PROVINCETOWN — Time is running out for Borislav Ivanov and his family. On May 15, the lease expires on the Commercial Street apartment where he, his wife, Iliana, and their three-year-old son have lived since October.
Short-Term Rental
TOWN FINANCE
Eastham Raises Fee for Vacation Rentals to $350
The increase is expected to raise about $200K for oversight efforts
EASTHAM — The town’s short-term rental registration fee will increase from $75 this year to $350 in 2025. The projected additional $192,500 in revenue will fund stricter oversight of more than 1,000 short-term rentals that Town Manager Jacqui Beebe said Eastham is struggling to supervise.
The select board unanimously supported the increase at its Feb. 5 meeting along with an increase in the fee for longer-term rentals (more than 31 days) from $75 to $100. Beebe said she proposed the fee increase after examining the preliminary budget for fiscal 2025 with Finance Director Rich Bienvenue and finding that “our operating budget is extremely tight.”
Some of the costs of the town’s housing coordinator, housing inspector, and an administrative assistant for health should be supported by short-term rental fees rather than the regular budget, Beebe said. Compliance services from Granicus, a short-term rental tracking company used by Provincetown and Barnstable, would cost another $65,000, Beebe told the select board.
Beebe told the Independent she has received many letters from residents who were surprised by the dramatic increase. “I know people are upset by it, and they’re absolutely right,” Beebe said. “I should’ve raised it more incrementally over time.”
Select board member Suzanne Bryan said that raising the fees was more fair to taxpayers who don’t operate short-term rentals, however.
“This is one way to keep it out of the overall tax burden for the town,” Bryan said. “Now, if you don’t run a short-term rental, your taxes aren’t funding them.”
Beebe said that Eastham does not have a system for accurately counting short-term rentals, tracking complaints about them, or estimating the income they generate. She said the select board and the Task Force on Zoning and Regulation frequently request that information and the town has been unable to provide it.
There are 782 short-term rentals and 310 long-term rentals currently registered with the town. Town staff asked Granicus to do an initial assessment last month, however, and the company found that in January 2024 there were 1,029 short-term rentals available on more than 30 websites — indicating that about a quarter of Eastham’s short-term rentals are not registered with the town. The company found an average rental rate of $268 per night; the lowest daily rate was $200 per night, Beebe told the select board.
Tyler Hands, a year-round Eastham resident who works in property management, asked at the meeting if the fee should vary depending on how much revenue a property earns from short-term rentals. “Having it more closely connected to the amount of income seems more fair,” he said.
A set fee increase “tends to hit people at all levels regardless of their income, the value of the property, or the number of weeks they rent,” Hands told the Independent.
Bryan said that the town had not been able to fund a basic monitoring system, let alone a staff person to do income verification. A flat rate for all short-term rentals is the most feasible path forward, she said.
Bryan also said that with an average rental rate of $268 per night, the fee could be covered with just two nights of revenue.
Beebe noted that the town has received many complaints from residents regarding short-term rentals, particularly in the summer.
“As the intensity of use has grown, so have the complaints,” said Beebe. Residents complain about “lots of cars in the driveway, lots of noise, or smoke from barbecues.”
Overloaded septic systems could harm the town’s water supply, Beebe said, and residents sometimes report seeing “small cottages with 10 cars in the driveway.” Granicus software is able to check the capacity offered in short-term rental listings against the property’s septic capacity, according to Beebe’s memo to the select board.
“Where in the past we had part-time resident owners who would stay and visit and rent for a few weeks to cover property taxes, now we have increases in rental-heavy or rental-only properties that simply act as hotels and party destinations,” Beebe said.
“Over time, we have not kept up with the changes,” she continued. “The truth is, we are paddling as fast and as creatively as we can, and we can’t stay abreast, never mind ahead, of this challenge.”
Eastham has also been collecting short-term rental taxes since 2019, when a state law took effect that expanded the rooms tax charged on hotel bookings to also cover short-term rentals. Last year, the town took in $2.1 million in rooms tax, of which $1.5 million came from short-term rentals, according to Bienvenue.
Eastham has bonded out, or promised to a lender, five years’ worth of short-term rental tax receipts in order to finance almost $7 million of design and engineering work for its new sewer system.
