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short-term rentals

    REGULATION

    Short-Term Rentals: an Industry of Ones and Twos

    Only 10 percent of P’town rentals belong to owners of three or more units

    By

    PROVINCETOWN — Almost a year ago, town meeting voters endorsed two measures to regulate the ownership of short-term rental properties here and prevent consolidation of the industry in the hands of corporations and large investors.

    “To ensure future properties are not used only as short-term rentals, for investment purposes only, we are proposing these consensus measures,” said Town Manager Alex Morse at that October 2023 meeting: “a ban on corporations obtaining short-term rental certificates, Article 11, and a limit on the number of short-term rental certificates an individual can have to two, Article 12.”

    The two measures, which passed overwhelmingly, took effect in April when the state attorney general’s office certified they did not conflict with any state laws.

    A clause in the new bylaw protects owners of multiple properties that were in place when the bylaw was certified, however, so people or corporations that held more than two as of April 22 are allowed to maintain them until they transfer or sell their properties.

    To determine how many people owned more than two short-term rentals at that time, the Independent obtained copies of the state Dept. of Revenue’s short-term rental taxpayer list for Provincetown and the town’s list of rental certificates.

    The two lists show that, when the bylaw took effect, about 10 percent of Provincetown’s short-term rentals belonged to owners who held three or more rental certificates or who had state taxpayer accounts for three or more short-term rental units in town.

    A large majority of Provincetown’s short-term rentals were in the hands of owners with only one such property, the lists show.

    Stopping a Trend

    A cluster of transactions in early 2023 shows the type of “investment activity” the town’s new bylaw aimed to prevent.

    Puck’s Folly LLC, registered to Jason Harris and Gregory Lombardi of Billerica, sold a parking lot in Cambridge for $9.4 million that January.

    In February, the LLC bought a $2.9-million house on Martha’s Vineyard, and in March, it purchased a five-bedroom house at 157 Commercial St. that had once been the Martin House restaurant for $2.8 million.

    In April, the LLC bought a single-family house at 101 Bayberry Ave. for $1.9 million and a condo at 6 Mechanic St. for $665,000.

    The four purchases totaled $8.2 million in three months — almost the amount the company had made on the parking lot. All four properties were listed as short-term rentals on various platforms, and the three Provincetown properties have taxpayer accounts with the state and short-term rental certificates with the town.

    Under the new general bylaw, Puck’s Folly could not repeat this move. Neither it nor its named owners can operate any more short-term rentals here unless they sell those they currently own.

    Converting units

    The person with the largest number of short-term rental certificates registered to her name is Lyn Plummer, an officer of Dol-Fin Development LLC and several other LLCs.

    Plummer holds seven short-term rental certificates for properties owned by her companies, including four at 28-32 Standish St., a former year-round rental property that she converted to condominiums in December.

    Under the state’s Condo Conversion Act of 1983, if Plummer had had an “intent to convert” those residential units to condos while tenants lived there, she would have had to help find them comparable housing in Provincetown and help with their moving expenses.

    If she could not find them comparable housing, Plummer would have owed her low-income or elderly tenants — defined as people over 62 — four years of continued tenancy in the units they had lived in while she worked to find them a new place to live.

    That law has loopholes, however, as the Independent has previously reported. It is legal for a landlord to end tenancy for many other reasons, and to trigger the law’s protections, tenants must prove the landlord’s “intent to convert” in housing court.

    Plummer’s business partner, Maria Cirino, told the Independent in August 2022 that she was familiar with the condo conversion law, that she and Plummer had not yet decided what to do with the property, and that “we are always on the right side of the law.”

    Plummer applied for five short-term rental certificates in January 2023, and the property was converted into six condominium units the following December.

    A similar story played out when developer Tom Tannariello bought 24 and 24A Conwell St. in February 2023 and immediately applied for five short-term rental certificates for the five residential units there.

    He sold the three units at 24 Conwell St. in February 2024. New owners Timothy Sabol and Judd Flesch were able to apply for three short-term rental certificates that month because the town’s new bylaws, passed in October 2023, had not yet been approved by the state.

    Not That Common

    These examples notwithstanding, a review of the short-term rental lists show that there are actually not that many people operating multiple short-term rentals here.

    About 20 people had three short-term rentals on either the town’s list or the state’s. Most of those consisted of three residential units on the same property, such as the three units at 129 Commercial St. registered to Donna Pickard of Wellfleet.

    Six people had four or five short-term rentals registered to their names, and three people had six, for a total of about 100 units.

    Thomas Leonard of Collingwood, N.J. owns 10 of the 27 units at Angel’s Landing, a commercial and residential property across from the Provincetown library. He has short-term rental certificates for six of those 10.

    Giovanni Cicero of Eastham owns the building that contains Cabot’s Candy, which includes three residential units, and the one next to it, which contains the jewelry store Zinnia and three more residential units. He has short-term rental certificates from the town for all six units.

    Above and behind the Coconuts sunglasses store at 294 Commercial St. are six residential units, all with short-term rental certificates registered to Thomas Gutzler of Boca Raton, Fla.

    Some of these units had been long-term rentals until relatively recently — but most of them have not actually been bought or sold in 30 years or more.

    Assistant Town Manager Dan Riviello said that the goal of Articles 11 and 12 had been “to make it so the situation did not get worse based on large investors buying up property and converting them to short-term rentals.”

    There are just over 900 short-term rental certificates in town, Riviello said, and the market-research website AirDNA.co indicates there are about 1,000 short-term rentals in total here. Putting boundaries around multiple ownership is significant, Riviello said, but that’s also a relatively small share of Provincetown’s market.

    “I think the bylaws are doing what they set out to do,” Riviello said. “They can’t really do more than that.”

    THE SHORT VIEW

    Court Says Nantucket Can’t Ignore Zoning Laws on Vacation Rentals

    Outer Cape zoning laws may need to take up ‘principal use’ question

    By

    A ruling in state Land Court last month will likely force towns across the Cape and Islands to vote on new zoning bylaws for short-term rentals — a complex proposition that could put some existing short-term rental properties on the wrong side of new rules.

    In Catherine Ward v. Town of Nantucket, Judge Michael Vhay found that Nantucket’s zoning bylaw, which is silent on the subject of short-term rentals, cannot be construed to allow them as a “principal use” in residential zones, as town officials had argued.

    Short-term rentals could be a permissible “accessory use” of a house in a residential zone, Vhay wrote. But Nantucket’s zoning bylaws do not define where accessory short-term rental activity would end and principal use would begin.

    Neither do the zoning bylaws of Provincetown, Truro, Wellfleet, Eastham, or any of the towns on Martha’s Vineyard. In most towns, it is already too late to add bylaw changes to this spring’s town meeting warrants.

    Provincetown has already adopted a general bylaw that requires corporations and trusts to name their human owners and that limits short-term rental certificates to two per owner. Truro and Eastham have similar bylaws on their town meeting warrants this May.

    General bylaws do not remove the need for a zoning bylaw, however, Vhay wrote.

    “Our zoning bylaws will need some proactive housekeeping in response to the court’s ruling,” said Provincetown’s zoning board of appeals chair Jeremy Callahan.

    “People have been doing short-term rentals for as long as people have been coming to the beach,” said Provincetown Select Board chair Dave Abramson, “but I’ve been concerned that some people were running a business under the guise of ‘Oh, we’re just a homeowner renting out our house.’

    “We allow commercial lodgings in the Residential-1 zone by special permit,” Abramson said. “I think voters are now agreeing there needs to be some regulation.”

    What Happened on Nantucket

    Judge Vhay found that Catherine Ward’s neighbors, Peter and Linda Grape, use their vacation home for 40 to 55 nights per year and rent it short-term for 90 to 111 nights per year. He ordered the Nantucket Zoning Board of Appeals to reconsider Ward’s complaint against the Grapes and determine if that level of short-term rental activity is an “accessory use,” which would be permissible, or a “principal use,” which would not be permissible.

    Nantucket’s zoning bylaw is constructed like many others — including those on the Outer Cape — as a “permissive zoning bylaw,” meaning that it prohibits uses that are not specifically permitted.

    Despite this structure, and despite having a short-term rental industry that brought in $124 million in 2022 according to state tax figures, Nantucket has repeatedly failed to write short-term rentals into its zoning bylaw.

    “There have been four town meetings on this subject, but it feels like 20,” said Nantucket Select Board vice chair Brooke Mohr. “In 2022, we passed a general bylaw that requires registration, a fee, and inspections, but we haven’t gotten to anything beyond that that the community agrees on.”

    Short-term rentals have been a divisive topic on the island, with some neighbors calling them a nuisance, some saying they deplete the island’s year-round housing stock, and others saying they are essential to the island’s economy.

    After its 2022 town meeting, Nantucket convened a short-term rental work group that met for almost a year to develop a general bylaw and companion zoning bylaw, Mohr said.

    That group came to a compromise that involved limiting short-term rental registrations to one per owner, requiring corporations holding short-term rental properties to name their human owners, and limiting how many rental contracts each owner could book each summer. During the July and August high season, owners would be limited to four rental contracts unless they had a verified short-term rental history at the property, in which case they were “protected” and could have nine.

    “It was really complicated because they were trying to get support from people with completely different views,” said Mohr. “They wanted to make the financial model less attractive going forward, but they didn’t want to put anyone in jeopardy who had already bought a property.”

