• ACK-Now has overlooked other “revenue positive” solutions. The main “poster child” for their complaints are multi-property owners and non-resident investors, even though these constitute a small fraction of the 2,000+ homeowners who do short-term rentals. Massachusetts law allows for an additional 3% “Community Impact Fee” for multi-home owners, which could increase the de facto Nantucket short-term rental tax from 6% to 9% for the 2nd or 3rd properties owned by that small segment. If an added 3% tax was levied on additional homes owned & rented, that would allow the island to continue to generate tax, all of that revenue could be directed to affordable housing, without harming everyone else and potentially reducing town revenue.
• ACK-Now cites neighborhoods such as Cato Lane, Miacomet, Finback/Grey Lady Lane, etc. Could you designate certain areas of the island as “Affordable Housing Zones” (“AHZ”). In those areas, could you dampen forces that may accelerate price increases, such as limit the purchase of 2nd homes by part-time residents as well as vacation home rentals. Subsidize home purchases?
• In any area designated as an AHZ there would have to be consideration to grandfathering existing home owners who may be unhappy that either they may be unable to pursue vacation rentals or their properties may not appreciate as elsewhere because they are in a designated AHZ. An AHZ is most effectively established in new areas of development, or if a substantial majority of owners in a neighborhood area agree to become an AHZ.
• Could the Land Bank increase transaction fees, directed towards affordable housing? Could they release limited parcels of land that may be appropriate for the establishment of affordable housing zones?
• Could a larger percentage of the new found 6% short-term rental tax proceeds go to support affordable housing?
Analysis & Observations: This is not exhaustive, but touches on pieces of analysis, anecdotal observation and assertions made by ACK-Now.
1. For the town of Nantucket, during the first 7 months of FY 2021 (July 1, 2020 to June 03, 2021) The new 6% short-term rental tax has generated 80%, or $5.67 million out of $7.12 million, of Room Occupancy Taxes, which includes tax from hotel, inn and B&B rooms. This bylaw puts this new, growing revenue at risk, potentially reducing funds that could go to affordable housing. ACK-Now has presented nothing to address what would replace this direct tax loss, in addition to the much larger indirect loss of vacationer spending on island.
2. In order to create alarm, ACK-Now circulated a highly misleading email on February 1st, 2021 stating that the Massachusetts short-term rental registry grew by 10% from June – December 2020, asserting this underlines the worrying trend of removal of housing stock to convert to short-term rentals. These numbers were wholly taken out of context to suit ACK-Now’s goals. In 2019 the MA short-term rental registry was at 0, because there was no requirement until tax became due for leases post July 2019, so compliance only began that year. 2020 was the first full year of the new short-term rental tax, thus, it was fully expected that growth in the registry would accelerate throughout 2020, as short-term rentals came into compliance. A lag in compliance is always typical when a new tax is enacted. Furthermore, if a homeowner, in particular a family that has been financially harmed during the pandemic, decides to put up their house for rent when they’re not there, it’s not removing housing from the economy. It is generating tax revenue (and vacation spending) for the town, and helping that family to keep their home.
3. Few, if any, owners who rent are aware of ACK-Now’s push and proposed restrictions, directed at a small friendly audience and Nantucket town committees, occurring in winter and in the midst of a pandemic when most part-time residents are off island. These approx. 2,200 full time and part-time resident homeowners who offer short-term rentals pay 4 taxes: a. annual Nantucket real estate & personal property taxes, b. MA 5.7% and Nantucket 6% short-term rental taxes Thus, part-time residents who conduct rentals currently bear larger taxation, with little to no representation on this issue. They deserve to be pro-actively informed and heard on an issue of such material consequence.
4. If a Nantucket Bylaw was proposed restricting hotels, B&B’s and Inns, and those owners were not informed to express their view or have a chance to defend against a harmful bylaw, there would be an uproar and likely lawsuits
5. ACK-Now asserts they have many supporters, but it’s unclear who they are, if they have a vested interest and who may be against. For example, in addition to affected homeowners, it’s unclear if the majority of real estate agents, restaurants, and other businesses dependent on tourism are aware and would be in support
6. ACK-Now tries to give comfort by saying they don’t want to eliminate short-term rentals, only restrict them. Of course, not pushing the nuclear button is a plus, but they overlook the fact that a small economic impact can have a material effect on an economy. The Great Recession of 2008/09 saw a GDP fall in the U.S., peak to trough, of only 4.3%. This caused enormous pain, especially for hourly employees and those with little savings. National unemployment grew to 11%. Real estate values fell nationally; on island the decline was 15% - 25% from 2007 to 2010.
