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taxes

    WHITE COLLAR CRIME

    Delgizzis Told to Pay Up or Shut Restaurant

    Eastham denies business license for Lobster Shanty over back taxes

    By

    EASTHAM — David and Carolyn Delgizzi will not be allowed to open the Lobster Shanty this summer because they haven’t paid their taxes. The select board voted unanimously on May 20 to deny the family’s food and liquor licenses for the Route 6 restaurant until the Delgizzis pay over $70,000 in back taxes owed on their eight Eastham properties.

    The Lobster Shanty on Route 6 in Eastham will not be permitted to open this year unless its owners, David and Carolyn Delgizzi of Weston, pay their back taxes. (Photo by Teresa Parker)

    The family has owned the Lobster Shanty building since the 1980s, when real estate investor Daniel Delgizzi bought the property from a local family. Daniel’s son David and David’s wife, Carolyn, inherited the business. They also own more than 30 other properties across Massachusetts and nearly 100 units of rundown housing on Cape Cod. The Delgizzis live in Weston.

    According to Eastham Treasurer-Collector Maya Golding, state law allows municipalities to deny any kind of business license if a person, corporation, or enterprise has neglected to pay their taxes. Denied licenses “shall not be reissued until a licensing authority receives a certificate issued by the tax collector that the party is in good standing with respect to any and all local taxes,” the law reads.

    Golding’s records show that the Delgizzis owe the town $70,300 in property taxes from 2023 and 2024. Golding wrote in a May 9 email to the select board that the Delgizzi’s Eastham properties are currently in tax title status, and the town will move to foreclose on those properties in August if payment is not made.

    The Delgizzis are notorious tax delinquents, as the Independent has reported. Last month, the Internal Revenue Service seized two Delgizzi properties in Orleans because David Delgizzi owed over $2 million in state and federal income taxes and failed to appear in U.S. District Court. The Delgizzis owe Truro over $500,000 for their five properties there, which have all been placed in tax title.

    Records at the Barnstable County Registry of Deeds show that Eastham placed all eight of the Delgizzis’ remaining properties in town in tax-taking status in February for a total of $25,978, including interest. Two other Delgizzi condominiums on Route 6 were seized by the town in 2020 for unpaid taxes dating back to 2014.

    Those properties are duplexes, and the Delgizzis still own the adjoining units. As a result, the town has struggled to get its half of each building into habitable condition. The Delgizzis are up to date on taxes for their units in the duplexes, town records show.

    Along with the Lobster Shanty, the Delgizzis own the Lobster Pound in Orleans. That restaurant closed during the pandemic and has not reopened. Orleans Treasurer-Collector Scott Walker told the Independent last summer that the Delgizzis stopped paying their property taxes after the restaurant closed. Yet town officials said they were aware of people living inside the restaurant, which has no bedrooms.

    “It’s strange, because they used to focus a lot of attention on their restaurants,” Eastham Town Manager Jacqui Beebe told the Independent. Beebe added that there’s still the possibility the Delgizzis might pay up. In 2019, they paid the town $130,000 for years of unpaid property taxes, she said.

    At the same time that the Delgizzis have had some of their properties seized for unpaid taxes, they continue to acquire more. Two weeks ago, they purchased a $900,000 home at 52 Baker Road in Brewster, a May 21 deed shows.

    The Delgizzis bought three other Brewster properties in 2019 and 2020. That was around the same time that Eastham took the two duplexes on Route 6, and Truro took the Delgizzis to housing court over living conditions at the 35-unit Truro Motor Inn.

    The Delgizzis did not respond to requests for comment on this story. A call to the Lobster Shanty disconnected; an online entry for the Lobster Shanty reads “permanently closed.”

    TAX RELIEF

    Taxation Aid Committee Makes Applying Easier

    Truro fund could help more than the 5 or 6 who apply each year

    By

    TRURO — The town’s taxation aid committee has begun accepting applications from residents who need help paying their property taxes this year — and, working with the town’s finance office, it has streamlined the process to reduce the paperwork and effort required. The town has also adopted a new rule that can compound the available aid.

    Applications for aid will be accepted through the end of January.

    The committee manages both donations to and distributions from the Truro Aid to the Elderly and Disabled Taxation Fund, which offers qualified residents a reprieve of about one-quarter of their property tax bills. The committee generally has five or six applicants each year — but it could help more, according to member Jennifer Shannon.

    Like other Cape Cod towns with similar programs, Truro’s fund has parameters. Applicants must be at least 65 years old as of July 1, 2022 and have a maximum income of $48,000 for individuals and $60,000 for married couples. Residents receiving federal disability aid or who are unable to work because of illness or accident also qualify.

    Shannon added that there is relief available for others facing immediate financial strain, for example, because of a medical emergency, even if they are not elderly or disabled.

    This year, applicants for taxation aid are required to apply for a residential exemption. This policy, enabled by state law for municipalities that choose to adopt it, reduces property taxes for year-round residents and those whose primary residence is in Truro. There are no income requirements.

    Alex Lessin, the Truro finance director who also serves on the taxation aid committee, sees efficiencies here, as the program is administered by the board of assessors and the required documentation is the same as for the taxation aid application. Lessin said this new requirement ensures that residents get all the aid they’re qualified for.

    Applicants do not need to qualify for the residential exemption in order to receive funding from the Elderly and Disabled Fund: “They just need to show that they’ve tried,” Lessin said.

    The town has taken other extraneous paperwork off the table. For example, since an inventory of high-value possessions and investments is available on other required documents like tax returns, applicants no longer need to fill out separate forms with this information. “We’re trying to reduce the paperwork burden,” Lessin said.

    Also, according to Lessin, the assessors are responsible for approving several other tax exemptions, such as those for blind people and certain categories of veterans. If people have already applied for these exemptions, they won’t have to duplicate income information paperwork to tap into the fund.