    The compromise was on the November 2023 town meeting warrant as two measures, a general bylaw and a zoning bylaw. Both were defeated.

    “It was chaotic,” said Mohr. “The finance committee introduced a motion to link the two articles, then the select board moved to de-link them, and it just went down a procedural rabbit hole.”

    The general bylaw was defeated 431 to 523, after which the zoning bylaw, which would have required a two-thirds vote to pass, was indefinitely postponed.

    The Question of Principal Use

    There were already four articles related to short-term rentals on Nantucket’s May 2024 town meeting warrant when the Ward decision was announced in March. The town is not appealing the case.

    “I don’t know what’s going to happen now, but it’s going to be really interesting,” Mohr said.

    According to lawyer Nina Pickering-Cook, who represented Catherine Ward at Land Court, Ward v. Nantucket was intended to spur the town to apply its existing zoning code — which would effectively prohibit at least some current rental activity.

    “The court found that short-term rentals are clearly not permitted as the principal use of a property under Nantucket’s zoning bylaw,” said Pickering-Cook. “It could be an ‘accessory use,’ but that has to satisfy two criteria: it has to be ‘customarily incidental’ to the principal use and it has to be ‘subordinate’ to the principal use.

    “There’s a great deal of case law around subordinate use,” said Pickering-Cook. “Given the facts found by the judge, where the Grapes rented the house more than they used it, I think it’s unlikely the Nantucket ZBA will be able to justify a finding that their use was accessory.”

    Town meeting voters could endorse their own definition of accessory use, Pickering-Cook said, but such a bylaw would require a two-thirds town meeting vote.

    “Once you’re talking about bylaw options, there’s a number of ways you could cut the cake,” said Pickering-Cook. Towns could define accessory use according to how many nights a property is rented, the length or number of bookings, or how often a human owner uses the property, for example.

    It would be difficult to define corporate or investor-owned short-term rental properties as being “accessory to residential use,” however. Full-time short-term rental properties would need to be specifically listed in Nantucket’s principal use table to be legal, according to Vhay’s ruling, and it would require a two-thirds vote of town meeting to accomplish that.

    Nantucket’s voters defeated such a measure in 2022. They will vote on another, Article 59, at their May 7 town meeting.

    Humans Who Stay 30 Days

    “If this were easy, we would have figured it out a long time ago,” said Nantucket’s former housing director Tucker Holland. “I do think, though, that corporations operating what are essentially scattered-site hotels around the island is not really what the community wants.”

    The town of West Tisbury on Martha’s Vineyard formed a short-term rental committee in 2021. According to members Bea Phear and John Rau, the group struggled to find agreement but ultimately decided that banning corporate and investor-owned short-term rental properties was something they could all support.

    “We decided we wanted to continue the tradition of short-term rentals by people who live here, both seasonal and islander,” said Phear. “So, we decided to limit short-term rental properties to one per owner, and the owner had to demonstrate they’re a member of our community with the 30-day residency rule.”

    If their proposed bylaw passes, the human owners of short-term rental properties would have to spend at least 30 days out of the year at their property. Rau said the committee had considered a 180-day rule but decided to draw the line at 30 days to include seasonal residents.

    HOUSING

    Truro and Eastham May Limit Short-Term Rentals

    ‘Fractional ownership’ arrangements could also be banned by voters

    By

    Truro and Eastham are each considering town meeting articles that would limit how many short-term rental properties one person or corporation could legally own and that would ban “fractional ownership” of residential property outright.

    The four Outer Cape towns have the highest percentage of seasonal housing units — homes that are not anyone’s primary residence — on Cape Cod. [Image courtesy Cape Cod Commission]
    The measures follow in the footsteps of bylaws that Provincetown adopted last October. Tisbury, on Martha’s Vineyard, adopted a fractional ownership ban last April.

    At a public forum on March 4, Truro officials gave an overview of that town’s articles and answered questions.

    The first article, which does not yet have a number because it has not been inserted in Truro’s town meeting warrant, would prohibit corporations from holding short-term rental certificates and would allow LLCs, S corporations, and trusts to hold them only if they disclose all of their human owners at town hall.

    A second draft article would limit the number of short-term rental certificates any one owner could have to two. Current owners of three short-term rentals would be “grandfathered in” and allowed to continue operating, but owners of four or more would be allowed only to continue with three.

    A third draft bylaw would prohibit fractional ownership arrangements of residential property in which the ownership shares are sold to strangers on the open market, as facilitated by companies such as Pacaso and Lifestyle Asset Group.

    Short-term rentals are defined (and taxed) under state law as offering stays of fewer than 30 days.

    The Lexvest Group, which is based in Maynard, currently offers three single-family homes and three cottages on Shore Road as short-term rentals on the website VRBO.

    The company also owns the Prince of Whales cottage colony, which has 17 units, and the Truro Beach Cottages, which has 11. Those rentals are booked through their own websites.

    Truro had 459 registered short-term rentals last season, Town Manager Darrin Tangeman told the Independent. The municipal services company Avenu, which offers software that can “scrape” a variety of short-term rental listing sites to find unregistered listings, told Tangeman there were another 27 properties that were not registered with the town.

    The draft articles say that their “purpose and intent” is to “protect the time-honored tradition of home rentals in Truro” while also limiting “the conversion of residential units to short-term rentals,” which it says has had a “deleterious effect” on the year-round rental stock.

    According to Truro’s draft Housing Needs Assessment and Production Plan, only 15 percent of the town’s occupied housing stock are rental units, which makes the town a “rental desert.”

    Considering Truro’s total housing inventory instead of just the occupied units, only 5 percent of the units are occupied by renters, according to the Cape Cod Commission. Twenty-five percent of Truro’s housing units are occupied by their owners, and the remaining 70 percent are either used seasonally or are entirely vacant.

    The percentage of Truro’s housing that is fully occupied is lower than in any other town on Cape Cod, according to the commission, and the median sale price for a single-family home is $1.4 million, among the highest on the Cape.

    The affordable housing development at Sally’s Way has 16 year-round rentals — and more than 200 families on a waiting list.

    Select board chair Kristen Reed said that the number of registered short-term rentals one owner could hold has not been finalized. “The number two could change if that was the will of the people,” Reed said at the March 4 forum. “It could be three. It could be more.”

    Forum attendees had questions about the fractional ownership article and how it might affect longtime friends who own property together. Lee Swislow referred to “chosen family” to describe those relationships and said the bylaw’s language about “unrelated persons” might exclude people.

    Tollie Miller made a similar point. “For about 25 years, I’ve owned a house in Truro with three of my closest friends, two of whom are married to each other,” Miller said. “I don’t want to discover that because we’ve done this for all these years together — because we could never afford to have a place to share otherwise — that it’s going to get us into trouble.”

    Anne Greenbaum, vice chair of the planning board, was moderating the forum; she said that the issue deserved attention. “First of all, you all would be ‘grandparented in,’ but second of all, we need to figure out how to integrate that issue of chosen family,” Greenbaum said.

    A ‘Proactive’ Ban

    Eastham’s Task Force on Zoning and Regulation recommended both a ban on fractional ownership and a per-owner cap on short-term rentals to the select board. Though the town reports that it currently has no homes under fractional ownership, task force chair Mary Nee said the ban is “a proactive response” to the possibility of single-family homes being bought up in investment schemes.

    “This is the first year we’ve looked at fractional ownership as a task force,” said Nee. The select board had asked the task force to examine the subject after Provincetown and Tisbury passed their bans last year.

    Eastham’s year-round rental vacancy rate is “virtually zero,” the task force found. Provincetown’s assistant town manager Dan Riviello and community development director Tim Famulare discussed Provincetown’s new bylaws with the task force on Dec. 5.

    Nee said that Eastham is especially vulnerable to investors buying up the housing stock because property values are lower than those in nearby towns. Eastham’s median single-family home price was $779,500 in 2023, according to the Cape Cod and Islands Association of Realtors, whereas Wellfleet’s was $965,000, and the median in Orleans was $1,222,500.

    “In terms of investment opportunities, we as a community are very attractive,” Nee said.

    Select board member Gerry Cerasale raised concerns that groups of friends would not be able to share homes or that the ban would complicate divorce proceedings. Nee assured him that the ban would apply only to corporate entities.

    Eastham’s proposed short-term rental bylaw would require corporations to name their human owners, as in Truro’s proposal and Provincetown’s bylaw, and would cap the number of short-term rentals any one person could own or operate at two.

    The current draft of the bylaw does not include a “grandfather” clause for people who own more than two, however. Instead, a person who currently owns or operates three short-term rentals would need to choose two that would continue to operate.

    The proposed bylaws will be discussed at a public hearing of the planning board on March 20, after which the select board will make an “ultimate determination” on the final draft of the article before the warrant is finalized in early April.

    Town Manager Jacqui Beebe will then hold a public meeting on all of the warrant articles ahead of town meeting on May 6.

    DEMOGRAPHICS

    For Small Towns, Census Data Can Be a Puzzle

    A peek at the numbers shows some strange results on the Outer Cape

    By

    PROVINCETOWN — For years, U.S. Census data have told a consistent story about Provincetown’s rental housing: one of vanishing inventory.

