of money. The underlying programs are complex, but the upshot is that any renter or home owner who makes less than Barnstable County’s median income ($67,700 for a one-person household; $87,000 for a three-person household) can apply for help, and HAC will try to find a source of funds that matches their situation.

    Housing
    Alisa Magnotta of the Housing Assistance Corporation and Larry Marsland of the Lower Cape Outreach Council at the council’s walk-in office in Orleans, where people can go for help. (Photo courtesy HAC)

    Now, the bad news. Advocates are not just worried about tenants losing their homes: they’re worried about a broader loss of inventory if landlords leave the market. Cape Cod is uniquely dependent on small landlords — “individuals who had the capacity at some point to buy one or two or three houses and rent them out,” said Alisa Magnotta, CEO of HAC. If these landlords aren’t receiving rent payments and choose to sell their properties in the current very hot real estate market, then the already limited supply of year-round rentals could shrink further. Rental assistance programs are designed to help both tenants and landlords stay in place.

    A Raft of Programs

    The Workforce Housing Relief Fund was organized early in the pandemic, and it has raised $875,000 in private contributions. There is state money and a federal grant to Barnstable County. The towns of Brewster, Barnstable, and Yarmouth have allocated some of their Community Preservation Act money for emergency rental assistance. HAC uses a unified relief application for all of these programs, to make it easier for people who need help.

    HAC also just announced a collaboration with the Lower Cape Outreach Council, which has a staffed office in Orleans. People in need of help can call (508-240-0694) or go to the office at 19 Brewster Cross Road, where the council offers food, clothing, and cash assistance, and HAC can help with money for housing.

    Getting the word out is important, though, and landlords need to know about programs as much as tenants do. Rental assistance checks are cut directly to the landlord. (For home owners in distress who are eligible, checks go directly to the mortgage lender.) Many tenants in need aren’t comfortable asking for help, however. In particular, people who aren’t citizens — even permanent residents with green cards — can be very leery, even of nonprofit agencies.

    “Some people have obstacles with technology, and aren’t comfortable over the phone,” said Magnotta. “So, we’re excited to be sending a staffer to the Orleans office every Monday morning to offer face-to-face help.”

    Protecting the Inventory

    If landlords who aren’t getting paid wind up selling into the hot real estate market, the current high prices pretty well ensure that the property won’t be a year-round rental again. It might become a short-term rental, or it might be reserved for an owner’s use, but, either way, year-round rentals, which are already hard to find on Cape Cod, could get even more scarce.

    “Adding inventory, building units, is the number one strategy every town should be focused on, but we know we can’t build fast enough,” said Magnotta. “We don’t have the large apartment complexes that define this part of the market in cities. We are really dependent on the independent mom-and-pop investors. This rental assistance helps solve two problems. We want to avoid the extreme trauma of an eviction, and we want these land owners to keep their mortgages.”

    HAC started a program called Rent365 in 2018 to encourage land owners to rent properties year-round. It worked to identify homes that were lightly used — some had been in a family for generations, but the current generation was rarely able to use them — and facilitate a transition to renting them year-round. HAC offers help with tenant selection procedures, local permitting rules, and even access to an attorney to help owners become landlords.

    “We flipped 25 units into year-round rentals,” said Magnotta. “There’s a desperate need to build housing, but I think we also need to ask how to incentivize people to use their own assets in this way that benefits the larger community. One huge opportunity is to allow people to build accessory units on their property, by right. You also need to make investments in wastewater, because that’s how you keep construction costs low.”

    HAC is part of the Future Cape Cod Coalition, along with the Cape Cod Chamber of Commerce, the Association to Preserve Cape Cod, and the Cape Cod & Islands Association of Realtors. The coalition was formed in 2019 to advocate for the future use of room occupancy taxes, now that short-term rentals are taxed the same as other hotel rooms and revenue is increasing. The coalition developed a model bylaw that would direct 50 percent of the room tax in each town to special infrastructure and community investment funds. The funds could be used for housing, wastewater, broadband, transportation, and town marketing projects.

    “We don’t have this bylaw on any town warrants this year, because of Covid and what it’s done to town budgets,” said Magnotta. “We will pick it back up, though.”

    ECONOMY

    A Tough Time for Local Businesses

    Uncertainty prevails at planning time

    By

    WELLFLEET — The “Coming Attractions” marquee at the Wellfleet Cinemas is empty, an indication that nobody knows what’s coming next. Spring is a time for preparation and planning for the July-August tourist season, and even though the coronavirus has not yet emerged widely here, its effects are already hitting hard.

    Just last week, many people said it was “too early to tell” what summer would bring. This week brought a dose of reality in the form of the first confirmed case on the Cape. Emergency closures of bars, restaurants, schools, and other institutions, and cancellation or postponement of conferences, concerts, and other large gatherings have followed.

    The outlook boils down to three questions: Will the tourists come? Will the workers be here? And will anybody have any money?

    Peter Hall, owner of Van Rensselaer’s and Catch of the Day restaurants in South Wellfleet, said his plans to bring 18 summer workers from eight countries are up in the air. “If you had asked me a month ago, I was all hired up,” he said. “Now, I don’t know if I’m going to get any of them. We might have a good summer, we might have a rotten summer. We will do what we have to do.”

    The U.S. State Dept. last week announced a 60-day “pause” in international exchange programs that allow students from other countries to come work here. That includes the J-1 program that covers Hall’s workers.

    “If worse comes to worst, we might not get our summer workers,” said Radu Luca, executive director of the Provincetown Chamber of Commerce.

    U.S. restrictions on travel from Europe are initially scheduled to last just 30 days, but no one knows what will happen after that. Travel restrictions within Luca’s native Romania may pose problems for summer workers on H-2B visas, he said.

    As for travel within the United States, while restrictions are still limited to specific areas, that could change.

    “In a situation like this you plan for the worst and hope for the best,” said Cape Air CEO Dan Wolf. “Advance reservations are really starting to show the impact.”

    Wolf estimated his airline’s reservations for June through August are down 30 to 40 percent, while closer reservations are down about 10 percent. “If the timing is relatively short, there is time for this to recover, and for us to have a good summer,” he said. “But if this was June right now, we would be expecting a serious decline.”

    Travel and tourism generated over $1.2 billion in direct spending by domestic visitors and $100 million by international visitors to Cape Cod in 2018, said Wendy Northcross of the Cape Cod Chamber of Commerce. It is an important part of the Cape’s $14 billion economy, employing nearly 10,000 people, she added.

    Sometimes a global crisis encourages more people to travel domestically. That might give a boost to the Cape. The overwhelming majority of visitors arrive here by car and live within a day’s drive.

    Hotel reservations on Cape Cod seem to be coming in at normal levels for summer, but reservations can be easily canceled. “Our primary visitors tend to book very close to the time of travel, thus we may not know of any potential business loss until closer to the summer season,” Northcross said.

    Cruise ships, which have become the most visible incubators of coronavirus, have been a growing part of Provincetown’s tourist economy in the past few years, though the ships that stop here are generally smaller, carrying dozens or hundreds of passengers, not thousands. Luca said six cruise ship companies have scheduled 22 port calls in Provincetown this year, and so far none have been canceled.

    Jim Russo, executive director of the Eastham Chamber of Commerce, said he is already focused on readying solutions for those who may be hit hard later. “My immediate concern is to get the information on business recovery resources, and the tools to implicate such procedures to our members that are or will be affected in some way by COVID-19,” Russo said.

    The challenge for local business people is to make decisions based on facts, rather than fear. The latter, he said “seems the present-day hallmark for even the slightest change in our daily expectations.”

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