    As of Nov. 28, there was $10,678.67 in the Elderly and Disabled Taxation Fund. Twenty-one Truro households had donated a total of $1,380.70 for fiscal year 2023 at that point.

    The goal is to give out at least half of the fund every fiscal year, and keep the rest in reserve, Lessin said.

    Applications for aid from the fund are available at town hall, the Truro Public Library, the community center, and online. All information gathered by the committee is kept confidential. The third member of the group, in addition to Shannon and Lessin, is Barbara B. Wood.

    Both Lessin and Shannon said that the only reason applicants would be rejected is if they did not meet income eligibility requirements. “Generally speaking, it’s because they’re over the income qualification,” said Lessin, “or because they’re unable to furnish any kind of evidence of income.”

    Both Wellfleet and Eastham offer similar aid programs. In Wellfleet, applications for fiscal 2023 were due in July and are not yet open for next year. Residents over 55 with an income below $42,000 if single or below $55,000 if married were eligible. In Eastham, applicants must be over 55 or disabled, with an income under $35,000 if single or under $45,000 if married.

    While these town taxation aid committees provide assistance only to elderly and disabled residents within income limits, there are other programs available to help other residents with their taxes. The Community Action Committee of Cape Cod & Islands, a branch of the Mass. Association for Community Action, offers help accessing services and benefits to all Cape residents who earn less than $57,000.

    The Truro Taxation Aid Committee is also looking to fill a vacancy. The ideal candidate would be a certified public accountant with tax preparation experience, Lessin said, although any applicant will be considered.

    TAXES

    Part-Time Residents Say Tax Exemption Policy Is Unfair

    Once again, it’s time to talk about the residential tax exemption

    By

    PROVINCETOWN — “We just all want to be treated fairly,” said Patricia Miller during the open comment segment of the Provincetown select board meeting on July 12. Miller, who is president of the Provincetown Part-Time Resident Taxpayers Association (PPRTA), was objecting to the residential tax exemption (RTE) in Provincetown, which offers year-round resident home owners a property tax benefit, while increasing the property tax paid by others.

    The policy is unpopular with part-time residents who object to paying more based on their status. The RTE doesn’t distinguish between a year-round resident who “actually needs a tax break” and one who could afford to pay, Miller said.

    The effect of the RTE is weighted, however, with the greatest benefit going to those with the least valuable properties. The formula is complicated, and many residents — and even town officials — don’t understand how it works.

    The exemption isn’t automatic. Full-time residents must apply for the benefit, and not all do.

    The RTE is revenue neutral, that is, it doesn’t change the total amount of property taxes collected by the town. This means that home owners who don’t get an exemption, including part-time residents, must pay more. To make up for the lost revenue, the overall tax rate goes up.

    Provincetown’s property tax rate for fiscal 2021 was $7.08 per thousand. Without the RTE, it would have been $6.77. The exemption amount for that year was $175,221 — which is 25 percent of the average value of all residential properties. Under Massachusetts state law, the RTE can be set as high as 35 percent.

    According to the Mass. Dept. of Revenue’s Division of Local Services, the RTE “shifts the tax burden within the residential class from owners of moderately valued residential properties to the owners of vacation homes, higher valued homes, and residential properties not occupied by the owner.”

    Although several people spoke on the RTE during the open comments section of the select board meeting, it was not actually an agenda item. “It was a part of our packet the meeting before,” said board member Louise Venden, and came out of a discussion about town goals.

    But the RTE was “not something being presented for the select board to review” at the July 12 meeting, said Venden.

    The official tax classification hearing by the select board will be on Aug. 23, said Principal Assessor Scott Fahle. Each year, the select board must vote on whether to adopt the RTE and, if so, at what percentage.

    Sixteen municipalities in Massachusetts have adopted the RTE, including Truro and Wellfleet.

    The PPRTA opposes the RTE, arguing that part-timers already pay nearly 85 percent of residential property taxes. “They pay more taxes because the total value of real estate owned by nonresidents” is so much greater — “85 percent,” said Venden in rebuttal.

    Venden plans to request an analysis showing how many homes of residents and nonresidents are valued within certain ranges, she said. “I think it will be revealing and clearly show why nonresident taxpayers pay 85 percent of the taxes,” said Venden.

    As of 2019, only 28.6 percent of Provincetown homes were owned and lived in by year-round residents, while 59.6 percent were owned by seasonal residents, according to the Cape Cod Commission. During the select board meeting, the PPRTA’s Miller spoke about the “division” created by the RTE, “pitting neighbors against neighbors.”

    According to its website, the PPRTA is a “volunteer-run organization of concerned taxpayers” offering membership levels ranging from $35 for individuals to $1,000+ for patrons. Separate from membership on the website is a donor list, sorted into tiers by amount. One of the part-time residents and Provincetown taxpayers who spoke during the public comment portion of the select board meeting is a patron of the group, having made a donation of at least $1,000, and several other speakers are “friends” of PPRTA — having donated between $200 and $499.

    The difference that the RTE makes in the taxes paid by nonresidents is modest. Last year, as noted above, it was 31 cents per thousand dollars of valuation. So the owner of a house valued at $500,000 paid an extra $155 in property tax last year under the RTE. The owner of a million-dollar house paid an extra $310.

    Venden, too, sees division in the community, but the solution, she said, isn’t just to do away with the RTE.

    “There is a growing divide here, as there has been in the country, between rich and poor,” she said, but “as a community, we have a lot of money,” and that can be used to find solutions.

    Much of that money is held by nonresident taxpayers, and “they should have a place at the table,” said Venden, who’s in favor of allowing them to serve on the finance committee, an idea that Town Moderator Mary-Jo Avellar has opposed.

    A criticism of the RTE is that it doesn’t create affordable housing. But the value of the RTE “is not to create more housing,” said Venden. Rather, it’s meant to “help preserve modestly-priced housing.”