    A U.S. Census Bureau “population tree” for Truro based on data from the 2021 American Community Survey. Despite its being a high-quality source, the ACS can have large errors in small populations and produce impossible results — such as Truro having no women in their teens or their 30s. (U.S. Census Bureau image)

    In 1990, the decennial census found 1,009 renter-occupied housing units in Provincetown. The 2000 census found 849 renter-occupied units; the 2010 census found 782 — a 22.5-percent decline in two decades.

    The American Community Survey, which is published every year by the U.S. Census Bureau based on continuous sampling of the country’s population, then showed a more precipitous decline: to 611 units in 2014, 573 in 2017, and a drastic loss to just 365 rental units in 2019.

    The 2020 decennial census, however, found 837 renter-occupied units in Provincetown. The 2020 American Community Survey reported 427.

    Depending on which source one chooses, Provincetown either has lost half the rental housing it had in 2000 or it has lost almost none at all.

    This uncertainty in the data is not confined to Provincetown. A “population tree,” or chart of population by age and sex, that is prominently featured in the Census Bureau’s profile for Truro shows that there are no females in Truro between the ages of 10 and 24. It’s not only the women of Gen Z who are missing: the chart shows no females in their 30s, either.

    Apparently, there are few young men around to lament these conditions. The same chart, based on the 2021 American Community Survey, shows Truro having only three male residents between the ages of 15 and 34.

    The picture is a little less strange in Wellfleet, where the 2021 American Community Survey reported that more than a quarter of the town’s residents were age 15 to 44. But the supposed gender balance is not credible: Wellfleet is reported to have only 87 males for every 100 females. That is more than double the gender gap in China, where decades of one-child policies (and sex-selective abortion) have created a population with 105 men for every 100 women.

    The data for Eastham, meanwhile, show a 21-percent rental housing vacancy rate, according to the 2020 decennial census, with 136 vacant units for rent. In even better supposed news for prospective tenants, fewer than half of Eastham’s renters are paying any rent at all, according to the 2020 American Community Survey.

    In some cases, these obviously inaccurate numbers aren’t likely to cause too much confusion in the real world — renters in Eastham are paying rent, one can safely assume.

    But figuring out the actual number of rental units in Provincetown or the number of young people in Truro are more difficult questions that don’t lend themselves to guesswork.

    For help interpreting these confounding numbers, the Independent consulted Chloe Schaefer, chief planner at the Cape Cod Commission and a custodian of the commission’s online extravaganza of charts and graphs at datacapecod.org.

    “I love data, and I try to use it as much as possible,” Schaefer said, “but it’s really important to put it into context. It’s a guide.

    “It’s important to think twice about all numbers and make sure you have more than one kind of reference point,” Schaefer added. “Does it make sense with what we’re hearing and what we’re seeing out there? Maybe the numbers aren’t the same, but are they pointing in the same direction?”

    Margins of error increase as populations get smaller, Schaefer said, and the Outer Cape’s towns are very small compared to the nation’s cities and counties.

    In spite of the anomalies in the data, the decennial census and the American Community Survey are useful, Schaefer said, especially because their methods are consistent across the country and mostly consistent across the decades.

    “Data the Census Bureau produces is standardized across geographies and towns, which is very valuable because you can compare one town to another, not just on the Cape but right across the country,” she said. More localized sources of information like a street listing may be more complete, but they could be prepared differently in other jurisdictions, making comparisons difficult.

    “That comparability makes census data useful,” Schaefer said, “but it’s still important to pair it with other sources of information to get a more complete picture of what’s happening on the ground.”

    In Truro, for example, the street listing, the voter roll, and information from Outer Cape Health Services or the Registry of Motor Vehicles could provide more precise information about how many young people live in town. But the Census Bureau has been counting with more or less the same methods for decades, so its data are good for detecting trends — even when the absolute numbers seem off.

    In Provincetown, the town’s list of rental certificates would be a more bespoke source of information about housing — although in an example of local rules affecting the data, the town did not register long-term rentals and short-term rentals separately until just this January.

    Schaefer’s overall advice was to be cognizant of which kind of data best suits the question — and to be willing to “ground-truth” data against other sources.

    “It’s a challenge whenever you’re working with data,” she said. “When it’s not matching what people are seeing on the ground, you gather as much information as possible and ground-truth it to the extent you’re able.”

    In the case of Provincetown’s rentals, the trend lines in U.S. Census data might be more important than any single data point.

    But when in doubt, Schaefer said, the answer is always to find more data.

    TOWN MEETING

    With Turnout High, All 14 Articles OKed

    Provincetown now has first short-term rental bylaw on Cape Cod

    By

    PROVINCETOWN — All 14 articles on the warrant passed at the special town meeting on Oct. 23, including a $2-million purchase of land for new housing on Nelson Avenue and two measures to regulate short-term rentals.

    HOUSING WORKSHOP

    On Provincetown’s Agenda: Short-Term Rentals and Zoning Reform

    A ‘working group’ that can engage the public is in the works

    By

    PROVINCETOWN — At the four-committee housing workshop held on June 20, the town’s leaders expressed support for moving toward three large-scale policy goals: new regulations on short-term rentals, new rules to encourage multifamily housing, and new incentives to encourage landlords to rent to long-term tenants.

    While there was broad agreement on overall direction, the four committees —- the planning board, the select board, the community housing council, and the Year-Round Market-Rate Rental Housing Trust — also decided that a smaller working group was needed to hash out the details of such a program, particularly for regulating short-term rentals.

    “I don’t want to create the expectation that there will be universal support for every policy that’s being considered,” said Town Manager Alex Morse, “but I do think we can get to a place where there’s a broad group of short-term rental regulations to bring to a future town meeting.”

    The workshop ended with a discussion of how to create a working group reasonably quickly, without the candidate-interview process that might be required for a temporary town committee.

    At the next select board meeting on July 24, Morse will propose creating a town manager’s housing advisory group that would include three committee members, three members of the public, and a town staff member, he told the Independent this week.

    The housing workshop began with a presentation by Morse and Assistant Town Manager Dan Riviello of some metrics related to the town’s housing crisis. Among them were the Census Bureau’s most recent estimate for the median rent in Provincetown — $1,326 per month — and the median nightly rate for short-term rentals in Provincetown, as measured by AirDNA.co — $425 per night.

    “Obviously, this illustrates the central conflict for a person with a rental in town,” Riviello told the group. “They can earn as much as they would for a year-round rental in the space of only 37 days renting short-term.”

    Another slide showed that the number of year-round occupied units in town was almost exactly the same in 2021 as it was more than 30 years ago — 1,968 units in 2021 and 1,942 units in 1990.

    That means 30 years’ worth of residential growth has gone to the “seasonally vacant” category, which went from 1,418 units in 1990 to 2,826 units in 2021.

    In the survey that was distributed to committee members before the workshop, every single participant said they were interested in trying to tilt the balance back toward renting long-term through some kind of financial incentive. Nearly every participant was open to offering incentives to people who rent to seasonal town employees as well.

    Truckee, a ski town near Lake Tahoe, Calif., currently offers one-time grants of $4,500 to $10,000 for new year-round leases, Morse told the workshop. Despite the relatively small amount compared to short-term rental earnings, the grants seem attractive to some property owners who were already considering leaving the short-term rental market, Morse said.

    The “Landing Locals” program launched in Truckee in 2020, and the company that administers it, changed its name to Placemate a few months ago. It has expanded to a handful of other vacation towns in California, Colorado, and Idaho, and is currently in talks with Nantucket, according to the company’s Facebook page.

    According to recent reporting by the Taos News in New Mexico, in another vacation town that is considering a Landing Locals program, more than half of the property owners who accepted a payment in Truckee have continued renting long-term even after the payments end.

    Select board member Erik Borg said that “it’s hard to bridge the gap” between short-term and long-term rental revenue. He added that “I see a little bit of bad blood” about the payments to new landlords from people who have been renting year-round for years.

    Morse said it might be possible to have a smaller payment for current landlords.

    The workshop agenda also included questions about how the town could incentivize dormitory and employee housing. Setting up a new title in the zoning code was a possibility, especially because committee members worried that simply adding dormitory housing to the existing inclusionary bylaw might lead builders to choose employee rentals instead of building affordable-ownership units.

    Select board member Austin Miller jumped into this conversation with a broader argument about zoning.

    “Single-family zoning is one of the biggest policy failures of the 20th century,” Miller said, “and I would love to see us be a leader in potentially eliminating it in Provincetown and upzoning to allow for by-right duplexes in residential districts.”

    About eight people nodded in agreement, and no one raised objections.

    “In California, the whole state recently moved away from single-family zoning,” Morse said. “Maybe we should have added that to our survey, but we can continue the conversation on that.”

    The discussion of short-term rental regulations was a bit more contentious.

    It began with a series of survey questions that showed broad agreement around preventing corporations from holding short-term rental certificates and limiting how many such certificates individuals can hold. Capping the total number of short-term rentals drew more discussion, however.

    “We know that capping short-term rentals is not a guarantee of creating new housing; it’s intended to preserve the rental housing that’s already here,” said planning board member Michael Gaucher.

    “I have a three-family home,” said Year-Round Market-Rate Rental Housing Trust member Cass Benson. “You’re saying, ‘You keep renting year-round.’