Truro’s select board also raised its short-term rental registration fee this month from $225 to $450 per year, to help pay for its oversight efforts. Provincetown raised its fee from $100 every three years to $750 per year in January 2023.
Editor’s note: An earlier version of this article, published in print on Feb. 22, incorrectly reported the new annual fee for short-term rental registration in Truro. It is $450, not $415.
TOWN MEETING
Monday’s Provincetown Warrant: Heavy on Housing
A land purchase and two short-term rental regulations lead the agenda
PROVINCETOWN — There will be 14 articles in the town meeting booklet on Monday, Oct. 23, but only a few of them are likely to provoke much discussion at town hall that evening.
A $2-million land purchase on Nelson Avenue is the reason the meeting was called, as the expenditure must be authorized by town meeting voters for the purchase to proceed.
Alongside it on the warrant are two short-term rental regulations, a ban on “fractional ownership” of homes, a liberalization of accessory dwelling unit rules, and three articles that help move forward plans for housing on town-owned land at 3 Jerome Smith Road, 26 Shank Painter Road, and 288A Bradford St.
The land purchase was announced on July 24, when the select board approved a negotiated price of $2.035 million for three adjacent parcels: 22 Nelson, 22R Nelson, and 24 Nelson. Together, the parcels amount to nine-tenths of an acre.
Developer Tom Tannariello had gone through 13 months of meetings to secure permits for 12 residential condominium units at 22 and 22R Nelson Ave. under the town’s inclusionary bylaw. Ten of the units would have been sold at market rate, while two would have been affordable-ownership units.
The planning board approved that project in January, but Tannariello put the properties on the market in April anyway.
With 24 Nelson Ave. included, the properties could currently support 18 units, according to Town Manager Alex Morse. But once the town’s sewer system is expanded to include Nelson Avenue, the switch from density rules based on septic systems to those for sewered areas would allow for 48 to 60 units, Morse said.
“Securing the land is undoubtedly in the Town’s best interest,” reads the official explanation for Article 8 on the warrant. “Without the Town’s intervention, the likelihood of private development looms large, leading to a proliferation of market-rate condominiums, many of which could potentially become short-term rentals.”
When Tannariello’s project was before the planning board, critics argued that the 10 market-rate condos would likely become short-term rentals, and that two affordable units were not sufficient to make the project worthwhile.
Morse argued, however, that the town’s density formulas clearly permitted the project and that failing to approve it would be a sign that the planning board could not actually implement the inclusionary bylaw it had sought.
With Tannariello’s change in plans, however, if the town now buys the land, all the units that are built there will likely be deed-restricted in one way or another, either as affordable rentals or affordable ownership units, perhaps with a new kind of restriction copied from Vail, Colo. that town meeting voters endorsed this spring.
Short-Term Rental Rules
Articles 11 and 12 would create a bylaw to regulate short-term rentals in two specific ways: by preventing corporate ownership of short-term rental properties and by limiting short-term rental certificates to two per person.
Under Article 11, trusts, S corporations, and LLCs could still hold short-term rental certificates, but they would have to have all their human owners named on documents at town hall.
Article 12 would limit each person to holding only two short-term rental certificates. Both articles would “grandfather in” existing short-term rentals, even if they are currently corporate-owned or are held by someone with more than two.
In spring 2022, the Independent examined the state Dept. of Revenue’s list of properties in Provincetown that had paid short-term rental taxes at any time between July 2019, when the tax went into effect, and February 2022.
Eighty percent of the properties on the list were held by people who had only one short-term rental; 128 properties were held by people who had two properties on the short-term rental list.
There were 13 owners at that time who had three properties on the list, five owners who had four, two owners who had five, and one who had six. That means 75 short-term rental properties at that time would have been affected if Article 12 had been in place then.
Some of those properties have been sold since then — for instance, the owner of five short-term rental properties above Way Downtown and Tin Pan Alley, across from town hall, sold all her holdings to two different buyers this year.
Other buyers have made bulk purchases of property, however.
In January, a company called Puck’s Folly LLC sold a half-acre parking lot in Cambridge for $9.4 million. It subsequently bought a $2.9-million house on Martha’s Vineyard and three Provincetown properties in March and April.