    A nonresident home owner in Provincetown for 15 years before moving here full-time, Venden said the additional cost to nonresident taxpayers is “not a lot of money. It’s not taxation without representation. It is simply preserving the homes and dwelling places of people who have more modestly priced homes here.”

    The bottom line for Venden: “The RTE is not unfair and it does have a purpose” — and she’s in favor of leaving it where it is at 25 percent — not increasing the exemption amount.

    TAXES

    3 Towns Consider Raising Short-Term Rental Tax Rate

    But few decisions are made on how to spend the money

    By

    Town meeting voters this spring in Truro, Wellfleet, and Eastham will be asked to raise the short-term rental tax rate from 4 to 6 percent, to maximize what state law allows towns to collect on vacation home rentals.

    Provincetown is currently the only Outer Cape town that charges the maximum 6 percent. In one year, Provincetown accrued $1.7 million in new revenue from short-term rentals. Even at 4 percent and even in a pandemic, the other three towns also did well. Truro will get close to an additional $600,000, Wellfleet almost $700,000, and Eastham almost $800,000, according to the state Dept. of Revenue.

    Though housing advocates and legislators are urging officials to earmark much of that money towards housing, Truro is the only town so far that has proposed a specific housing-related use for it.

    “If the select boards and finance committee cannot find a way to take a certain percentage of that money and devote it to affordable housing, it is a huge missed opportunity,” said state Rep. Sarah Peake of Provincetown. “This is millions and millions of dollars coming directly back to the communities as the result of people who vacation here.”

    Jay Coburn, CEO of the Community Development Partnership, said 50 percent should go to housing.

    “I don’t understand why every single town isn’t doing that,” Coburn said. “Why aren’t we using that money now?”

    “This crisis is so severe, we need multiple revenue streams, and we need multi-million-dollar investments,” said state Sen. Julian Cyr of Truro.

    Provincetown: 13% for Housing

    The select board got into the nitty-gritty of how much of the town’s short-term rental revenue should go to housing on May 10. The latest proposal from town officials puts 13 percent into housing, or about $416,000. The rest of the anticipated $3.2 million would go to the tourism fund, capital stabilization, wastewater infrastructure, and the general fund.

    Select board member Louise Venden asked why so much (26 percent, or $832,000) is for the general fund. Town Manager Alex Morse said nearly $600,000 from the general fund pays the mortgage on Harbor Hill, a market-rate rental housing project. No decisions were made that night.

    The nonprofit Housing Assistance Corporation’s CEO Alisa Magnotta said taxpayers should be alarmed if select boards aren’t setting aside money to help year-rounders stay here.

    “Once it starts going into the general funds, it will be really hard to pull it back,” she said.

    Truro: 33% for Housing

    Truro town officials had worried that the new short-term rental tax, which went into effect in July 2019, would deter vacationers. Instead, rental demand and real estate sales skyrocketed. Even with newly hired Truro Town Manager Darrin Tangeman’s $172,000 salary, he is unable to get financing for a house in town, he said.

    So, along with the 6-percent tax rate article, Truro voters on June 26 will be asked to create a housing stabilization fund. The fund would get 33 percent of the revenue from the short-term rental tax. The money would be spent on housing projects approved by town meeting. The proposed stabilization fund differs from a housing trust, from which trustees can authorize spending without town meeting approval, Tangeman said.

    Any more than 33 percent, Tangeman said, would cut into what the town used last year to offset budget shortfalls.

    Eastham: No Decision

    The Eastham Select Board remains uncommitted.

    “It will be used for attainable housing, but we are waiting to decide on the most impactful use,” board chair Jamie Demetri said.

    Rich Bienvenue, Eastham’s assistant town administrator, said that so far Eastham has used the short-term rental tax for capital projects and budget reserves. Currently, the town has only an AA+ bond rating and Bienvenue said increasing reserves will help the town achieve a AAA bond rating.

    The extra 2 percent would give Eastham at least another $300,000, he said.

    Wellfleet: Transfer Fee?

    Town officials have been caught in a crisis trying to prepare for the June 26 town meeting. Both the town accountant and town administrator resigned, and officials are struggling to put together a budget. There has been no decision about what to do with the short-term tax revenue — either what has come in so far or future receipts, said Harry Terkanian, a member of the Wellfleet Housing Trust and a volunteer now helping to prepare the warrant in the absence of town leadership. Raising the tax by 2 percent would bring in an additional $375,000, according to the Wellfleet draft town meeting warrant.

    At the same time, the select board is considering a real estate transfer fee, which could put many thousands of dollars toward year-round housing each year. The article, proposed by board member Ryan Curley, would impose a fee of ½, 1, or 2 percent, still undecided by the select board.

    Select board member Ryan Curley at the Wellfleet Shellfish Farmers Market. He has written a home-rule petition that would add a transfer fee to real estate sales for a housing fund. (Photo K.C. Myers)

    State Rep. Sarah Peake said she has asked the state legislature to approve a home rule petition for a ½-percent real estate transfer fee in Provincetown ever since she was first elected to the House in 2007. Provincetown voters have approved the idea repeatedly, but opposition on Beacon Hill is strong, particularly from the Mass. Association of Realtors. CEO Theresa Hatton told the Statehouse News Service that transfer taxes are “not good policy” because they ask one specific buyer or seller “to take care of the common good.”

    Curley, however, said he thinks the tide may be turning. Boston, Nantucket, Truro, Provincetown, Somerville, and Brookline have submitted home rule petitions to link transfer fees to housing, according to the Statehouse News Service.

    “Boston asking for it changes the playing field,” Curley said, adding when Airbnb infiltrated mainstream communities, suddenly Boston lawmakers saw the wisdom of a short-term rental tax.

    In Wellfleet, where just 1.9 percent of the housing stock is officially affordable, Curley’s proposal could raise real money. Based on 2020 home sales, a ½-percent fee would generate $237,247 a year if applied to sales over $500,000. (That is, if a home sold for $600,000, the fee would be ½ percent of $100,000.)