    “You’re forcing me,” Benson added. “You’re saying, ‘You don’t get the short-term rental certificate.’ You’re saying, ‘Preserve it,’ and then I have to keep doing that.”

    “This is why there needs to be a working group to talk about every scenario,” said select board member Leslie Sandberg. “I think we’re trying to move forward, and I think a subgroup would help move it forward.”

    “We can reach a place where there’s a broad number of short-term rental regulations or related bylaws to bring to town meeting,” said Morse. “Not everybody will get 100 percent of what they want, but I think we’re heading in the right direction — and inaction is not an option.”

    The meeting ended with a call to participants to reach out to Morse if they had specific ideas on how to structure a working group or related public outreach. The results of those conversations will be presented at the July 24 select board meeting, Morse told the Independent.

    SUPPLY AND DEMAND

    Even in a Lull, Prices for Most Short-Term Rentals Rise

    Some formerly hot properties are vacant for the first time in years

    By

    PROVINCETOWN — When Anna Leister bought a small seasonal cottage on the Wellfleet-Eastham line at the outset of the pandemic, she wasn’t looking to make money. Leister lives in Braintree, but she grew up in Provincetown. She was priced out here, she said, but she still “wanted a little piece of Cape Cod” for herself. She uses the cottage on weekends and rents it out for two summer months to help defray costs, she said.

    “We were a little nervous about whether or not we should purchase this,” she said. “We didn’t know what was going to happen with the market. I don’t think I need to tell you what happened,” she added.

    Leister was one of many Outer Cape property owners who found startling success renting in the short-term vacation market as remote work and fears of coronavirus contagion drove people from across the eastern seaboard here. Prices skyrocketed, and landlords began to see their properties fully booked even in the off-season.

    Now, with inflation and an increased supply of rentals, the pandemic boom is wearing off, and those landlords are beginning to sing a different tune. Though prices remain high, bookings for this summer have dipped compared to this time last year, reflecting a cooling market.

    “This year, I am noticing a lull,” Leister said. In previous summers, her cottage would be booked up by early June at the latest, she said. Now, of the nine weeks she offers for rentals, three are unbooked.

    According to Ryan Castle, CEO of the Cape Cod and Islands Association of Realtors, bookings between Memorial Day and Columbus Day in Wellfleet, Truro, and Provincetown are down 19 percent from last year, while prices in those towns have risen 19 percent.

    Data provided by AirDNA, a company that collects information from short-term rental platforms Airbnb and VRBO, suggest a similar story. According to AirDNA, nights booked in June through September across the four Outer Cape towns have fallen 8 percent compared to the same time last year. At the same time, prices have risen 12 percent.

    In Truro, according to the AirDNA data, bookings have fallen 13 percent while prices have risen 21 percent. Wellfleet and Eastham, which saw little change in the number of bookings, experienced a rise in prices of about 10 percent, while Provincetown saw its bookings dip by 9 percent and prices rise by 5 percent.

    Castle collects his own data, mostly from other rental companies around the Cape. Many properties are listed with both Airbnb or VRBO and traditional realty firms, making precise measurements of the rental market difficult.

    Nevertheless, Castle’s numbers reveal an overall downturn in vacation bookings on the Outer Cape, with some homeowners finding their previously hot properties vacant for the first time in years.

    Joe DeMartino, who has been a broker in Provincetown for 20 years, said rising prices and the local rental tax are giving some potential vacationers “sticker shock.” For high-volume dates like the Fourth of July, Carnival, and Bear Week, he said, typically all his properties are fully booked by April 1.

    This year, he still has 10 properties available for the July 4 weekend — something he said has never happened to him before.

    Susannah Elisabeth Fulcher, a contributing writer for the Independent who rents out a couple of rooms in her Wellfleet home through Airbnb, said she was fully booked in 2021 and 2022. “Everybody wanted to come to Cape Cod, it seemed,” she said. “This year, it’s different. It’s slower, and we have more gaps.”

    Both Fulcher and Leister said other property owners they know are experiencing similar lulls.

    But not all homeowners and rental services are feeling these effects equally. Luke Chapman, the CEO of the Orleans-based rental service Del Mar Vacations, said his company is on track to hit 99-percent occupancy in July and August — which he attributed to superior marketing and hospitality.

    “There’s professionals, and there’s amateurs,” Chapman said. In July and August 2021 and 2022, “a kindergartner could’ve booked a house,” he said. Now, homeowners can’t expect to simply “toss a house on Airbnb” and see it fully booked, said Chapman.

    He said Del Mar, which pays homeowners a flat fee and sets its own rental prices, has lowered prices on only a handful of properties in its portfolio.

    Jim Reese, the chief operations officer at the vacation rental site We Need a Vacation thinks an adjustment is ahead. As pandemic-era splurging fades away, he said, “vacationers will pull back, and homeowners will adjust accordingly. They’ll recognize what vacationers are willing to spend for their homes.”

    Besides inflation and belt-tightening, another reason for the lull here may be the stark weakening of the Euro against the dollar last year. That has meant that for some vacationers booking a jaunt to Spain or Italy is cheaper than a week on the Outer Cape. “We’ve had more than one tenant tell us that they can go to Europe for less,” said DeMartino, “and it’s true.”

    Reese said he expects prices to readjust to their prepandemic trajectory, a steady growth of about 3 to 4 percent per year.

    DeMartino said he has been telling homeowners he works with to consider lowering their prices. But so far, prices for Airbnb and VRBO rentals are remaining well above both 2022 and 2021 levels, according to AirDNA.

    “I think the question becomes each individual homeowner’s decision,” Castle said. “Are they willing to cut their prices to get more weeks booked, or are they willing to have weeks vacant?”

    Terry Hochman, who owns a Truro condo rented through the Braemar Condominium, has no power to set his own price for his unit, which he proudly markets as “The Winds of Truro.” But Braemar’s high rates have not proved to be an issue for his tenants. Although he has 10 fewer nights booked compared to this time last year, he said his revenue is down by only $100.

    But Fulcher, who has lowered her prices to prepandemic levels, said she feels “more comfortable” renting at a more reasonable rate.

    “I’m okay with it for myself,” she said. “I like having the people that can afford to come because of what we do at our place.”

    SHORT-TERM RENTALS

    Outer Cape Towns Weigh Community Impact Fees

    Revenue raised from rentals would go toward affordable housing

    By

    TRURO — In an effort to stem the loss of residential property from the year-round housing stock, three Outer Cape towns are considering the adoption of an additional fee on certain short-term rental units.

    The rules for the fee were set in the same state law that created the short-term rental tax in 2018.   Towns that have adopted the 6-percent local-option tax on hotel rooms and short-term rentals — typically referred to together as the “rooms tax” — may consider adding a “community impact fee” of up to 3 percent. All four Outer Cape towns now have the 6-percent local-option rooms tax in place.

    State law offers two options for the fee, which is targeted at owners of multiple residential properties that are booked as short-term rentals. The first option would apply when an owner has two or more residential units in the same town listed as short-term rentals if those units are not also at their primary address and if that primary address is a one-, two-, or three-family home. The second option would apply the fee even if the units are at the owner’s primary address.

    The terms can become complicated, but the upshot is simple: people who have multiple properties in a given town that are rented short-term would see the tax that their customers pay go up. The rooms tax in all four Outer Cape towns is now 14.75 percent — 6 percent of the room price goes to the state, 6 percent to the town, and 2.75 percent to the Cape and Islands Water Protection Fund. The community impact fee would add up to another 3 percent to the room price for affected units, all of which would go to the town.

    The law specifies that at least 35 percent of the revenue from the fee must go to housing efforts.

    Both Provincetown and Wellfleet will have the fee on their town meeting warrants, with 100 percent of the revenue directed to housing efforts. Provincetown’s warrant will include only the first option: a 3-percent fee that exempts units at the owner’s primary residence. Wellfleet’s warrant, meanwhile, will include both options, but with only a 1-percent fee.

    Eastham’s select board discussed the fee on March 8 but decided to have a community forum on the subject before adding it to the town meeting warrant. The date of that forum has not been set, according to Town Administrator Jacqueline Beebe.

    Truro’s select board has not discussed the community impact fee. Town Administrator Darrin Tangeman said the fee is “not something the town is looking at right now.”

    If approved at town meeting, the fees would be implemented on Jan. 1, 2023, according to Eastham Finance Director Rich Bienvenue.

    Provincetown: 3 Percent

    According to Provincetown’s town meeting warrant, “the intent is 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.”

    The impact fee appears as Article 15 on the warrant, the first of 10 articles developed in a series of housing workshops involving the select board, community housing council, and Year-Round Market Rate Rental Housing Trust.

    At those workshops, town staff were not sure how many properties the impact fee would apply to, and they told the boards the measure probably wouldn’t raise a huge amount of money. But the consensus of the three boards was that the fee could deter developers who might consider buying up properties here to create a short-term rental operation in the future.

    “Rather than try and catch it after the fact, like we’ve done with every other housing issue, let’s have something on the books before it becomes a problem,” said select board chair David Abramson.

    Wellfleet: One Percent

    Wellfleet’s select board voted on Feb. 15 to put both the primary-residence-exclusive and primary-residence-inclusive impact fee options on the warrant, but they opted for a one-percent fee instead of 3 percent.

    Select board chair Ryan Curley advocated for a 3-percent fee, but other board members pushed back and suggested the town take an incremental approach.