The historic Martin House at 157 Commercial St. was purchased for $2.8 million on March 9, a two-bedroom house at 101 Bayberry Ave. was purchased for $1.9 million on April 3, and a one-bedroom condo, 6 Mechanic St. Unit B, was purchased for $665,000 on April 11. All four properties are now short-term rentals.
The two-bedroom at 101 Bayberry rents for $12,000 to $18,000 a week on weneedavacation.com, and the five-bedroom Martin House, formerly a restaurant and then a single-family home, rents for $15,800 to $21,000 a week in summer on its own website.
These are the kind of bulk corporate purchases that select board members have said are not yet common here but that they would like to prevent. “It would be nice to be ahead of the curve for once,” select board chair Dave Abramson said at a housing workshop in June.
Fractional Ownership and ADUs
Article 13, a ban on fractional ownership of properties, is another trend that the town would like to get ahead of. Select board member Leslie Sandberg brought up the subject in the spring, saying that housing advocates on Martha’s Vineyard have been alarmed to see fractional ownership deals beginning to appear in the market there.
Sandberg recused herself from voting on Article 13 when the select board made its final endorsements on Oct 10, however. “I voted to recuse myself because of a client that I have, and I’m not sure where they stand on fractional ownership,” Sandberg said. “I do not want to appear to tip the scales either way.”
Sandberg, who is a partner in and owner of the communications firm Rose, Sandberg, and Associates, told the Independent that the client in question is the Cape Cod and Islands Association of Realtors.
Article 14 would remove existing year-round restrictions on the use of new accessory dwelling units and add two looser ones: a ban on short-term rentals in ADUs and a prohibition on splitting ADUs off into condominiums. The town has produced only one new ADU under its current bylaw, and participants in the housing workshop argued that looser rules might encourage more.
Abramson voted against Article 14 on Oct. 10, while the rest of the board endorsed it.
Town meeting will start at 6 p.m. on Monday, Oct. 23 at town hall. Voters who have missed the last several elections may have been marked “inactive” in the town’s voter rolls and should bring identification with them for voter check-in.
THE HOUSING CRISIS
Short-Term Rental Rules Won’t Dent Vacation Home Market, Study Finds
But some limits and deed restrictions could protect the community
PROVINCETOWN — A year after the select board first discussed the need for a study on potential short-term rental regulations, researchers at the UMass Donohue Institute turned in its 60-page assessment of what might and might not work here.
The study, presented to the select board on Sept. 25, was written by Rod Motamedi and five other researchers in the Institute’s economic and public policy research group. It outlined the short-term rental market in Provincetown and identified regulations tried in other towns across the country that could make sense here.
The report’s principal conclusion was that short-term rentals are a subset of a much larger vacation home market — a market that is large and still growing. The authors concluded that new short-term rental regulations likely would not change vacation homes back into year-round homes.
“The evidence gathered in this study suggests that any STR regulation is unlikely to reduce home prices or rents to a level affordable to residents or to induce owners of vacation homes to stop using the homes themselves and instead rent them out to local workers,” they wrote. The median condo price would need to fall by as much as 70 percent to become affordable, they noted.
That “70 percent” caught select board member Leslie Sandberg’s attention, and she asked Motamedi to repeat it.
Then he told the board something it already knew: Provincetown housing prices are similar to those in New York, Boston, and San Francisco. “The vacation home buyer is bringing income from those other places,” said Motamedi, “and you have that disconnect between the income of the residents and the income of the buyers.”
Only about a third of vacation home buyers are using short-term rentals to support their purchases, the study found. Capping the number of short-term rentals or devising a zoning map for them would likely just shift those properties into the hands of other vacation home buyers, the authors wrote.
The study did not suggest doing nothing, however.
Short-term rental regulations designed to limit corporate ownership of homes and ensure that homeowners are “connected to the community” could still be advisable, the authors wrote.
“Though current data suggests there are few properties used solely as STRs, Provincetown may still wish to restrict this use to encourage every homeowner to have a connection to the community, whether as a resident or a seasonal visitor,” the authors wrote. “That can be done through restricting the number of STR licenses available to any single owner or banning corporate ownership without an obvious natural person as the beneficial owner.”
Those measures are on the warrant for Provincetown’s Oct. 23 town meeting.