    Curley is waiting for more input from his fellow board members, which he hopes will happen in time to put the article before voters June 26. Chances of getting the required legislation through the State House, however, remain virtually nonexistent, according to Peake.

    TOWN HALL

    Resident Tax Exemption Causes Friction on Eastham Select Board

    Seeking ways to increase revenue and keep town affordable

    By

    EASTHAM — The select board began its annual deliberations on whether to adopt a residential tax exemption for the next fiscal year at its Monday, Dec. 7 meeting, and division on the board was quickly apparent.

    Board member Arthur Autorino, tasked with reviewing prior board discussions of the tax exemption option, noted that “the word fairness never came up.”

    The residential tax exemption is considered revenue neutral: the valuations of properties owned by “domiciled” residents are reduced by a fixed amount, which results in a higher tax rate for all properties.

    “I don’t know if any one of you has ever paid taxes as a nonresident,” Autorino said.

    “No, because I don’t own a second home,” replied chair Jamie Demetri.

    “I couldn’t vote,” Autorino continued. “I couldn’t be on any town committee. If I wanted to go to a town meeting, I had to sit in a separate room or sit in the bleachers.”

    “It really is a choice, Art, whether you live in town or not — to be a resident and participate,” said vice chair Aimee Eckman. “So, the taxation without representation idea doesn’t really fly with me.”

    Nonresidents can and do serve on committees, noted Eckman. They just can’t serve on regulatory boards. Eckman said her nonresident friends are happy the town has good infrastructure and schools, so their homes are safe when they’re not here.

    Demetri shared a recollection of a trip she made to Nantucket, where she watched who was arriving on the first ferry on Monday morning. “It was construction workers,” she said. “It was painters, and it was plumbers. People with lunch boxes. They’re the people who keep a community going, and they had to be boated in on Monday morning because they can’t afford to live there. And I remember thinking to myself, as long as I’m on this board that won’t be Eastham.”

    “I agree,” said Autorino.

    The select board had previously set a policy of triggering a residential tax exemption when the ratio of resident home owners to nonresident home owners reached 40 to 60 percent. Finance Director Rich Bienvenue said that the ratio was 52 to 48 percent when the board set that policy, and it’s probably about 55 to 45 now. “It’s not really moving in the direction you think it would go,” said Bienvenue.

    The residential tax exemption would not generate additional revenue for the town. But Bienvenue brought up the community impact fee, which is allowed under short-term rental legislation. The fee could amount to “three percent of the total amount of rent upon each transfer of occupancy of a professionally managed unit that is located within that city or town.”

    “We have a situation,” said Bienvenue, “where we have 1,100 or so properties contributing to short-term rental taxes, and a good portion of those are owned by corporate interests.” The impact fee could be charged in addition to the four percent in local taxes the town currently receives on short-term rentals.

    Town Administrator Jacqui Beebe said on Tuesday that, during Monday’s discussion, they were considering applying the community impact fee to owners of three or more units in town. She noted that the law actually allows towns to levy the fee on owners of more than one property, but she wasn’t sure citizens would want to institute the policy on those owners.

    She stressed that Monday’s discussion was preliminary, and that the select board would place the residential tax exemption on the agenda for its first or second meeting in January.

     

     

    LET'S GET FISCAL

    Tax Rates Set in 3 Towns

    By

    Three of four Outer Cape towns have set their fiscal year 2021 tax rates; Provincetown and Eastham taxpayers face 7-percent and 5-percent increases, respectively, while Truro’s rate is just slightly higher than last year’s.

    Truro mailed out tax bills on Oct. 9, with the 2021 rates set at $7.38 per thousand for residential property and $7.12 for commercial, industrial, and personal property. The 2020 rates were $7.33 residential and $7.07 commercial.

    Eastham expects to mail tax bills on Oct 22. The town’s 2021 rate of $9.18 per thousand for all classes of property represents an increase of 5.27 percent over last year’s rate of $8.72.

    Provincetown Principal Assessor Scott Fahle said he expects tax bills to go out on Nov. 1. This year’s residential tax rate is $7.08, up 6.95 percent; the commercial, industrial, and personal property tax rate is $6.77, up 7.12 percent.

    Wellfleet’s tax bill mailing has been delayed not just by Covid-19 but also by the dismissal of the town accountant on Sept 22. Wellfleet has “borrowed” Eastham Finance Director Rich Bienvenue to help set the tax rate.

    “He’s doing a fantastic job, getting the last bits and pieces for our tax rate filing,” said Town Administrator Maria Broadbent.

    Wellfleet Assessor Nancy Vail said Monday that she expected the tax rate to be set in about two weeks. Then it would be about another two weeks before tax bills were mailed.

    Tax payments are due 30 days from the date postmarked on the bill. —Linda Culhane

    CANNABIS

    Pots of Cash Expected After Curaleaf Opens

    It’s cash only at most such shops, raising safety concerns

    By

    PROVINCETOWN — When Curaleaf opens the first recreational marijuana store on Cape Cod at 170 Commercial St. — perhaps next Wednesday, Jan. 29 — it will be a cash-only business. Possibly a lot of cash.

    “Curaleaf cannot comment on revenue projections or the handling of cash revenue,” company spokesman Casey Sherman said this week.

    But the numbers from other cannabis stores already open in Massachusetts suggest that the Provincetown shop could be pulling in as much as $90,000 a day.

    Curaleaf, whose majority stakeholders are Russian oligarchs, is expected to receive its annual business license from the town on Jan. 28 and plans to hold a “soft opening” the following day, according to Assistant Town Manager David Gardner. A more formal opening will be in early February.

    The state requires all marijuana stores to have strict security plans because they deal in such large amounts of cash. Gardner would not discuss details of Curaleaf’s security plan.