    The 3-percent fee is a “a big jump” for tourists, board member Michael DeVasto said. He argued that the fee is paid by the customer, so it would not stop people from buying residential properties here for short-term rentals but would price out some long-time summer visitors who could no longer afford vacations on Cape Cod.

    If the article passes, all fees collected would go to the Wellfleet Affordable Housing Trust, with 35 percent designated for federally defined affordable housing projects and 65 percent for the trust’s unencumbered funds, which can be used for a wider range of projects targeting varying income levels.

    “It’s important to dedicate these funds when we actually enact it, as we know, because of what happened with the rooms tax,” Curley said.

    Wellfleet has brought in new revenue from the expansion of the 6-percent rooms tax to include short-term rentals, but that money has been earmarked for the town’s fiscal 2023 budget deficit.

    The community impact fee is one of the few options still on the table for a dedicated funding stream for housing, Curley said.

    Eastham: Public Forum

    The select board in Eastham discussed the community impact fee at its March 8 meeting and decided to have a public hearing on the subject before putting an article on the warrant. The date was still being determined as of Friday, March 11, according to Town Administrator Beebe.

    “I want to understand what the feeling is in the community about it,” said select board chair Art Arturino.

    Assistant Town Manager and Finance Director Rich Bienvenue offered detailed projections on how many properties the fee would apply to and how much revenue would be produced.

    Eastham has 75 short-term rental owners the community impact fee would affect, according to Bienvenue’s data. Fifty-seven of those owners have two short-term rental units, eight have three units, nine have four units, and one has five units, for a total of 179 residential properties.

    “Some people will rent for the summer and some will rent for less than the summer, with varying rates which range from $1,000 a week to $3,000,” Bienvenue said. “On average, those units or properties got $10,000 for the season. Three percent of that would generate about $54,000.”

    Select board member Jared Collins supported implementing the fee.

    “Why would we not want to do this?” he asked the board. “It makes sense to tax people more if they’re able to afford more properties to have vacant all year. I’m saying that as someone who is about to inherit a property with seven units on it, so I’m being the opposite of biased here.”

    Truro: Not Right Now

    A community impact fee “is not something the town is looking at right now,” Town Administrator Darrin Tangeman told the Independent. Having just raised the local-option rooms tax from 4 percent to 6 percent, “we’re waiting to see how that impacts the market before we add an additional fee.”

    HOUSING FUNDS

    Provincetown Boards Will Revisit Tax Revenue Split

    Conservative rental tax estimate could mean housing loses out

    By

    PROVINCETOWN — The select board, community housing council, and year-round market-rate rental housing trust will reconvene on Dec. 15 to tackle, for the second time, a slate of housing proposals for town meeting.

    The most difficult question is sure to be how much of the new money coming from short-term rentals — a subset of the town’s rooms tax revenues — should go to housing. The answer will affect the scale of housing efforts the town can pursue.

    Provincetown’s “Fiscal ’22 Town-Wide Goals” sets as a policy goal to “capture new short-term rental revenue collected in fiscal ’21 and fiscal ’22 for housing.”

    The question has been discussed all year. In May, town staff proposed allocating 13 percent of the rooms tax revenues to housing — around $440,000. Select board members asked for more, and on Oct. 18, at the first meeting of the three committees, Town Manager Alex Morse suggested 26 percent for housing — around $880,000.

    To some, that still did not sound right. Year-round rental housing trust chair Nathan Butera asked if all the short-term rental funds could be spent on housing. That would be about $2 million for the last fiscal year, according to state tax data.

    A Debate Foreshadowed

    Before the new rental tax revenue started to roll in, leaders across Cape Cod were signaling its importance.

    “Setting aside the new revenue before it gets absorbed into general operating budgets and before the ability to invest strategically in long-term municipal needs is lost is critical,” said Andrew Gottlieb, executive director of the Association to Preserve Cape Cod.

    “I can’t think of a town that won’t more than double their existing revenue” said Ryan Castle, CEO of the Cape Cod and Islands Association of Realtors. “This is about town leadership,” he said.

    By 2021, the housing crisis had become more acute. In June, state Sen. Julian Cyr said, “I am 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. It’s incumbent on local officials to recognize our own agency in solving this crisis.”

    The fact that Provincetown already has a rooms tax revenue allocation formula that supports four important funds presents another puzzle.

    The first proposal on the agenda for the Dec. 15 meeting is to add a fifth category, for housing, and rewrite the allocation formula. Many town leaders have said they would like to roughly level-fund the other four beneficiaries, perhaps with a little extra on top, and then direct the rest of the “new” revenue to housing.

    How much ends up going to housing will depend not only on how the five-way split is written but also on the total amount coming in. And that’s hard to guess, because the pandemic had a dramatic but temporary effect on both hotel and short-term rental revenue.

    Building a Forecast

    Before the rooms tax was expanded to cover short-term rentals, it was bringing in about $2.2 million per year to Provincetown. Rooms tax revenue rose slowly and consistently every year since 2011 — even though the total number of hotel rooms in town went down. But prices of hotel rooms increased, and tax revenue continued to rise.

    The expansion of the tax in July 2019 came eight months before the pandemic struck in March 2020. Hotels were closed for almost three months. For the rest of 2020, Cape Cod experienced a survival-level season, with businesses operating at about 70 percent of normal levels, according to Wendy Northcross, then-CEO of the Cape Cod Chamber of Commerce.

    Rooms tax revenue exploded anyway, because of adding short-term rentals to the base. Provincetown’s rooms tax revenues went to $3.1 million, and then $3.5 million.

    The state Dept. of Revenue (DOR) still maintains it cannot split the revenue from the first four quarters during which the expanded tax was collected, corresponding to fiscal 2020. But for fiscal 2021 — July 1, 2020 to June 30, 2021 — DOR figures show that the hotel portion of the rooms tax brought in only $1.4 million, while the new short-term rental tax brought in $2.05 million.

    Forecasting remains difficult, however, because hotels have typically brought in $2.2 million per year. All indications are that hotels have recovered in 2021 and, indeed, their revenue in the first quarter of fiscal 2022, which ended on Sept. 30, is higher than ever, according to new rooms tax data provided to the Independent by the DOR.

    Short-term rentals brought in $2.05 million in a year when every other indicator was below normal. Meanwhile, independent data from the market-research website AirDNA.co confirms that short-term rentals also had a bigger year in 2021 than they did in 2020.

    AirDNA aggregates detailed listing data from Airbnb, VRBO, and Homeaway. Among the data points it offers are total revenue numbers for all the bookings in a given town, month by month, for three years.

    The Independent matched these revenue data with the quarterly reports from the DOR and found them closely correlated for the four quarters of short-term rental tax revenue in fiscal 2021.

    Based on that tight correlation, and the last six months of activity reported by AirDNA, Provincetown’s short-term rentals had a big summer, bringing in $31.8 million in just six months. That means the short-term rental tax will yield $1.9 million just in the first two quarters of fiscal 2022. A four-quarter figure would likely be around $2.5 million.

    A Conservative Estimate

    Town staff are forecasting much lower total rooms tax numbers. Based on the pandemic year of fiscal 2021, which brought in $3.48 million in rooms tax revenues, town staff have presented forecasts of $3.4 million.

    Historical and current information on the performance of hotels and short-term rentals suggests a number closer to $4.7 million.

    Select board chair Dave Abramson has complained about the town’s “very conservative” forecast. And board member Louise Venden said, “We need to put all the cards on the table here.”

    If leadership’s goal is level funding of every area other than housing, and the total revenue forecast is too low, the percentages required for that level funding will mean that the percentage for housing will be low. Then, if an extra million dollars comes in, most of it will go to the other four funds and not to housing.

    “Getting the maximum amount of money to that fund without cutting off the others” is how Abramson has described the goal.

    ECONOMY

    As Guest Houses Sell, Many Become Private Homes

    But innkeeping retains its appeal for some new owners

    By

    PROVINCETOWN — For 10 years, Provincetown’s hotel and guest house industry has been characterized by two trends. The total number of hotel rooms has been gradually decreasing, as many properties, especially smaller ones, have been converted to private residences. Meanwhile, the industry’s total revenue has been steadily rising, up to $37 million per year just before the pandemic — according to the town’s rooms tax revenues.

    The pandemic is the great turbo-charger of trends, however, and relief measures, low interest rates, and the rising stock market have put a lot of money into people’s pockets. The question facing Provincetown’s hotel industry now is which trend is going to be stronger: more properties removed from the market by wealthy buyers of single-family homes? Or more people willing to spend more money per night on hotels?

    The answer could be both: fewer rooms, at higher prices, producing more total revenue.

    A look at recent sales and listings shows that both trends are going strong. Residential buyers are snapping up smaller properties, but larger ones are still finding people — and, sometimes, corporations — willing to invest.

    Residential Conversions

    Before short-term rental sites like Airbnb.com and Homeway.com existed, there were many more guest houses and hotels in Provincetown. The list of business licenses in 2011 includes the names of many long-gone lodgings: the Valentine Guest House, the Rose Acre, the Black Pearl, the Gallery Inn. Some of them became single-family homes; some became condo complexes; a few even became staff housing for seasonal workers.

