The University of Massachusetts, Amherst, Donahue Institute published the results of their economic analysis on May 13th, 2021. The report* is attached. In summary, the short-term rental restrictions proposed by Article 90 would be devastating:
This may be an underestimate of the financial impact in several areas, including shoulder season festivals & the wedding season, as well as indirect economic losses resulting from the negative impact on real estate due to island-wide legal encumbrances on property, impacting the real estate, construction and other sectors.
The research team also determined that short-term rentals account for 9 of every 10 lodging rooms on Nantucket and debunks the claim by Article 90 proponents that short-term rentals affect the amount of affordable housing available on the island.
Please ensure you, your colleagues, friends and family vote on June 5th, 2021 to stop this highly damaging Article 90. It is anticipated that several articles will be moved to the start of the meeting, including Article 90, so please be at the Backus Playing Fields by 9:00.
Commissioned by the Alliance to Protect Nantucket’s Economy
Rent Responsibly is a national organization dedicted to supporting the short term rental comunity through education, advocacy and is a recognized source of factual information.
The first-of-its-kind research behind the 2022 State of the Short-Term Rental Community Report sought to ask novel questions about short-term rentals (STRs) to two distinct but interdependent audiences.
The first was local government staff charged with managing the STR programs in their jurisdictions, interviewed to better understand their unique needs and challenges through questions that had largely not been asked of this audience before. Qualitative interviews were conducted with municipal staff members from local governments and destination marketing organizations across South Carolina, Utah, and Colorado. While each focal region represented one of the top tourist destinations in their state, the issues faced in each region were markedly different.
The second audience was STR owners and managers who are required to comply with municipal STR regulations. Nearly 4,600 respondents participated in the study via a detailed survey.
With a better understanding of the challenges that both cities and operators face as identified through this research and the opportunities for collaboration between the two, communities can design and create informed solutions that improve the experiences of all stakeholders including city personnel, STR operators, and the broader community.
Commissioned by the Rent Responsibly - Conducted by the University of Charleston
After town meeting soundly defeated Article 90 in 2021 the town committed to drafting short term rental warrant articles for the 2022 annual town meeting. Faced with little or no factual information and lots of anecdotal data, they studied what they could and created a set of bylaw concepts to consider and presented this information to town boards in November 2021. The concepts included the following:
The information presented to the town boards illustrated the physical locations/zones and counts of short term rentals. It also included their study of noise complaints found in Data from Nantucket Police Department: May 1, 2020 through October 1, 2020 that concluded the following:
The town Planning staff further stated that a review of traditional year round housing zones (R-10) showed no erosion of year round housing, dating back to 2008.
In the meantime, the town Zoning Board of Appeals and property owners continued to be sued over the legality of short term rentals in residential neighborhoods.
Given the lack of definitive local data that could point the finger at short term rentals as a general nuisance, coupled with their century old tradition on the island and the unknown economic impacts of limiting them, the Town took a prudent step forward and under the advi of Town Counsel, crafted a set of partnered bylaws that use each type to its best intended use:
FINANCE COMMITTEE COMMENT: The Finance Committee notes that this article is a companion to Article 42 and recommends Motion to Adopt for both articles. While the details of Article 39 have yet to be determined, the Finance Committee believes it is important to have this framework for the Select Board, Board of Health and future Town Meetings to establish community guidelines with respect to Short Term Rentals.
(Select Board for Planning Board)
PLANNING BOARD MOTION: Moved that Chapter 139 (Zoning) of the Code of the Town of Nantucket, be amended as follows (NOTE: new language is shown as highlighted text, language to be deleted is shown by strikeout; these methods to denote changes are not meant to become part of the final text and, further, that non-sustentative changes to the numbering of this bylaw be permitted in order that it be in compliance with the numbering format of the Code of the Town of Nantucket), provided that Article 39 is also approved by a vote of Town Meeting:
After town meeting soundly defeated Article 90 in 2021 ACK-Now promised they would be back in 2022 and would not stop until short term rentals were severely curtailed and they have been true to their word.
Since then they have provided support and funding to a member of their Advisory Board to challenge again (after a previous similar lawsuit was dismissed) the ZBA rulings on the use of residential property for short term rentals. They then filed lawsuits when their challenge was denied and the matter of Ward vs. Grape is now in the courts, costing the chosen victims (the Grape Family) upwards of $100,000 in legal fees and the town staff time and taxpayer money to defend.