    Elsewhere in the state pot revenues have been strong. New England Treatment Access (NETA), which opened the first recreational pot shop in the state in November 2018, produced $2.09 million in tax revenue for its host city of Northampton in 2019, according to the mayor’s office. Since Northampton’s cannabis tax and impact fee are six percent of gross sales (like Provincetown’s), that means NETA’s gross sales were $34.8 million in 2019 — or about $95,000 a day.

    The Northampton pot shop, however, was one of the first two in the state. And it is located in a college town on a major interstate highway — not in a small town at the tip of Cape Cod. Location matters. Cultivate Holdings in the Worcester suburb of Leicester opened the same day as NETA in Northampton. Leicester’s pot tax receipts for the first quarter of 2019 were $193,328.26, a town official told the Springfield Republican. For the same period, Northampton collected $737,331.40 from NETA’s sales.

    Closer to Cape Cod, Wareham collected $1.5 million in taxes from the Verilife store for its first full year of operation, said John Foster, Wareham’s finance director.

    “So that’s a good amount,” he said, noting that the town budget is $80 million.

    When it first opened, the Wareham store attracted so many shoppers that a shuttle bus had to transport people from off-site parking, he said. Now the shuttle is no longer necessary; people can find parking right on Main Street.

    “I don’t even notice it anymore,” Foster said.

    In Provincetown, Curaleaf predicted up to 250 customers a day, according to plans submitted to the planning board. Karen Nash, a Provincetown resident who has a host community agreement to open a dispensary here, said that’s got to be a low projection. The Cannabis Control Commission reported the average sale per person is about $40 statewide. That would come to at most $10,000 per day in gross sales.

    “A company as big as Curaleaf would never come to Provincetown” for that amount of sales, said Nash.

    Nash said her market research showed that 22 percent of Americans use marijuana. Based on that, she estimated that Provincetown would generate $30 million to $35 million in sales, enough to support six cannabis shops, she said. That’s a lot of money in a town where the entire lodging industry brings in $38 million a year, according to the tourism department.

    Follow the Money

    Whatever amount Provincetown generates in pot sales, it will all be cash. No credit or debit cards are accepted at most cannabis shops — although CanPay, a new debit app, is available at some. Most banks are reluctant to get into the weed business.

    Only three banks in Massachusetts currently work with cannabis companies — not enough to handle the 466 marijuana businesses awaiting licensing in Massachusetts, Cannabis Control Commission Chairman Steven Hoffman told the Republican in November.

    The GFA Federal Credit Union in Gardner accounts for about 50 percent of the business; the others are Century Bank of Medford and Baycoast Bank in Swansea, said Michael Fee, a Truro- and Boston-based attorney who represents the local High Dune Craft Cooperative. Curaleaf’s Casey Sherman declined to say which bank the company uses.

    Because marijuana is still illegal under federal law, bankers must contend with onerous federal statutes to prevent money laundering, Fee said. Violations entail stiff penalties.

    “It takes banks lots of time and it’s costly,” Fee said.

    The Mass. Cannabis Control Commission, American Bankers Association, and the marijuana industry are pushing to make it easier for banks to work with marijuana businesses. Some bankers cite security as the rationale.

    In July, Joanne Sherwood, chair of the Colorado Bankers Association, urged passage of the SAFE Banking Act in Senate testimony to make it easier for banks to handle marijuana money. (The bill has passed the U.S. House but is not likely to clear the Senate anytime soon, Fee said.)

    Sherwood said in Colorado, with limited access to banking services, “large amounts of cash remain onsite in many of the cannabis-related businesses, which creates significant safety concerns…. On average, more than 100 burglaries occur at cannabis businesses each year in Denver.”

    Tina Sbrega, CEO of GFA Credit Union, told the Worcester Business Journal in 2018 she was going to do business with marijuana companies out of concern for public safety. She said when Colorado first legalized cannabis, cash was stored in warehouses. Eventually, businesses even began to bury their cash.

    Since then, a lot of small banks in Colorado have gotten into the game, Fee said. They are more nimble and willing to take risks. They have figured out how to monitor their deposits to watch for money laundering, he added.

    Provincetown will soon see how all this plays out. Along with lots of cash, there may be a perennial line of customers snaking down Commercial Street.

    “They are the first to open on the Cape, but it is also February, so we don’t know what their crowds will be like,” Gardner said. “But we are prepared to react to large crowds if necessary.”

    Silence on Subpoenas 

    Back in October town administrators from all over the state were subpoenaed by U.S. Attorney Andrew Lelling, who wanted to see all their records related to host community agreements with marijuana businesses.

    Provincetown, Wellfleet, and Eastham town administrators all received subpoenas ordering them to produce documents, emails, and any other correspondence associated with the agreements. Months after complying with the order, the administrators still don’t know the reason for the court’s order, nor have they had received any follow-up information.

    “Not a peep,” said Jacqueline Beebe, Eastham town administrator.

    U.S. attorney spokeswoman Elizabeth McCarthy said Friday her office cannot comment.

    It’s widely believed that the subpoenas have to do with corruption investigations related to the Sept. 6 arrest of Jasiel F. Correia II, the mayor of Fall River, whom the U.S. Dept. of Justice has charged with “extorting marijuana vendors for hundreds of thousands of dollars in bribes,” according to the U.S. attorney. Lelling’s office alleges Correia, 27, accepted bribes from marijuana companies ranging from $100,000 to $250,000 in cash in exchange for host agreements.

    Correia’s trial is now scheduled for May 4, McCarthy said.

    Provincetown, Truro, Wellfleet, and Eastham select boards all have signed host community agreements. Truro, which was not subpoenaed, has a host agreement with the High Dune Craft Cooperative, a group of local farmers who wish to grow marijuana in Truro and Wellfleet. So far, only Curaleaf is fully licensed by the state on the Outer Cape. 