    The town’s official room count hasn’t changed as much. It was 1,722 rooms (excluding campgrounds) in 2011, said Tourism Director Anthony Fuccillo, and dropped to 1,589 in 2012. It then stayed in the 1,500s for many years, before finally dropping to 1,495 in 2021.

    The official count may not capture the full decrease in inventory, however. Many properties that are not actively renting rooms to tourists are nonetheless maintaining and renewing their lodging licenses. The Atlantic House, for instance, still has a license for 15 rooms. There are four licensed rooms at 116 Bradford St., which many years ago was the Burch House. The Victoria House is staff housing now, but it is still licensed for 10 hotel rooms.

    “People may maintain the licenses, because they think there’s value down the line,” said Rob Tosner, former owner of the White Winds guest house and a broker who has been the listing agent for several guest house sales. “They’re thinking, we may not want to use it this way, but when we do go to sell it, we can say, ‘We’re licensed for X number of rooms.’ ”

    “It’s certainly become more difficult over the years to make a residential property into a commercial one,” Tosner added. The complex process to create a new hotel makes the existing licenses worth holding onto.

    Recent Sales

    Against this backdrop, it’s hard to say for sure if the pandemic has accelerated a loss of rooms. But residential conversions are definitely happening. Between October 2020 and March 2021, four smaller guest houses sold and were taken offline: the Bradford-Carver House, the Shire Max, the Secret Garden Inn, and the Bayberry Hotel. Christopher’s by the Bay just sold in September and is also permanently closed.

    There are also at least two properties that are listed for sale and are currently under contract: the Beaconlight Guest House and the Somerset Inn. Details on the prospective buyers and their plans were not available at press time.

    The Beaconlight, an inn on Winthrop Street, is under contract. Its future owners have not yet announced their plans. (Photo Nancy Bloom)

    Throughout this period, though, there have also been properties selling to buyers who want to run hotels. Snug Cottage, the White Winds, and the Crew’s Quarters all sold in 2020 and are operating as guest houses. (The White Winds was renamed the Brasswood by its new owners.)

    There’s also something of a new player afoot: the corporate buyer. “This is somewhat anecdotal,” said Tosner, “but there seem to be some bigger players in town who buy multiple properties and get some economies of scale.”

    Linchris Hotel Corp. is the current owner of the Harbor Hotel and the Surfside Hotel in Provincetown. Lark Hotel Group bought the Inn at the Moors in 2017 and renamed it AWOL. The Lexvest Group has owned the Cape Colony Motel since 2012 and bought the Breakwater Motel in 2018.

    The smallest of those corporate-owned properties has 26 rooms; the largest, Harbor Hotel, has 139. Corporate buyers haven’t yet stepped into the world of the 10-to-12-room guest house.

    The Brasswood and the Bayberry

    Brian Calhoon and his husband Tom Westmoreland bought their hotel, the Brasswood, from Tosner in early 2020 — coinciding with the March Covid shutdown. The next year, Calhoon’s parents, Stuart and Liz Calhoon, bought the Bayberry Hotel just up the street. The Brasswood is open and prospering; the Bayberry was taken offline, and the senior Calhoons, along with their son and son-in-law and their business partner Scott “Scooter” Differ, all live there.

    “The Brasswood is licensed for 12 rooms,” said Brian Calhoon. They use the smallest one as an office, he explained, leaving 11 for guests. Meanwhile, the Bayberry was a six-bedroom guest house, with one room reserved for the owners. “The revenue from 11 rooms maths out a lot better than the revenue from five,” Calhoon said. “I think there’s a kind of balancing point, where there’s enough rooms to keep the property open.”

    The physical layout of the buildings can also shape their viability as residences, Calhoon said. The Bayberry, for example, was built as three separate flats and, he said, was “awkward as a guest house. It had three kitchens!” It made sense to convert it back into a residence.

    On the other hand, the White Winds, which became the Brasswood, was both huge and stuffed with bedrooms. “It’s just so much an inn, it wouldn’t make sense to make it a house,” Calhoon said.

    Nearly all of Provincetown’s guest houses were originally built as residences. A determined renovator can do anything — but some properties are much easier to convert than others.

    Tosner agreed that layout matters and added some other factors. “You’ll notice there are very few waterfront accommodations,” said Tosner. Those that do exist are almost all larger hotels. “You don’t find the guest house model there.”

    Residential real estate prices are always a factor. To remain a business, a commercial property must out-earn what a potential home owner would pay for it.

    That is why current prices and current property sales are significant. Market pressure is most clearly felt when a new mortgage is written, and room rates need to cover a much higher cost structure. Calhoon said that the pandemic year was tough, but the Brasswood hit the revenue it needed in 2021.

    “We have come out in the black,” he said. “It’s not very deep black, but it’s black, and not red.” He does not think the era of inns is over in Provincetown.

    “It’s funny — two musicians from Boston who worked in education,” said Calhoon, referring to himself and his husband. “It’s a weird pivot that I never would have guessed, but it’s worked out. We love making music, we love hosting people and creating community.

    “It’s definitely a lifestyle, being always on — but I’ll clean toilets and carry laundry so that I can put on a concert that night or host a guest artist playing on the porch. Running an inn like this — it’s something I never would have predicted but absolutely love.”

    THE RENTAL TAX

    Wellfleet Select Board: 80% of Revenue Should Go to Trust Fund

    Short-term rentals created housing shortage, says Terkanian

    By

    WELLFLEET — The select board has endorsed the idea of earmarking 80 percent of the revenue from the short-term rental tax to the town’s new affordable housing trust fund.

    “A major contributing factor to the shortage of housing in Wellfleet is the financial attractiveness of short-term rentals,” said Harry Terkanian, chair of the trust, during his presentation to the select board on Oct. 12 in which he argued for the policy. The short-term rental and rooms tax netted about $855,000 for the town in the fiscal year that ended on June 30; 80 percent of that amount would be about $684,000.

    It’s rare, said select board member Michael DeVasto, to have a revenue stream created by a problem that can be used to help solve that problem. DeVasto is also a member of the affordable housing trust.

    The short-term rental tax rate in Wellfleet will rise from 4 to 6 percent on Jan. 1, 2022, maximizing what state law allows towns to collect on vacation home rentals. The increase was approved by town meeting voters last spring. Despite recent troubles in the town’s accounting department, the select board agreed with Terkanian that it was time for a greatly increased commitment of funds for affordable and workforce housing.

    The problem, said Terkanian, is that property owners can make more money renting out their houses for the summer than they can by leasing the property for a year. As a result, fewer living units are on the market, and the ones that are become pricier. This makes houses harder both to rent and to buy for working people and those with limited incomes.

    Town staff will work on the specifics of the tax revenue allocation policy and return it to the select board by Nov. 30, after interim Town Administrator Charles Sumner finishes the town’s capital plan and a financial forecast analyzing projected revenue over five years.

    “You’re going to be looking at comprehensive financial issues facing the town that you’ll have to balance,” Sumner told the board. Other allocations of the tax revenue could include wastewater treatment, infrastructure, and other projects. Several select board members referred to the Cape Cod and Islands Water Protection Fund, which was established in 2018 and is funded by an additional tax on lodgings and short-term rentals. That fund is specifically earmarked for wastewater infrastructure projects.

    July 2019 was the first month in which short-term rentals were subject to the rooms tax. For the first 12 months, the state Dept. of Revenue (DOR) didn’t keep track of the new revenue from short-term rentals as distinct from the previously existing tax on other lodgings.

    Prior to the expansion of the rooms tax, Wellfleet collected only about $125,000 a year from it, Terkanian said.

    The new policy on allocating the revenue could stand on its own, he said, or it could be an addition to the current budget and financial management policy. That policy covers the cash reserves the town should maintain, the stabilization fund, the finance committee reserve fund, and debt management, among other items in the town’s bylaws and charter.

    While it was important to start the discussion, there’s no specific deadline for making a final decision, Terkanian said in a phone interview after last week’s meeting.

    “We’re just trying to make sure we can develop reliable sources of funding, so that when we are presented with housing opportunities, we have the ability to act on them,” he said.

    The affordable housing trust made a push for the allocation policy last March, but in light of the town’s accounting deficiencies, consideration of the request was put off.

    While mindful of the town’s financial status, “I’m also mindful that there are big dollar projects out there that we do have to face up to,” Terkanian said during the select board meeting. The policy can be flexible, he added, allowing the board to make exceptions when needed.

    The short-term rental tax revenue stream would be the only money available to pay for housing outside the federal Dept. of Housing and Urban Development affordable housing guideline of 80 percent or less of area median income (AMI), DeVasto said during the meeting. This would be important for what is called “workforce housing,” serving households that make more than 80 percent of AMI but still can’t afford to live in Wellfleet.

    Wellfleet has a history of allocating revenue streams to specific purposes, Terkanian told the select board. For example, at a 1966 town meeting, voters established the beach fund into which was deposited the revenue generated by the sale of beach stickers. The town has also established an ambulance fund, a recreation fund, two enterprise funds (water and marina), and a shellfish revolving fund.

    Efforts by Other Towns

    Provincetown, Truro, and Eastham also have made recent moves related to the allocation of short-term rental tax revenue.

    Truro voted last May to put one-third of its total rooms tax revenue in a new housing stabilization fund.