Article 43 was filed as a citizens warrant by the chair of ACK-Now, Tobias Glidden and it is more restrictive than its predecessor, Article 90 from last year. Our website lists a variety of reasons it is bad for Nantucket's economy and tax revenue that is now being used to fund significant high priority projects for the town.
This article is not supported by the town as indicated in their recommendations below.
PLANNING BOARD MOTION: Moved to take no action.
PLANNING BOARD COMMENT: This article does not accomplish the stated intent, which would require substantial revisions to correct. In addition, terminology contained in the article is inconsistent with terms that are defined in the Zoning Bylaw, thereby creating an ambiguous interpretation issue which may continue to lead to appeals and litigation – a problem that Article 42 would address. The requirement in this proposed Bylaw to provide federal tax filings creates a privacy issue, as all documents submitted as part of an application filing become a public record. Last, but not least, the proposed requirement that a special permit must be issued by the Zoning Board of Appeals for any “non-resident” owned property would create an unprecedented application volume that could not be dealt with in the timeframe required by MGL Chapter 40A §9 and §11.
FINANCE COMMITTEE COMMENT: The Committee supports the Planning Board Motion.
The stated goal of ACK-Now’s proposal is to alleviate the affordable housing crisis on island, a worthy goal which everyone should support. Unfortunately, the solution from ACK-Now to target & limit short-term rentals does nothing to directly address the affordable housing crisis and risks triggering substantial economic harm to the heart of Nantucket’s economy, tourism.
This could result in a reduction in town revenues, and in turn, funds that may go towards affordable housing. What is apparent from ACK-Now’s presentations & ordinance is
A) there is a dire affordable housing crisis on island that must be addressed, &
B) there is blame and bias against part-time resident owners and short-term rentals.
But that does not mean there is a causative effect or remedy between A & B. Furthermore, their analysis is heavy on anecdotal observation and false equivalencies, while being light on relevant economics. Before taking any step that may harm Nantucket’s main source of revenue (tourism), it is critical that an independent economic study is commissioned and reviewed by members of the Finance Committee and Select Board. ACK-Now should have no involvement.
If the objective is “How to improve affordable housing options on Nantucket,” there is already a Nantucket Affordable Housing Trust on island which is taking great strides to address this issue. But ACK-Now should not be allowed to speak for NAHT, nor permitted to co-opt this cause to further their agenda. What is at risk in this ordinance?
The direct risks are the loss of the 6% short-term rental tax, but this is the tip of the iceberg. The indirect risks/costs, which any economist will note, are likely to be multiples larger.
Nantucket Tourism Receipts:
1. Direct Short-term Rental Town income: 6% short-term rental tax.
2. Indirect Short-term Rental Town income:
a. Owner expenditure: gardeners, caretakers, cleaners, plumber, electricians, painters, utilities (water, electricity, propane), rubbish removal, insurance agents, mortgage brokers, etc.
b. Renter expenditure: real estate agents, restaurants, car rentals, bike rentals, airlines, ferries, food stores, cleaners, store keepers, gas stations, etc.
Furthermore, reducing the supply of housing through the proposed rules limiting the total days and requiring a 7 day minimum stay at all times of the year may dramatically increase the cost of staying on island, which in turn could accelerate single family home price. Using ACK-Now’s numbers (see points 1-4 in “Analysis...” below), this ordinance is restricting a minimum of 850 short-term rentals which offer 2,950 “hotel room” equivalent rooms (counting bedrooms in a home as comparable to a hotel room). By my estimates, the inventory of Nantucket hotel, guest and B&B rooms is under 900. Thus, the proposed By Law would impact 75% or more of short-term vacation accommodation on the island, with a commensurate financial risk to those home owners and the islands economy. The dominance of single-family home rentals has always been a disproportionate source of vacation accommodation since tourism offered Nantucket an economic lifeline in the late 1800’s.
This prevalence of single-family home rentals has had multiple benefits:
a. attracting families more so than singles
b. keeping at bay high density hotel & resort development
c. serves to maintain the residential character of the island, while facilitating steady growth to tourism revenues
d. as homes are typically at a higher price point compared to hotels, home renters tend to be larger spenders.