     

     

     

    ECONOMY

    Outer Cape Sees Boom in Rooms Tax Receipts

    First full quarter of ‘weekly tax’ brings in an extra $1 million

    By

    PROVINCETOWN — After a year of commotion and confusion, the expansion of the rooms occupancy tax to cover short-term rentals is beginning to produce its intended dividends. In the first full quarter for which the tax was in effect, that is, August, September, and October 2019, the tax added just under $1 million in revenue for the four Outer Cape towns.

    Rooms tax receipt tableYears of debate in town meetings and the state legislature preceded the change; the final version was signed by Gov. Charlie Baker on Dec. 31, 2018, and the bill took effect the next day: all rentals beginning after July 1, 2019 had to pay the state’s 5.7-percent rooms tax, as well as any local-option taxes that municipalities levied.

    Provincetown had long ago established a 6-percent local-option rooms tax, while Truro, Wellfleet, and Eastham all set the rate at 4 percent. In addition, Cape and Islands towns had a mandatory add-on of 2.75 percent for water pollution abatement.

    In addition to concerns about the effect of the hefty tax increase on visitors, there were logistical challenges: who would collect the tax, and on what schedule would it be paid to the state. Airbnb’s host forums show nearly an entire year of confusion for hosts in Massachusetts.

    The first full quarter for which the short-term rental tax was in effect was the second quarter of fiscal year 2020, which corresponds to rentals during August, September, and October 2019, said Tony Fuccillo, Provincetown’s tourism director.  (For clarity, this is referred to as Aug-Sept-Oct 2019 in the accompanying charts.) In those three months alone, the rooms tax payments to the towns went up half a million dollars in Provincetown; nearly $200,000 in Eastham; $167,000 in Wellfleet; and $121,000 in Truro. That’s just under a million in new tax money for the four towns for one quarter.
    The second quarter usually accounts for just under half of the year’s total rooms tax receipts. The May-June-July quarter accounts for most of the other half, with the other six months contributing 10 percent or less of the total in all four towns. If the weekly tax has a similar impact on the May-June-July quarter, Provincetown could be looking at a million dollars in new revenue from the tax in calendar year 2020. Eastham could see $400,000; Wellfleet, $300,000; and Truro, $250,000.

    Rooms tax receipts chartWellfleet, Truro, and Eastham all direct rooms tax revenue into their general funds, according to officials in the three towns. Eastham’s select board and administration have already decided to direct the new revenue into town reserves and future capital projects, according to Michael Lorenco, finance director and assistant town manager.

    Provincetown splits the revenue from the rooms tax four ways: 35 percent to the tourism fund, 27 percent to the general fund, 25 percent to the fund that supports long-term capital projects, and 13 percent to the sewer fund. The town manager’s budget proposal for the next fiscal year mentions options for the new revenue from weekly taxes. It’s possible to preserve the existing formula untouched, explained Assistant Town Manager David Gardner in an interview; it’s possible to adjust the formula so that each of the four funds gets some of the new money and some goes to a fifth or sixth priority, such as the Affordable Housing Trust or the Market-Rate Rental Trust. It’s also possible to adjust the formula so that all the new money goes to new priorities.

    “There is a general principle in town finance to try to have some kind of logical nexus between a given tax and the way that money is spent,” said Gardner. “Since weekly rentals do remove housing from the market, there is a certain logic to using weekly rental tax money to help address the housing situation.”

    Ultimately, the decision will go to the select board and to voters who instituted these taxes in the first place, Gardner said. “This is a discussion that everyone in town, including the select board and town meeting, is going to have to have,” he said.

    ECONOMY

    Short-term Rental Tax Nets $672K in New Revenue

    Receipts show it was a very good year for tourism

    By

    PROVINCETOWN — The rooms occupancy tax and the meals tax draw attention every year for two reasons — they are a reliable indicator of how the tourist industry is doing, and they also are actual tax revenue that support local programs. Normally, what these numbers show about the underlying economy is the more important consideration. If an entire industry is up four percent or down two percent, that’s a big deal; if an annual allocation to a municipal rainy-day fund is up four percent or down two percent, that’s of somewhat less significance.

    The tax numbers that town government released last week, however, are important in both respects.

    Short-term rentals
    Short-term rentals have given 2019 tax revenue a huge boost, reflected in numbers for 2020. (Chart: Town of Provincetown)

    Restaurants had a strong year, up seven percent in the first quarter and five percent in the second quarter compared to 2018. These are some of the best numbers for restaurants in a while, and they probably mean the rest of the tourism sector had a pretty good 2019 as well.

    On the other hand, the rooms tax, now that it has been expanded to include short-term rentals on platforms like Airbnb and HomeAway, brought in half a million dollars in new tax revenue in just one quarter. And because the underlying rules have changed, it’s the tax receipts themselves and not the health of the hospitality industry in general that are the story.

    The rooms tax was expanded to include short-term rentals effective July 1, 2019. The town of Provincetown had voted for this change at every spring town meeting between 2010 and 2018, but on Dec. 28, 2018, Gov. Charlie Baker finally signed the legislation that turned it into law. Because the tax took effect July 1, the May-June-July quarter of 2019 included only one month with the expanded tax. That quarter saw tax receipts go up by $160,000.

    The next quarter, the August-September-October quarter, was the first with the tax fully in place, and tax receipts went up by $512,000, or 49.6 percent.

    The next two quarters of the fiscal year correspond to November-December-January, and February-March-April, and historically see very little income from rooms tax. However, the two quarters that have already passed have produced $672,000 of extra tax revenue between them, and the expanded tax was in effect for only four out of those six months. For the coming year in which all 12 months have the expanded tax, $672,000 in extra revenue would probably be on the low end.

    The rooms tax revenue is used four different ways in Provincetown: 35 percent is earmarked for the tourism fund and used to support a range of direct marketing for the town; 27 percent goes into the general fund; 25 percent goes into the rainy-day fund; and 13 percent goes into the wastewater enterprise, or sewer, fund. For the last five years, total room tax receipts for the year have averaged about $2.1 million, and that money has been split according to those percentages. If an expanded rooms tax were to generate consistently greater revenue, that would mean more money moving into these four funds.