    “But those funds won’t be available until we certify them at the end of the fiscal year, and they won’t be available for use or appropriation until fiscal year 2024,” said Truro Town Manager Darrin Tangeman. Receipts have to be certified prior to being appropriated, and certification will happen in October 2023.

    Eastham’s short-term rental tax receipts go into the town’s general fund, but are designated for specific purposes under the town’s select board policy, said Town Administrator Jacqui Beebe. Originally, the receipts went into the town’s stabilization fund, but Eastham reached its goal for that fund last year.

    Now the revenue stream will go towards housing and other infrastructure needs, Beebe said.

    “This year, we have collected a little over a million dollars in short-term rental funds,” Beebe said. “Those funds are now going to be available for the board and the finance committee and the town to spend this coming year.” While still in the planning phase, the idea would be to use the money to support Eastham’s six-year housing plan, she said.

    Provincetown discussed the reallocation of the rooms tax at a joint housing meeting of the select board, the community housing council, and the Year-Round Market-Rate Rental Housing Trust on Oct. 18. While no formal vote was taken, the boards discussed setting the housing allocation at 26 percent. (See related article on page A5.)

    Paul Benson contributed to this report.

    HOW TO SPEND IT

    Morse Suggests Putting 26% of Rooms Taxes Into Housing Efforts

    Three boards try to move the needle on town’s housing crisis

    By

    PROVINCETOWN — How much of the money collected from the new short-term rental tax should go to community housing efforts?

    That was the big question on the table at a workshop on Monday at which the select board, community housing council, Year-Round Market-Rate Rental Housing Trust, and other town officials started making plans for next year’s spring town meeting. Their most immediate objective was to establish a permanent funding source for housing efforts from rooms tax revenues, which totaled $3.48 million in the last fiscal year.

    After Town Manager Alex Morse proposed allocating 26 percent of the total to housing, which would come to less than $900,000 this year, Nathan Butera, chair of the Year-Round Market-Rate Rental Housing Trust, asked if it was possible to allocate the short-term rental portion of the rooms tax to housing solutions. That amount would come to more than $2 million this year.

    “I think it’s a good question,” said Morse.

    Before getting down to business on allocating those funds, the group discussed a wide range of proposals that could eventually wind up before the voters, including allowing taller buildings on Shank Painter Road, a larger expansion of the Maushope senior housing complex, and the use of town money to secure more middle-income apartments at the VFW housing development.

    Other nascent ideas included a change in the inclusionary bylaw that would allow private developers to pay more into the affordable housing trust, and a change to the accessory dwelling unit (ADU) bylaw to make renting to seasonal workers an acceptable use of those units.

    Adding a 3-percent community impact fee to bookings in investor-owned short-term rental properties was debated, as was the feasibility of purchasing deed restrictions in new private developments to secure year-round rentals.

    Each of these policy changes would move the needle on the town’s housing crisis. Collectively, they could represent the most ambitious effort at housing development in years.

    The rooms tax allocation is complicated because the pot contains money from two different sources — “traditional lodgings” and short-term rentals. Historically, the rooms tax was collected only on the first of those two: stays in hotels, motels, campgrounds, and bed and breakfasts. It regularly brought in around $2 million per year, which was divided up among the tourism, sewer, capital stabilization, and general funds.

    In July 2019, that tax was expanded to stays in short-term rentals. In fiscal 2021— the 12 months that began on July 1, 2020 and ended on June 30, 2021 — the expansion of the rooms tax to short-term rentals brought an additional $2.05 million to Provincetown, according to data requested by the Provincetown Independent and provided by the state Dept. of Revenue (DOR).

    In the same fiscal year, revenue from “traditional lodgings” was down 32 percent from its prior average, with only $1.4 million in receipts, according to the DOR. Pandemic year tax data from across Cape Cod show that spending on hotels and restaurants was only about 70 percent of normal.

    With that $2 million in short-term rental taxes added to the tally, the rooms tax revenue total came to $3.48 million for the last fiscal year — a number that is higher than ever before, even though hotel taxes had plummeted.

    A New Formula

    On Monday, Morse proposed his new allocation formula based on a $3.4-million future rooms tax estimate. His proposal would maintain the original four funds at just over their pre-pandemic revenue levels and set aside 26 percent of the total rooms tax revenue for housing. If taxes come in at the $3.4-million mark, the formula would direct $884,000 per year to new housing efforts.

    Select board member Louise Venden asked Morse about his topline estimate for the rooms tax.

    “Right now, our estimate is still $3.4 million,” Morse said. “We don’t have a solid year of no interruptions, absent Covid,” he added. Morse said a lot of collections and payments were deferred until this month. He will know more by December, he predicted.

    Morse explained that he wanted to be certain that the housing allocation was close to the difference between rooms tax revenues before and after the change.

    The $884,000 would represent “almost 100 percent of the increase,” he said, “while still being committed to obligations we have to support the economy of Provincetown and the general government, to carry out the work that we have to do in the years to come.”

    “Our hope would be that we can build a formula that can last another decade for the town,” Morse said. “That’s not to say that you can’t make changes before a decade — but the last formula lasted almost 11 years, and I think it’s time we do that again.”

    Details are important because formula changes can’t be made easily. Even after town meeting passes a home rule petition to alter the allocation formula, the state legislature has to approve it, a process that can take months.

    At the end of the workshop, the boards appeared broadly supportive of Morse’s proposal. No votes were taken, but another workshop with the three boards will be scheduled soon.

    HOUSING ANALYSIS

    Surprises in Short-Term Rental Data

    Community impact fee could apply to many properties here

    By

    PROVINCETOWN — The conversion of year-round rental property to short-term rentals has played a starring role in the housing crisis here. But it’s not the only player.

    An Independent analysis of rental tax and other data shows that properties being rented short-term to maximize revenue for their owners account for less than 30 percent of the total real estate sales in the last five years.

    They are a consistent share of the market for properties priced from $300,000 to $1.2 million, however. The potential revenue from short-term rentals could be helping to establish the market price — but the evidence shows there are plenty of other buyers at that market price who aren’t renting out their properties short-term.

    One of 38 properties in Provincetown that are managed for short-term rentals by Del Mar Vacations Inc. (Photo Paul Benson)

    The short-term rental tax took effect on July 1, 2019. The state gave a list of the taxpayers to the town in November 2020, after the tax had been in effect for 16 months. The Independent obtained that list and compared it with other sources, including the market-research website AirDNA, the 2020 U.S. Census, and the assessor’s sales reports.

    Short-term rental taxes were paid on 1,064 properties in Provincetown between July 2019 and November 2020. That is about 7 percent fewer than the number of properties appearing on AirDNA, which aggregates information from Airbnb, Homeaway, and VRBO. AirDNA reported a peak of 1,148 “entire home” listings in August 2019.

    Some short-term rentals would not appear in AirDNA’s data, such as those run by local real estate companies, or by smaller websites like WeNeedAVacation.com, which currently has 76 Provincetown listings.

    AirDNA data show that about 200 properties have left the short-term rental market since the pandemic began, presumably because their owners have moved here full-time.

    Who Are the Owners?

    The taxpayer list shows few large investors with multiple properties.

    Because of condominium conversions, different units often share one address — and sometimes one owner still owns several of those condos. Not many people have units scattered across more than two different addresses, however. The Independent could identify only eight owners on the whole list who had short-term rentals at three or more different locations.

    That includes five individuals with three properties each, the Packard Family Limited Partnership, with four properties, and Lexvest Group LLC and Dol-Fin Management, with three properties each.

    Two large property managers are on the list: Turnkey Vacation Rentals and Del Mar Vacations. But the assessor’s records show that they don’t own the properties they manage.

    This means multi-property investors are rare here. The market is almost entirely in the hands of people with one or two properties.

    Community Impact Fee

    It also means that a community impact fee might apply to a lot of properties if it were enacted here. The law that created the short-term rental tax gives towns the option of imposing a 6-percent local tax on bookings — which all four Outer Cape towns have now done. It also allows for an additional 3-percent community impact fee on bookings in “professionally managed units.”

    That term is defined as “one of two or more short-term rental units that are located in the same city or town, operated by the same operator and are not located within a single-family, two-family or three-family dwelling that includes the operator’s primary residence.”

    In other words, any two short-term rentals that are not on the property of the owner’s primary residence could be affected by a community impact fee. There are very few owners with three short-term rental properties in Provincetown — but there are a great many with two. Depending on where those owners live, a large fraction of the total list might be affected.

    Despite the presence of the term “professionally managed,” there appear to be no distinctions drawn between units managed by a real estate broker, an online platform, or a property management company. According to the law (mass.gov/info-details/room-occupancy-excise-tax), it’s the ownership of units that matters.

    Provincetown brought in $3.5 million from the 6-percent local-option rooms tax in the most recent fiscal year. That number includes revenue from hotels and short-term rentals, and is the third highest in the state, behind only Boston and Nantucket.

    Only 16 towns statewide have adopted the community impact fee. In nearly all, it added about 3 to 9 percent to the overall rooms tax number.

    These data suggest that a community impact fee here would probably raise an additional $200,000 or so a year.

    A Fraction of the Market

    The Independent’s analysis also found that properties sold recently were only slightly more likely than others to be part of the short-term rental market.