Article 11 would ban corporations from holding short-term rental certificates except for LLCs, trusts, and S corporations that have named their beneficial owners at town hall.
Article 12 would limit individuals to holding two certificates, although people who already have more than two would be “grandfathered in” and get to keep all their existing licenses.
Meanwhile, in Vail and Truckee
The researchers suggested copying a primary-residence deed restriction program used in Vail, Colo. That program permanently removes some units from the wider vacation home market and places them in a parallel market that is tied to local incomes.
The restrictions do not limit the resale price or rent that the owner may seek, the report said. But the occupancy requirement “effectively shrinks the market of buyers by tying the asking price to local wages,” the authors wrote, citing a study of Vail’s program from the U.S. Dept. of Housing and Urban Development. It is one way of insulating local buyers from competition with wealthier buyers and renters.
Vail has invested an average of $70,000 per unit to gain a total of 174 units this way. The program has cost $12.2 million over six years.
The study also suggested an incentive program to lead vacation homeowners to rent to seasonal or year-round workers. It might not interest many, but some might be convinced, especially if they do not plan to use their properties much in the short term.
“It is possible that owners could cycle in and out of programs as their needs changed,” the report said. Homeowners might bring in long-term tenants one year when they don’t expect to travel to Provincetown much, then go back to having short-term renters again.
Naturally Occurring Affordability
The study also pointed to the existence of “naturally occurring affordable housing (NOAH).”
A relatively new term, NOAH “generally is understood to mean rental housing at least two decades old, short on amenities and affordable without a subsidy,” according to the Washington Post. Because these units are privately owned and were not built with taxpayer money, they have rarely been a focus of housing policy, even though they are far more numerous than subsidized units nationwide.
Such rentals had been the intended focus of short-term rental regulations, however, said select board chair Dave Abramson.
“When there were initial discussions of STR regulations last winter, I think people were trying to prevent something that was a rental from going to the short-term rental” column, Abramson said.
But whether regulations or incentives could slow the conversion of year-round rentals to vacation homes was not discussed in the study.
“I think it is important for us to protect our affordable and community housing stock against changes in the market going forward,” said select board member Austin Miller. He called for “a robust and diverse set of deed-restricted units throughout the town.” He suggested deed restrictions for both year-round rental and seasonal workforce housing.
“I want to encourage everybody who’s been listening today to take some time to dig into this Donohue study,” select board member Erik Borg said. “Regardless of whether you’re disappointed with what it’s saying or whether it’s exactly what you wanted to hear, I think there’s an opportunity to dig into it, to think about follow-up questions, to try to poke holes in it to see what comes up. Hopefully it’s a starting point to find what’s right for Provincetown.”
SHORT-TERM RENTALS
A Stuttered Rollout for the Community Impact Fee
Early returns were low, but summer receipts will be arriving soon
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.
LEDGERDEMAIN
Short-Term Rental Taxes Boom — but Not in Provincetown
Receipts from state rooms tax actually fell despite strong sales reports
PROVINCETOWN — The Outer Cape had another banner year for rooms tax receipts, with revenue up 42 percent over last year in Eastham, 46 percent in Wellfleet, and 47 percent in Truro.
Those numbers come on top of large gains in the three prior years. The tax that once brought in $293,000 per year in Eastham (in fiscal 2019) is now bringing in $2.1 million per year. In Wellfleet, those numbers were $116,000 in fiscal 2019 and $1.6 million now; in Truro, receipts rose from $370,000 to $1.8 million.
The gains come from two factors, the first being the statewide expansion of the rooms occupancy tax, formerly levied on stays in hotels, motels, and campgrounds, to apply to short-term rentals such as those booked through Airbnb and VRBO. That change took effect in 2019; voters in Truro, Wellfleet, and Eastham elected to raise their “local-option” rooms tax rates, effective in 2021.
The story in Provincetown has been a bit different. The town has a much larger base of hotels, so it was already collecting more than $2.2 million in rooms taxes even before the expansion to short-term rentals in 2019.
The town also had already adopted the highest possible local-option tax rate of 6 percent in 2010 — so Provincetown did not have the same opportunity as the other three Outer Cape towns to juice its revenue by raising its tax rate.