    “We have asked the state dept. of revenue to break out the rooms tax for us and separate the income from licensed lodgings that have historically paid this tax from the newer income that’s coming from short-term rentals,” said Provincetown Director of Tourism Tony Fuccillo. “They don’t have that breakout available yet, but they’re supposed to be working on it.”

    In the meantime, the new money from short-term rental taxes will continue to be allocated according to these formulas — which means the rainy-day fund is having a pretty sunny day.

    TAXES

    Eastham May Adopt Resident Tax Exemption

    Select board is considering new policy that assessors oppose

    By

    EASTHAM — The select board is considering making Eastham the seventh Cape Cod and Islands town to implement a residential tax exemption [RTE] that could give an estimated 90 percent of year-round residents who own their homes a break on their property tax bills.

    The RTE, which has been adopted in Provincetown, Truro, and Wellfleet, does not change the overall tax levy. That is, the amount of money raised by the town via property taxes remains the same. In order for some taxpayers to get relief, others must pay more.

    Thus nonresident property owners, who account for 52 percent of the town’s total residential parcels, along with residents who choose not to apply for the exemption, would see an increase in their tax bills.

    The idea was discussed at the Dec. 2 select board meeting with board of assessors chair Denise Kopasz and the town’s principal assessor, Belinda Eyestone.

    The four-member board of assessors voted unanimously against adopting the exemption. The other members of the board are Maureen Fagan, Joanna Buffington, and W. Davis Hobbs.

    The state offers towns the exemption as an optional tool for encouraging year-round residence. The policy is designed to make the property tax more progressive by giving the biggest benefits, proportionally, to owners of the most modest homes. Each year at a tax-classification hearing, select boards are required to decide whether to adopt it. The law allows it to range from 10 to 35 percent.

    A presentation for the select board prepared by Eyestone estimated the likely effect of adopting a 20-percent RTE on different types of residences. Wellfleet and Truro each have a 20-percent RTE; Provincetown’s is 25 percent.

    The percentage refers to the average value of class-1, single-family residential properties in the town, which in Eastham was $471,582 this year. A 20-percent RTE would allow year-round residents to exempt $94,316 (that is, 20 percent of $471,582) from their tax bills. So a resident’s $500,000 house would be taxed only on $405,684 of its value.

    The practical effect of the policy, according to Eyestone’s analysis, would be that the resident owner of a property of average value would save $438 per year, while the nonresident owner of a similar property would pay $480 more.

    In a Nov. 25 letter to the select board, the assessors wrote, “Research and feedback from other towns show that the RTE works best when 80 to 90 percent of residences are those of nonresident taxpayers. Nonresident taxpayers make up 52 percent of Eastham ownership.”

    “It can affect a lot of people,” Kopasz told the Independent. “We voted no because we wanted to keep the tax rate the same for everyone.”

    Eyestone reported that the percentage of nonresident owners in the other Outer Cape towns was significantly higher than in Eastham. She wrote that in Provincetown it was 63 percent, in Wellfleet 74 percent, and in Truro 86 percent.

    Nonresidents in those towns pay more, “but not that much,” said Town Administrator Jacqui Beebe. “It’s not as dramatic as ours would be.”

    Both Harwich and Orleans voted not to adopt the exemption earlier this year.

    “Towns are doing this for different reasons,” Eyestone told the select board. “[Resort towns] are doing it because they have a very small year-round population and they’re trying to help the people that live there year-round.”

    The board of assessors would use evidence like the census and voting lists to determine who is a resident and who is not. Those who own a second home in Eastham must pay a personal property tax as well; those who are domiciled in Eastham — that is, considered to be year-round residents — do not pay this tax.

    Because the RTE has a progressive design, the tax benefit gets smaller as the value of the property increases. The “break-even point,” according to the assessors, would be at a value of about $1,000,000, above which residents would end up paying more property tax, not less.

    “We have a tax rate that’s going to go up anyway because of the Nauset High School, Cape Cod Tech, and water project,” said Kopasz.

    “I’m still sort of torn,” select board Chair Aimee Eckman told the Independent. “Roughly 90 percent [of our residents] would get some sort of relief but the other 10 percent would not.”

    Kopasz said that residents with trusts must be both the trustee and beneficiary to qualify for the exemption. Those whose properties are owned by LLCs would not qualify. She added that residents who own multiple homes would get the exemption only for the one they claim as their year-round residence.

    “It’s a difficult decision and probably would not be implemented for several years,” Eckman said.

    Assistant Town Manager Mike Lorenco said the earliest the RTE could be adopted is to take effect in fiscal year 2022.

    “The residential tax exemption has definitely been on my radar for a long time,” select board member Jamie Rivers told the Independent. “The more I learn about it the more interesting and complicated it is.”

    Rivers said the town is looking at both the positives and negatives of the policy and when it would be best to implement it. She said she is interested in figuring out if a bylaw could be created that would trigger the exemption to go into effect once the town’s resident versus nonresident split became more pronounced, such as 35 to 65 percent, or 30 to 70 percent.

    The town offers tax relief to veterans and seniors. But Rivers said she is also interested in looking at exemptions for working people who don’t necessarily qualify as low income but also don’t make enough money to easily afford to live in town.

    “We’re taking multiple approaches,” Rivers said. “I’d rather see a more dynamic approach that has real change and hinder the town from becoming a 30-70 split [between residents and nonresidents],” she said.

    Rivers said these types of exemptions won’t dramatically change things but could be a step to help keep people in town.

    The select board asked Eyestone and Lorenco to review figures for 25-, 30-, and 35-percent tax exemptions and come back with numbers at an upcoming meeting. 

    “We want to get some more info on other ranges to see what it looks like for the town,” Eckman said.

