Legislature Considers Options on Short-Term Rentals

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By Vice President Lindsay Toghill

There are many challenges for state government as new technologies become incorporated into everyday life. Last session, the Massachusetts Legislature came to an agreement on regulation of ride-hailing services such as Uber and Lyft after ongoing concerns about public safety.  This session, the issue of Short Term Rentals (STR) like Airbnb has become a significant priority for the Legislature as it considers lost lodging revenue and public health and safety.

The discussion has been complicated by competing interests and proposals. Governor Charlie Baker made it very clear that he is interested in addressing the issue this session by including regulation and taxation in both his Fiscal Year 2018 and 2019 budget proposals. While these inclusions do not have the force of a stand-alone bill, his interest has not gone unnoticed in the Legislature.

The House of Representatives passed a bill in late March that took an expansive view on regulation and taxation of this new industry. The bill creates a tiered taxation structure based upon the number of days and type of lodging offered, as well as requirements for a state registry and enhanced public health and safety measures. It also allows expanded municipal oversight and regulation, as well as enhanced insurance requirements for each rental unit.

The just-released Senate response contains many earlier themes with a significant focus on the potential revenue possible if STR units were taxed in the same manner and rates as conventional hotels. This bill, redrafted by the Senate Ways and Means committee looks at the benefit of expanding taxation on STR transactions as well as various online resellers such as Hotels.com and the conventional realtor industry.  By offering a very lean bill, the Senate allows for expansion of online technology in the tourism industry, while most notably allowing municipalities to regulate short-term rentals according to the specific needs and interests of their community. This bill was considered by the full Senate on Wednesday, April 4th.

It is expected that the two bills will be considered and combined into a final version by a legislative Conference Committee before the de-facto end of the legislative session on July 31. With much at stake in this new industry and in our communities, this issue will likely set the tone for future disruptive technologies in Massachusetts.