The affordable housing crisis on Nantucket has been an issue for 30+ years and is now affecting towns and cities around the country, especially prime 2nd home destinations like the Hamptons, Martha’s Vineyard and Miami. There are many ways to begin to take remedial steps (a few “off the cuff” ideas are below in “Alternative solutions”) without doing undo harm to the primary revenue base of the town (and angering thousands of homeowners and businesses). As a quick observation, how does it solve the affordable housing crisis to restrict the number of days to rent, thus restricting the Town’s direct tax income from a 6 bedroom, $6 million home on Eel Point? How does it help if you restrict the number of families who might rent that home and spend at island restaurants, stores, real estate, car and bike rental agencies? How does it help to restrict them to 1 car (an ACK-Now request) in a home that can house 12 people, forcing those vacationers to consider alternate destinations?
Also, all homeowners on island should beware. If all property is encumbered by a rental restriction unique to Nantucket, it will harm real estate values. All values. It's unknown how much. Maybe it's 2%, maybe 10%. But a unique restriction on how you can use your home, not applicable in Hyannis, not applicable in Martha's Vineyard or the Hamptons, is not good. And what happens if your wife or husband gets a job offer off island for a couple years, and you become part-time resident for a period of time? Or you intend to give your home to a son or daughter, who marries or takes a job off island but wants to bring their children during vacations, then rent at other times? Suddenly, your or their ability to rent will be restricted, which may threaten their ability to hold on to that property.
On reflection, the presentation and proposal begs the question, is the sympathetic cause of “affordable housing” serving as a Trojan Horse for another agenda by the principal funders & backers of ACK-Now, as what is proposed is flawed in so many areas and harms so many unnecessarily.
• 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, we estimate less than 10%, of the 2,000+ homeowners who do short-term rentals. Massachusetts law allows for up to 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 1.5% tax was levied on a 2nd, then 3% on a third, etc, 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. https://www.mass.gov/info-details/room-occupancy-excisetax
• 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, can help be extended in other ways? Usually, coming up with the 30% deposit is the main roadblock to home ownership. Could some form or participating loan be provided by the NAHT (Affordable Housing Trust), where the NAHT retains a percentage ownership reflecting the down-payment, but a new family who can afford the monthly payment can get in quickly and own the majority? Over time, the new family can also buy out the NAHT’s deposit? Getting into the home quickly but at a monthly cost they can bear? Are there other forms of non-interest bearing forgivable loans? • 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? • 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 zero, 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. The ACK-Now data cites an increase in investor-owned and short term rentals but when we looked in to their sources, we found the HUD data ACK-Now cites is simply counting vacant homes. This includes a) part-time owners who are currently off island, both those who rent and those who don’t need to, and b) investor owned homes (by our estimates, under 10% of the total). Bu there was no way from the actual HUD data (as admitted by ACK-Now on a phone call with us) to delineate how many were operated as rentals, either investor or family owned.
4. In January few, if any, owners who rent were 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 income tax Thus, part-time residents who conduct rentals currently bear larger taxation, with little to no representation and no right to vote on this issue. They deserve to be pro-actively informed and heard on an issue of such material consequence.
5. 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
6. 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. Where was the public outreach and input before this damaging warrant article was submitted?
7. 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.
8. 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)
9. 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.
10. 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.
11. 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.
12. 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.
13. 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?
14. 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 high-end 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
15. 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?
16. 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?
17. 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 and Chamber of Commerce sponsored events. 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. Many shoulder season rentals have grown in recent due to the Chamber of Commerce’s successful efforts. Why stop tourism when traffic is of no issue, density is low and islanders need business?
18. 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.
19. 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.
20. ACK-Now asserts “The bulk of rental income is going off-island.” The opposite is true. Shortterm 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.
21. 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.
22. 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.
23. 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.
24. ACK-Now cites police reports of unruly behavior. This is anecdotal and it’s unclear how prevalent it is. Many of our members have never had one police report in all their 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.
25. 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.
26. “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.
27. 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.
28. ACK-Now states they have a lot of support, including by impacted parties. How many of the 2,200 home owners support their actions? Zero. Real estate agencies? Zero. Restaurants? Zero. Once you start to poke around, and speak to many islanders who work with these homeowners, virtually no one supports Article 90.