Gov. Baker wants changes in short-term rental bill

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The governor wants amendments made to a bill Massachusetts lawmakers approved to tax, register and regulate Airbnb and other online short-term rentals.

The plan — to impose a 5.7 percent state tax, and another 6 percent if local towns choose to add it — won lopsided majorities when the House and Senate adopted it on Monday in a flurry of last-minute votes before the Legislature adjourned its formal session for the year around 1 a.m. Wednesday.

But Gov. Charlie Baker sent the bill back to Beacon Hill late Wednesday, proposing a change that would exempt homeowners who rent their rooms or houses for a total of less than 14 days a year.

He also objected to the bill's provision for an online public registry listing short-term rental hosts and their addresses. Baker wants to limit the amount of information that the public could see on the registry.

The governor's amendment would exempt about one out of six homeowners who list their properties for short-stay visitors.

Baker would eliminate "personally identifiable information" from the registry.

He also wants to redefine a short-term rental from its current 30 days or less to a 90 days or less.

"We're in a pickle," Rep. William "Smitty" Pignatelli told The Eagle. He explained that for the rest of this year, lawmakers are holding informal sessions, normally limited to routine, non-controversial matters.

That means, he pointed out, that "all it takes is one lawmaker to object, and then the issue is dead. We can say no or accept the governor's amendment. We may just have to accept it."

The Lenox Democrat, representing 17 South Berkshire towns and three in adjacent Hampden County, called the bill passed by lawmakers a positive step since it gives towns and cities a local option for additional tax revenue and also limits investors who buy homes to run them as 24/7, year-round commercial lodging enterprises.

"A commercial business in a residential zone requires built-in controls and the bill empowers towns to do just that," said Pignatelli.

The hard-won compromise bill that took more than a year for lawmakers to hash out could go up in smoke.

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The lead House negotiator, Rep. Aston Michlewitz, acknowledged the obvious late Wednesday.

"I guess we're not done," the Boston Democrat said. "I'm disappointed, but Baker has the right to do it and we'll see if we can keep talking."

Baker's revision was aimed at homeowners who limit their online rental activity by welcoming guests for two weeks or less in a year. The governor's plan would excuse them from collecting the 5.7 percent state tax from guests, registering with the state and taking out a required $1 million liability insurance policy on their property.

"This change would exempt those who participate in this new industry only occasionally, while allowing the extension of fair tax treatment to the growing short-term rental sector as it competes with hotel and motel businesses," Baker explained in a letter to lawmakers.

"I support leveling the playing field in the accommodations industry by obligating those individuals or businesses who are running hotel-like businesses to collect and remit the room occupancy tax," he wrote.

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The governor was drawing a line between homeowners seeking some extra income to cover taxes or home maintenance expenses and entrepreneurs who have been buying houses in some areas to run commercial lodging businesses year-round.

Earlier this week, the Massachusetts Lodging Association welcomed the compromise legislation.

The bill "goes a long way toward leveling the playing field for all lodging businesses while maintaining a welcoming environment for new home-sharing platforms," stated Paul Sacco, president and CEO of the association.

But there was pushback against the online registry. Massachusetts would be the first state to create a public database of online hosts.

"The registry is probably the biggest concern we have with this proposal," said Philip Minardi, a spokesman for Expedia Group, which owns HomeAway and VRBO. "You're talking about a public website that will list names and addresses of people who may only rent their homes out a few nights a year. There are privacy worries."

In a statement, Crystal Davis, public affairs manager for Airbnb, cautioned that the online database could send a discouraging message about doing business in Massachusetts.

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"A public registry of our hosts sets a precedent that negatively impacts families who home share and the state's reputation as a business leader," she said.

Acknowledging that the registry is a delicate matter, Pignatelli said that "anybody doing it right will have nothing to worry about. From a public safety standpoint, we should know more about what's going on in our neighborhoods."

Even with Baker's revision, the Beacon Hill legislation could raise close to $25 million a year for the state and the same statewide total for cities and towns. Affordable housing and infrastructure projects would get 35 percent of all local taxes raised through short-term rentals.

Towns like Lenox, catering to short-stay vacationers who rent rooms or entire houses online, may see a mini-windfall of more tourism tax revenue if the modified bill survives.

The Lenox Planning Board continues work on a potential short-term rental zoning bylaw aimed at a Nov. 1 town meeting.

Now, it's up to the state House and Senate to accept Baker's revised legislation, reject it or propose yet another solution. That's a heavy lift since any lawmaker can stop the action in its tracks during the informal session that continues until Dec. 31.

But if it finally becomes law, Lenox and other towns could add their own 6 percent levy to the 5.7 percent state tax included in the legislation for units booked after next Jan. 1.

The Lenox Select Board could approve the local-option tax for the Nov. 1 town meeting, where a simple-majority voter approval would be needed.

Chief Administrative Officer Christopher Ketchen has said he expects to recommend the proposal to the Selectmen. Combined lodging and meals tax revenue of more than $2 million annually helps the town keep its property tax increases to 2 percent or less.

Information from State House News Service and The Boston Globe was included in this report.

Clarence Fanto can be reached at cfanto@yahoo.com, on Twitter @BE_cfanto or at 413-637-2551.


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