7. ACK-Now states there are 2,200 short term rentals registered. However, the number of “active listings” appears to be under 1,000 (most homes have multiple listings with websites and real estate agencies): a. AirBnb, lists 302 (55 are single rooms, rest are hotel or single family homes) b. VRBO lists 417 (1br:4%, 2br:11%, 3br:21%, 4br:32%, 5+br:32%) c. Maury People 660 listings, not all are active. (70% are 4+br) d. J Pepper Frazier, 760 listings, not all are active (74% are 4+br)
8. The first question to be determined is how much of the housing stock has been converted to short-term rentals, and could that stock be targeted as “affordable housing?” 64%-74% of the stock are 4 bedroom or larger homes.
9. ACK-Now states 80% of the stock is owned by part-time residents. Given a resident-owner would either have to leave their home or rent out a room or auxiliary structure, it is likely that 85%+ of the available rental rooms are offered by part-time resident owners. This assumes that the number of island residents who own and rent multiple homes is a relatively small number of the 2,200 cited on the state registry.
10. Quickly looking at the data in 1, the average size of home offered is 3 to 4 bedrooms, let’s say 3.5. If for the moment, we assume 1,000 listings are active and 85% of these single family homes are owned by part-time resident owners, that equals 2,975 bedrooms, or “hotel room” equivalents, per night. An estimate of hotel, guest house and B&B rooms on island is no more than 900. Thus, ACK-Now’s proposal is putting at risk a large percentage of island short term vacation accommodation. This is supported by Town tax revenue statistics, where 80% of room occupancy taxes are coming from single family homes doing short-term rentals, 20% from hotels, inns, B&Bs.
11. Single family homes will rent at a large premium to single rooms and auxiliary structures offered by residents, thus Nantucket’s tax income derived from single family homes will likely generate the overwhelming volume of revenue, as illustrated above.
12. If we consider a 6 bedroom Eel Point property valued at $6 million. How does reducing Eel Point rental tax revenue and stopping vacationers from staying there and spending money on island help to solve the affordable housing crisis?
13. Limit to parking one vehicle: Most rentals on island often have more than 1 car staying at the property to accommodate, grandpa, an uncle, cousins or family friends. If the above Eel Point property has 6 parking spaces, how is this reasonable or why does the ordinance need to meddle with this question? There are multiple flaws with ACK-Now’s “1 Car per house” demand.
a. This represents a further deterrent to high end renters on island who rent larger homes with 4+ bedrooms that would never be considered affordable housing. Most are rented to bigger spending clients with extended friends or family. They are big spenders on island at restaurants & boutiques, and often require at least 2 cars to accommodate 8- 16 persons from multiple families. ACK-Now’s car restriction will be an irritant to highend renters, “Nantucket is too much hassle… has become anti-large family, anti-visitor.” Pushing some of them to look to Martha’s Vineyard, the Cape, Hamptons, Bar Harbor, where for an expensive weekly rental they can accommodate extended family without unique constraints.
b. Separately, there are homes at a lower price point who provide alternatives to island hotels and inns, which are more affordable on a per night per room basis. Many of these are visiting family on island and sometimes provide temporary housing for work crews coming to island for installations or repairs. Again, many of those staying, including work crews, need parking for more than 1 car or truck.
c. Would the “1 car per extended family” be extended to hotel & B&B guests to ensure fairness? “1 car per house” to all residents, whether renting or not?
d. I know of nowhere in the USA a “1 car” rule has been introduced to relieve affordable housing shortages. This appears to be at least one Trojan Horse of a sponsor’s irritation with summer traffic. We all share the summer traffic irritation. But there is no justification to use affordable housing as a cudgel to justify this wholly unrelated remedy
14. There are six anecdotal examples of big sales price increases in ACK-Now’s presentation, but many of those would not be “affordable housing.” Two had private swimming pools, most appeared to be 4+ bedrooms, two of six were priced above $2 million. Should “affordable housing” include properties valued over $3 million? $2 million? If these would not be affordable housing remedies, should they be included in rental restrictions and risk to Town revenue?
15. Minimum of 2 people per bedroom: there are many large homes finished to a high standard where there are 2 sets of bunkbeds in a living room sized bedroom. What is the need to micromanage bedroom occupancy? How does this improve affordability on island?
16. Minimum one week stay: Why is this needed September to May, when there is little demand for one week stays, harming tax revenue, island merchant income and employment at a slower time? The rental demand during this period is for 3, 4 day weekends, weddings. If homes hit their 45 day cap July-August, they will not be able to offer accommodation during the other 10 months of the year. ACK-Now responded during a Finance Committee meeting that there is no need during the shoulder season anyway, so it shouldn’t matter. Not true. Our shoulder season rentals have grown in recent years from 5 days September through May to more than 20 days in recent years. Why stop it when traffic is of no issue, density is low and islanders need business?