    Twenty-seven percent of the properties sold in the last five years appear on the short-term rental tax list. That number doesn’t change for individual years or specific sales prices. With relatively little variation, only about 24 to 32 percent of units in nearly every subcategory of year or sales price appeared on the short-term rental list.

    By comparison, about 23 percent of the town’s total housing inventory is used for short-term rentals.

    Most recent buyers, this means, apparently are not relying on short-term rental income to support their purchases. More than 70 percent of buyers at almost every price point are buying for year-round occupancy, seasonal use, or occasional vacation-style use, but without short-term rental income as a supplement.

    Knowing that a future buyer of property could count on this income may still be relevant in setting prices here. But short-term rental income is evidently not essential to most buyers in Provincetown in the last five years.

    This suggests that direct regulation of the short-term rental market might not move the needle in predictable ways when it comes to housing prices. The state’s 2018 short-term rental law also includes some little-used clauses, allowing towns to regulate the number of days per year properties can be rented and the number of short-term rental licenses in total, and even to regulate where short-term rentals will be allowed.

    These provisions have not been tried anywhere on Cape Cod, however. And with so many recent buyers not relying on short-term rental revenue, it’s hard to say what their impact on the housing market would actually be.

    SHORT-TERM RENTALS

    New Tax Yields Windfall, but Not for Housing

    Provincetown’s $2 million goes to tourism, stabilization, general funds

    By

    PROVINCETOWN — The tax on short-term rentals has generated a financial windfall for the four Outer Cape towns, newly released figures from the state show. The added revenue for the past year totals $4.45 million, with Provincetown netting a cool $2 million for fiscal 2021, from July 1, 2020 to June 30, 2021.

    Eastham brought in $936,000; Wellfleet, $829,000; and Truro, $686,000.

    Eleven years have passed since Provincetown’s voters first asked the legislature for the short-term rental tax. Gov. Charlie Baker signed the law in 2018, but the start date for the new tax was July 1, 2019 — and for the first 12 months, the state Dept. of Revenue (DOR) didn’t keep track of the new money from short-term rentals as distinct from the previously existing tax on hotels, motels, and campgrounds.

    That is because the short-term rental tax was enacted as an expansion of the tax on hotels. Revenue from the two sources is typically reported together as “rooms tax” by both state and town governments. The state, however, is now keeping track of the revenue from each source, and the DOR provided the breakdown for the last 12 months to the Independent.

    Most of that tax year was marred by Covid. Rooms tax revenue from traditional lodgings was down about 35 percent in Provincetown and Truro compared to fiscal 2019 (the last year that was entirely before the pandemic, and the last year in which only traditional lodgings were taxed). Traditional lodging revenue in Eastham was down about 50 percent.

    These numbers match Cape Cod’s overall last season. According to Wendy Northcross of the Cape Cod Chamber of Commerce, the Cape’s hospitality sector averaged about 70 percent of its normal numbers last year.

    The Cape’s hotels and campgrounds are now having their busiest year ever, according to Northcross. If that pattern holds, rooms tax revenue from hotels should return to normal.

    Where Should It Go?

    It’s the new short-term rental revenue, however, that housing advocates want to talk about.

    The town spent $145,000 of its short-term rental tax windfall on reupholstering town hall benches, but none on housing.

    “We fought like heck to get short-term rental tax parity,” said Northcross. “That is newfound money for our communities, and it needs to be directed into some kind of housing fund, protected from other uses.”

    “All of that short-term rental tax money should be used for housing purposes,” said Jay Coburn, CEO of the Community Development Partnership (CDP) in Eastham. “It’s up to opponents of using it all to articulate why — and what their compelling needs are that can’t be met with other sources.”

    Provincetown is the only Outer Cape town that was already getting major revenue from the rooms tax. Before July 2019, Provincetown was bringing in about $2.2 million a year from the tax. Truro brought in only $370,000 the year before the tax expansion, and Eastham and Wellfleet even less.

    In Truro, Wellfleet, and Eastham, all rooms and short-term rental tax revenue has gone to the general fund, where it can be used for any municipal purpose. Truro voted last week to put one-third of its total rooms tax revenue in a new housing stabilization fund.

    Provincetown’s select board discussed creating such a fund on June 28. Right now, rooms tax revenue is split in four directions, with none earmarked for housing: the tourism fund, general fund, capital stabilization fund, and wastewater enterprise fund.

    In May, town staff proposed a new five-way split, with 13 percent of the tax revenue going to the affordable housing trust fund. If that plan had been in place in fiscal 2020, $416,000 of rooms tax revenue would have gone to housing.

    Nothing New

    Just two weeks after the short-term rental law passed, then-Provincetown Town Manager David Panagore argued that the revenue should go to an aggressive housing program. “We need to establish a housing department, staffed to handle the workload required to make substantial progress,” he wrote in his January 2019 budget memo.

    Assistant Town Manager David Gardner told the Provincetown Banner that same month that there would be a conversation at the April 2019 town meeting about reallocating some of the tax revenue to housing.

    That didn’t happen, and Panagore quit in April 2019. The budget memos from the next two years show an effort literally on pause. Acting Town Manager David Gardner wrote in 2020 that the town must be “well informed and thoughtful before taking any substantial action or making a significant policy commitment” in allocating the new tax revenue.

    Provincetown’s then-Acting Town Manager Charlie Sumner wrote a nearly identical message this year. Both Gardner and Sumner said money needed to be reallocated to housing, but not until the revenue is fully predictable.

    Meanwhile, select board member Louise Venden has pushed to see money directed to a housing fund. But chair Dave Abramson has argued that the board can put money only into projects, not funds, until there is a new allocation formula. Town Manager Alex Morse has assured the board that the revenue collected in fiscal 2021 can still be used for housing purposes at a fall or spring town meeting.

    In the meantime, the pause had consequences. A million dollars of “excess revenue” came in during the first 12 months of the new tax — fiscal 2020 — and $354,000 of that total went into the tourism fund, following the old allocation formula. About a quarter million went into the general fund and the same amount to the capital stabilization fund.

    Where did that money end up?

    Infrastructure at Provincetown Airport got $55,000 from the tourism fund, and another $145,000 went to upholstered seats for the historic benches in town hall auditorium. In other words, the “excess revenue” has been transferred out of the tourism fund already — just not for housing.

    “The budget is the most important policy document in a town,” said the CDP’s Coburn. “You can have all the studies and committees you want. It really comes down to how you are using resources.”

    Editor’s note: This article has been revised and expanded from the version that appeared in print in the July 8, 2021 edition.

     

    CURRENTS

    This Week in Truro

    By

    Truro

    Meetings Ahead

    Meetings are held remotely. To watch live, go to truro-ma.gov and follow the “helpful link” to Truro Channel 18.

    Thursday, July 30

    • Zoning Board of Appeals, 5:30 p.m.

    Monday, Aug. 3

    • Conservation Commission, 2 p.m.

    Tuesday, Aug. 4

    • Board of Health, 4:30 p.m.

    Wednesday, Aug. 5

    • Planning Board, 6 p.m.

    Conversation Starters

    Covid-19 Update

    As of July 24, Truro had three active cases of the coronavirus, 10 cases considered resolved, and no deaths.

    Enforcing That Traveler Order

    Truro’s Health Director Emily Beebe told the Truro Select Board a $500 daily fine will be assessed against the owner of any lodging establishment or home owner renting out their place as a short-term rental if their guest is found to have arrived in Massachusetts without a negative Covid-19 test or fails to self-quarantine for 14 days.

    This statewide order goes into effect Aug. 1 and applies to all travelers except those from low-risk states, currently identified as New York, New Jersey, Connecticut, Maine, Rhode Island, Vermont, New Hampshire, and Hawaii.

    “So, if they get a test in California and then get on a plane where they could get exposed, the negative test is still valid?” asked board member Jan Worthington.

    “Yes,” Beebe replied. “Personal responsibility is still important in lowering the risk of the virus,” Beebe added. 

    Walsh Committee Applicants Short on Youth

    The select board is reopening the application process through August to see if more people will apply to be on a committee being formed to plan the future uses of the 70-acre Walsh property.

    After a lengthy Covid-19-related delay, applications from 16 people were received, said consultant Stacie Smith, managing director of the Consensus Building Institute. The committee is slated to have eight to 12 members. Truro hired Smith to oversee the selection process.

    They want the committee ready to go by Oct. 1.

    The disproportionate number of seniors relative to younger residents who have applied to be on the committee prompted a re-opening of the application process.

    Select board chair Robert Weinstein said he was dismayed that 10 seniors and only two people with young families were among the applicants.

    The majority of applicants said affordable housing was their first priority, though it’s unclear  if they meant affordable housing on the Walsh land, Smith said.

    The select board agreed Tuesday to let Smith start interviewing the current candidates while they see if others, particularly younger people, do apply.

    Payomet Gets Approval for Drive-In

    The Payomet Performing Arts Center will continue to offer concerts and circus shows with a 100-person limit at the Highland Center in North Truro through the fall, after receiving a license from the select board Tuesday. Artistic Director Kevin Rice had wanted to have about 90 cars with up to 300 people to come to view shows in a drive-in fashion.

    But right now, in spite of Payomet’s car-based distancing plan, the town is sticking with state guidance limiting performance gatherings to 100 people. Should the guidance change, his license allows him to go up to 300, according the select board’s vote. —K.C. Myers

     

     

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