House Short-term Rental Bill Includes Funding for Cape & Islands Water Quality Projects

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The sign at the Cape Cod Chamber of Commerce welcomes visitors.

DENNIS – A bill passed through the state’s House of Representatives last week to tax short-term rentals would also provide assistance to Cape Cod towns for water quality improvement efforts.

The bill, which would impose a 4 percent state tax on rentals by individuals who offer no more than two rooms for rent or those made available through online platforms such as Airbnb, included an amendment that would fund the Cape Cod and Islands Water Protection Fund.

Short-term rentals made through a professional property manager or investor host would be taxed at 5.7 percent and 8 percent, respectively. No excise would be imposed if the total amount of rent is less than $15 per day.

The bill also would let cities and towns impose their own local excise taxes and place certain restrictions on short-term rentals.

The fund would provide financial assistance to towns across the Cape and Islands to implement wastewater management projects with a goal of restoring the health of bays and estuaries.

“It’s a huge step forward for attempts to clean up Cape Cod waters at an affordable costs,” said Andrew Gottlieb, the executive director of the Association to Preserve Cape Cod.

The revenue for the fund would come from an additional 2.75 percent tax added to short-term rentals on Cape Cod and the Islands.

“A lot of the cost of managing wastewater comes from the fact that we have very, very high seasonal flows during the summer and that is driven in large part by the tourist economy,” Gottlieb said. “[The fund] is taking money from the area that contributes to the problem and directing it in a very dedicated way to help solve that very same problem.”

The fund would be administered by the state treasurer with expenditures to be approved by a management board made up of a representative from each town. Members would be appointed by boards of selectmen or town councils.

Towns would have the ability to decline financial assistance from the fund and may opt out after a year, or after the term of any financial assistance award is met.

The Association to Preserve Cape Cod has been a strong proponent of the fund and has worked closely with the Cape & Islands legislative delegation and other community leaders in supporting its implementation.

Gottlieb said the House vote took a large step towards addressing the Cape’s $4 billion water quality challenge.

“It makes a lot of sense and it helps transfer some of the burden of the high cost of managing wastewater off the backs of the permanent residents of Cape Cod and shares it with some of the people who are coming to the Cape,” Gottlieb said.

The Senate will take up its version of the bill on April 4.

“We don’t have a final version of what is going to apply here in the future but indications are that the trust fund is something that we’re hopeful will carry over into the Senate piece and therefore provide some certainty of financial relief for the Cape,” he said.

Once the Senate version of the short-term rental bill is passed it will go to a conference committee of the House and Senate to resolve differences in the legislation before going to the Governor to be signed.

By BRIAN MERCHANT, CapeCod.com NewsCenter

Material from the Associated Press was used in this article.

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