17. ACK-Now is correct when it states demand jumped for self-contained, single family house rentals during the pandemic, but that’s not the fault of homeowners or investors. This occurred not just in Nantucket, but nationally, and likely saved many Nantucket businesses last summer. As reported in the news, during the pandemic there was a jump in demand for home rentals globally as they provided a safe alternative to mixing with groups of unknown persons in large congregate settings such as hotels, Inns or B&B’s. This is also reflected in the demand for this upcoming summer when the timing of the rollout of vaccines is still questionable.
18. Why the anti part-time resident bias? The majority of businesses around the nation and on island, large and small, have non-resident owners, from Walmart, to Rite-Aid, to hotels, shops, restaurants, and car rental agencies, all of whom provide valuable services and employment to locals. Furthermore, many iconic long-term Nantucket businesses have non-resident owners. Non-resident ownership: i. Marine Home Center (owned by Intercontinental in Boston) ii. Stop & Shop iii. Nantucket Boat Basin iv. Nantucket Hotel & Resort v. The Wauwinet vi. Jared Coffin House vii. The White Elephant viii. The Summer House … and many others The measure of a business to a town, especially one centering on tourism, should be the value it delivers to its customers, the employment and revenues generated for the town, both via direct taxation, and the spending on island by vacationers.
19. ACK-Now asserts “The bulk of rental income is going off-island.” The opposite is true. Short-term rental homeowners are the de facto primary importers of revenue & Income to Nantucket, as they offer the majority of island accommodation, 3X to 6X what is offered by hotels, B&B’s and Inns. The bulk of homeowner rental income is used to pay their mortgage, home insurance, Nantucket annual real estate and personal property tax, MA & Nantucket short term rental taxes, Wannacomet Water, Nantucket/Yates propane, landscapers, tradesmen, rubbish removal, caretakers and cleaners, etc. Then, the families to whom they rent spend money on airline and ferry companies, souvenir shops, clothing boutiques, island restaurants, taxis, bike & car rentals, coffee shops, stores, pharmacies, food stores, etc.
20. ACK-Now asserts home rentals are “Unregulated businesses operating in residentially zoned districts.” a. S-T rentals are dramatically different in the number of guests, facilities and volume of turnover compared to Inns and B&B’s.
21. In ACK-Now’s presentation, all home owner types are bundled and restricted in equal measure, families who have owned 1 home for decades, those who own many, investment companies, vacations clubs, etc. Remedies are not tailored to different categories. It’s a “one size harms all” approach.
22. ACK-Now highlights what have historically been affordable, long term residential areas such as Cato Lane, Lover’s Land, Miacomet, roads off Bartlett Road, Beach plum village. But they are proposing targeting and restricting rentals everywhere. If these are designated “affordable” zones which are suffering rapid gentrification, why not focus efforts there?
23. ACK-Now cites police reports of unruly behavior. This is anecdotal and it’s unclear how prevalent it is. I have never had one police report in 8 years of rentals. Police reports should have implications, resulting in fines or loss of license if there are repeat infractions, but anecdotal observation should not be the basis of broad legislation.
24. A 45 day limit would harm many part-time resident owners. We typically stay in our home 4-6 weeks per year, but our average rental days in recent years has been 70-80 days, which covers costs and earns a slight return.
25. “Learning from other communities”, ACK-Now cites NYC, Hawaii, California, AZ and The Hamptons as examples. Many of these are not relevant, they either have broadly diversified economies, larger land masses and multiple, dense hotel, resort and time share complexes. The Hamptons are also not directly comparable, being predominantly a wealthy commuter suburb for those from New York City, dependent on NYC’s diversified business base. Hawaii is characterized by large multi-building hotel resorts and time shares, anathema to Nantucket.
26. The most relevant location is Martha’s Vineyard, however, there are distinct differences in density and cape access that have to be considered. Though it does makes sense for a reach out between Nantucket Town representatives and similar towns on how to address housing affordability and regulation of the short-term rental market. Other island or remote communities similar to Nantucket (ski towns like Aspen?) should be identified and share ideas.
27. ACK-Now states they have a lot of support, including by impacted parties. How many of the 2,200 home owners support their actions? Real estate agencies? Restaurants? Once you start to poke around, and speak to many islanders who work with these homeowners, virtually no one supports their proposal.
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