Nonetheless, the town’s rooms tax revenue more than doubled in three years, from $2.2 million in fiscal 2019 to $5.03 million in fiscal 2022.
That growth came to an abrupt halt this year, however. The town’s rooms tax receipts actually declined slightly, to $4.93 million in fiscal 2023.
The town has lost a few hotels recently, with some properties becoming workforce housing while others became condos or single-family homes. The “traditional lodgings” part of the rooms tax, however, has continued to increase, according to figures provided by the state Dept. of Revenue (DOR) to the Independent.
According to the DOR’s figures, the short-term rental part of the rooms tax brought in $2.33 million in fiscal 2022 but only $2.15 million in fiscal 2023 — a decrease of almost 8 percent.
Other data sources do not show a decrease in sales, however. The market-research website AirDNA.co, which aggregates data on bookings on Airbnb and VRBO, shows a big increase in sales in Provincetown’s short-term rental sector last summer and this spring: from $39 million total sales in fiscal 2022 to $52 million total sales in fiscal 2023.
Other towns on the Outer Cape show similarly large increases in the same period, with Eastham going from $17 million in 2022 to $29 million in short-term rental sales logged by AirDNA in fiscal 2023.
In fact, the sales figures that AirDNA recorded, which came only from Airbnb and VRBO, multiplied by Provincetown’s 6-percent local-option tax, would come to $3.1 million in short-term rental taxes in fiscal 2023 from just those two websites — about a million dollars more than was actually received by the town.
There are several dozen smaller websites that also book short-term rental stays that are not included in AirDNA’s sales figures.
Sales data in AirDNA had closely tracked tax receipts in previous years, so the Independent asked Provincetown Assistant Town Manager Dan Riviello and Graeme Dempster, director of North American sales for Granicus, which offers short-term rental compliance tools to governments, for their thoughts on the discrepancy.
A Missing Million?
“By nature, I tend to think there are probably multiple totally benign explanations,” said Riviello. “Nonetheless, it’s interesting.”
Riviello said that the AirDNA figures are a secondary source that are standing in for the real information, which is what Airbnb and similar websites are actually reporting to the state.
“I wonder if cancelations could possibly be inflating those sales figures, or if cleaning fees are getting added to the sales figure — something that looks like a transaction to AirDNA’s engine but isn’t actually a bookable, taxable night,” Riviello said.
Provincetown’s current contract with Granicus for short-term rental compliance support includes property address identification and compliance monitoring, Riviello said. The company has products that can estimate sales revenue across more than 60 different booking engines, but the town hasn’t purchased that service, Riviello said.
Dempster works on short-term rental compliance for a living, and he had several ideas about the discrepancy.
“In the Northeast, there’s always this wrinkle because the market there has these established family homes that are maybe even second-generation now,” Dempster said. “People block weeks off for family gatherings, or maybe it’s rented to cousins or friends, and it can be difficult to tell whether that’s a paid activity or not.”
If the computer programs that AirDNA and Granicus use have trouble telling the difference between a reservation for personal use and an actual sale, then estimated sales could be too high relative to actual sales.
“Airbnb and VRBO have an earnings report where the user is supposed to document every paid transaction,” Dempster said. “They know how many nights were actually booked.
“There’s a wrinkle with the state, though,” Dempster continued. “They have voluntary collection agreements with Airbnb and VRBO, and I believe the agreement there prevents the state from auditing Airbnb.
“By giving the platforms the ability to collect tax on your behalf, you just have to trust that they’re doing the collection,” he added. “You can’t actually go back and audit the platform.”
Some cities and states have had problems with this arrangement, Dempster said, including New Orleans and Hawaii. Questions about revenue discrepancies are not uncommon, he noted, and the numbers can be sizable.
“Some of the communities we’ve worked with, once they got the data, they looked back and realized they missed out on a significant portion of revenue,” Dempster said. “It’s definitely not unique to Provincetown to see a discrepancy between sales figures and tax collected.”
HOUSING
Short-Term Rental Regulation Goes to Town Meeting
But the select board won’t go along
PROVINCETOWN — At the annual town meeting on April 3, voters will consider three citizen-petitioned articles proposing amendments to Provincetown’s general bylaw that would institute new regulations on short-term rentals (STRs) — a hot-button housing issue here and nationwide.