    Town

    Total residential parcels

    Residents

    Nonresidents

    Percentage split

    Provincetown

    3,964

    1,467

    2,497

    37/63

    Truro

    3,348

    465

    2,883

    14/86

    Wellfleet

    4,479

    1,165

    3,314

    26/74

    Eastham

    6,264

    2,978

    3,286

    48/52

    Orleans

    5,387

    2,263

    3,124

    42/58

    Figure 1: This chart shows the number of parcels in each Outer Cape town and how many are split between residents and non-residents. (Source: Eastham Board of Assessors)

    ECONOMY

    How Was the Tourist Season? It’s Too Soon to Say

    Key tax data won’t be available until Dec. 30

    By

    PROVINCETOWN — The tourism industry brings about $200 million into Provincetown every year, according to Tony Fuccillo, Provincetown’s director of tourism. It’s an enormous economic engine that touches nearly everyone in town, regardless of occupation, and with most of the 2019 season in the rearview mirror, it’s common to try to assess how well the season went.

    The short answer: we don’t know yet.

    Because of the way the state handles tax revenue, there will be no information on the most important quarter of the year — the one that includes August, September, and October — until December 30. Aggregate numbers for sales tax, meals tax, and rooms tax receipts capture entire sectors of the economy more accurately than the rising or falling fortunes of an individual enterprise, and these aggregate data is mostly not available yet.

    “The state of Massachusetts allows localities to add ‘local-option’ taxes that are separate from the statewide sales tax,” Fuccillo explained. “Provincetown’s local-option meals tax and rooms tax means that the state keeps a separate tally of these two sectors for us, and then rebates that tax money back to the town at the end of each quarter.”

    That money goes to a variety of municipal funds, but along the way it offers an accurate snapshot of what was sold in town and when. These numbers consistently show that the August-October quarter is Provincetown’s most profitable. In 2018, that quarter accounted for 44 percent of the entire year’s restaurant sales, and 47 percent of its lodging receipts. The May-July quarter is close behind, with the other six months of the year contributing only 10 percent of lodging revenue and 12 percent of meals receipts.

    Restaurant revenue has been going up consistently by about 2 to 7 percent a year for the last six years, according to the data. Lodging revenue has been going up as well, but with more bumpiness — some years have seen big gains, while others have been flat or even negative.

    Restaurant scene in Provincetown
    A diner enjoying a waterfront meal in Provincetown.

    This year got off to a good start, at least. For the six months from February to July, restaurant sales were up about 5 percent over the same period in 2018. Lodging revenue was up as well, but those numbers are harder to compare because of the introduction of the short-term rental tax on July 1.

    “The tax on short-term rentals went into effect for the month of July,” said Fuccillo. “That tax money is being rolled in with the existing room tax that the licensed lodgings had already been paying. They’re paying the same tax now, and the state is reporting it to us in one big bundle. We’re gonna ask the Dept of Revenue if they can split out the numbers for us, so we could give you numbers for short-term rentals specifically, but right now we don’t have that.”

    Other Indicators 

    In the absence of tax data, there are other measures that can be used to infer how tourism is doing — but for a variety of reasons, most of them aren’t especially reliable this year. Parking revenue is often cited, but according to Provincetown Finance Director Joseé Young, “That’s not going to be a good one to use this year. Both the prices and the rules around parking changed over the winter, and you’re not going to get a valid year-over-year comparison.”

    The Cape Cod National Seashore keeps parking and traffic data for Herring Cove and Race Point, but the reconstruction of the Herring Cove parking lot wasn’t completed until July 2019, which threw off all the historical patterns.

    “This is going to surprise you, but we don’t actually charge the tour buses anything, which means we don’t actually count them at all,” said Eric Sussman, the town’s emergency manager and transportation coordinator.

    Ferry traffic, meanwhile, is exceptionally well documented — Coast Guard manifests and embarkation fees document precise numbers. The total number of passengers arriving by ferry has more than doubled in just three years: in 2016 there were just over 120,000 passengers, according to the Pier Corp.’s annual report, and in 2019 there have been 259,000. This is a staggeringly large increase for such a short period, and the town’s overall tourist economy has gone up by only 5 to 8 percent in the same period, making it somewhat unclear how exactly an increase in ferry ridership translates to the broader economy. (A good year for ferries doesn’t appear to hurt though: 2017 saw a big increase in ferry ridership, and was a great year for lodgings and a solid one for restaurants; 2019 was also a good year for ferries, which could be a good sign for the rest of town.)

    Water usage is another indicator that at least has precise numbers behind it. The tourism dept. has water usage broken down by month, including for the August-October quarter of 2019. Water usage doesn’t correlate particularly well to the broader economy, however; 2017 was a good year for lodgings and for restaurants, but water usage went down that year by 2.5 percent. And 2018 was a lousy year for lodgings and a pretty bad one for restaurants, yet water usage went up 4 percent. Water usage in 2019 has been up 2.4 percent so far, but historic data suggest that this figure is an unreliable predictor.

    What About Retail?

    The third big component of the tourist economy is the retail sector, which at around $40 million a year accounts for about the same revenue as lodgings, and about half the revenue of restaurants. It’s captured reasonably well by normal sales tax receipts, with the caveat that articles of clothing under $175 aren’t subject to sales tax — and Provincetown sells a lot of clothes.

    “The problem is the state doesn’t rebate any sales tax money to individual towns,” said Fuccillo, “so as far as the dept. of revenue is concerned, they don’t need to know where it’s collected. It’s not information they’re using. So we kind of have to beg them for it.

    “We haven’t gotten sales tax data for Provincetown for 2017 or 2018 yet, much less 2019,” Fuccillo continued. “Retail is also the most volatile sector — it can go up or down by double digits in a single year. I’m trying to get all three years’ worth of sales tax data in December, so we can fill in some of these gaps and get a better picture of how the whole town is doing.”

    Until all those tax numbers are released in December, the most one can say with real confidence is that 2019 got off to a strong start.

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