The select board, at its March 13 meeting, voted 4-1 not to recommend the proposals, with Chair David Abramson the outlier, saying he would prefer that the board reserve its recommendation.
A short-term rental is legally defined as a dwelling unit that’s rented for not more than 31 days at a time. In Provincetown, STRs require a board of health certificate.
Article 18, requested by Michael Gaucher and others, would regulate the certification process, requiring owners to register their short-term units annually and limiting permits to one per property owner.
Article 19, also requested by Gaucher, would create a cap of 1,500 short-term rentals and establish a town-run lottery or waitlist system for distributing relinquished or revoked certificates.
Article 20 is requested by Paul Benson and others. (Benson is a staff reporter at the Provincetown Independent.) It proposes a cap of 1,283 short-term rentals and would allow certificates to be bought and sold privately between owners as well as pass automatically from a certified seller to a buyer in real estate transactions. It caps the number of STRs per owner at three.
The town currently has just over 700 valid STR certificates on its books, according to Assistant Town Manager Dan Riviello. But data collected by Granicus, a civic communications software company under municipal contract with Provincetown, has suggested the existence of more than 1,400 units that are rented out during the peak summer season.
The town is working to identify the remaining 700-plus property owners and bring them into compliance with the rules, Riviello told the Independent.
Provincetown had 849 renter-occupied units listed on the 2000 census. By 2019, according to American Community Survey data, that number had dropped to 334, representing a roughly 60-percent loss in long-term rental units.
“I understand that we need a number of short-term rental properties in Provincetown to support our tourist economy,” Gaucher said. “But the number is out of balance.” He added that, as a result, the town is “losing people who are vital to keep the economic engine of this town running.”
The town is projected to add more than 150 dwelling units to its inventory in the next few years through multiple housing developments.
“There is a consensus around building housing,” Benson said. But the pace at which units are being constructed, he said, does not match the pace at which units are being converted to short-term rentals. “I think our housing crisis, which everyone talks about continually, requires a look not just at the construction side of the equation but also at the existing inventory and some consciousness of how its use is changing,” he said.
At the select board’s meeting, numerous people raised concerns about Articles 18, 19, and 20.
“The short-term rental articles on our town warrant are flawed,” said Lee Ash, a Provincetown resident and real estate agent with William Raveis. Ash said the proposals were likely to “change the demographics of buyers to those who don’t need to be concerned about rentals, just accelerating the ongoing shift to a more exclusive environment, which many people lament already.”
Several second-home owners who said they had plans to retire in Provincetown but for now operate their properties as short-term rentals spoke against the proposals. “There’s quite a bit of work involved in preparing our homes for people to come and enjoy Provincetown in the summer,” said Cindy Lux, a part-time resident. “Our efforts result in increased business to the town.”
In 2018, the Commonwealth passed a short-term rental occupancy tax that extends the “rooms tax” paid by inns and hotels to STRs. “I believe our properties have contributed over $30,000 to $35,000 in the last seven years that we’ve owned them,” said Kevin Cronin, who rents out the house at 9 Carnes Lane where he plans to eventually retire with his husband.
Finding other ways to regulate the booming short-term rental industry — facilitated through platforms like Airbnb, VRBO, and HomeAway — and quantify its role in destabilizing long-term rental markets and driving evictions has been a subject of intense debate in municipalities across the globe.
Lisbon, Portugal recently instituted STR “containment” zones, putting a moratorium on new certificates in certain dense tourism areas. Palm Springs, Calif. passed an STR regulation package in late 2022 that capped permits at 20 percent of residential neighborhoods. And in 2018, Portland, Maine instituted a cap of 400 non-owner-occupied STR units in the mainland city area (STR permits for owner-occupied units, i.e., primary residences occupied at least half the year by the owner, are not restricted there).
At the meeting, Benson said that both he and Gaucher intended to amend the scope of their articles before town meeting by requesting a one-year moratorium on additional STR certificates and the creation of a working group on the issue. This approach would “give our civic body more time to work on this problem,” Benson said.
Select board member Leslie Sandberg, who said she opposed the articles, also said she supported a working group, and that the board should create one before town meeting.
There will be a town meeting forum at town hall at 5:30 p.m. on March 22 where town bodies and petitioners may present their articles and answer questions.
