Senate goes light on short-term rental regs

Lodging industry pans bill as a gift to Airbnb and other home-sharing apps

THE MASSACHUSETTS SENATE has passed its bill for short-term-rentals, a stripped-down version of the House measure that simplifies the tax on hosts and eliminates any tiered structure so that people offering a single room in their home are treated the same as the investor with scores of units for rent.

The Senate bill, passed on a party line vote of 31-6, was panned by the hotel industry organization, which had embraced the tougher House proposal, saying the bill doesn’t force the industry to keep track of how much is being collected in taxes and ensure and accurate reporting. The measure now heads to conference committee to try to work out a compromise between the two bills.

“Today, the Senate capitulated to Airbnb by failing to produce even the most basic of health, safety and consumer protections while continuing to allow wealthy investors to convert scarce housing stock into illegal, unregulated and unwelcome de facto hotels in residential neighborhoods,” Paul Sacco, president and CEO of the Massachusetts Lodging Association, said in a statement. “Even the taxation portion of their bill gives unique rights to Airbnb that no other company in the state is entitled to – taxation without verification. We hope that the conference committee will do more to protect residents and guests and ensure this $31 billion multi-national corporation is accountable for paying its fair share.”

A spokeswoman for Airbnb, the industry bigfoot which had been pushing for a taxation bill to legitimize the technology but chafed at more stringent regulations, said officials there will work with the Legislature to get the bill into law.

“We applaud the Senate’s action today in passing legislation that allows Airbnb to collect and remit taxes on behalf of our Massachusetts hosts,” Crystal Davis said in an email. “We look forward to sharing the feedback and concerns of our community with the lawmakers as the legislative progress continues.”

Under the Senate bill, renters would pay a state excise tax of 5 percent, no matter if the host was a single-family home with a room or a condo in a multi-unit building that is owned by an investor. The bill also allows cities and towns a local option of up to 6 percent or, in the case of Boston, 6.5 percent.

That differs from the House bill, which set tax rates based on the number of units a host or management company operated. Under the House version, those renting out a room or their primary residence had a 4 percent excise tax, investors with two to five units for rent were required to charge 5.7 percent while “professionally managed hosts” with six or more units had to collect 8 percent. At the local level, communities could add on 5, 6, and 10 percent, respectively.

“It would be rather complicated both for hosts and communities” to have tiered tax rates, said Sen. Jamie Eldridge. “At the end of the day we feel it’s best to have a simplified tax approach. I just think there’s greater predictability, a better tax collection scheme.”

Sen. Eric Lesser, who cosponsored the bill, said the Senate’s version “levels the playing field” for hotels, motels, and bed and breakfasts who have been impacted by the home-sharing apps. He also said the light touch on local regulations acknowledges the differences between Boston, Cape Cod, and western Massachusetts.

“This bill levels the playing field so that all those in our hospitality industry, from motels to bed-and-breakfasts and others are treated equally and fairly,” Lesser said in a statement. “Importantly, this law allows for local rules, local zoning, to give flexibility to different communities that have different populations and different needs.”

Both the House and Senate bill would require $1 million insurance for each unit a host rents. The limit in the local option tax, though, would have a bigger impact on Boston if the Senate bill prevails because of the lower tax. City Councilor Michelle Wu, who opposes allowing multiple units from investors or management companies because it removes housing from the market, said she is pleased both bills allow for local regulations to limit short-term rentals.

Boston Mayor Marty Walsh had proposed regulations for the city to oversee the burgeoning industry but pulled it back after meeting some resistance from city councilors, including Wu, over its inclusion of investors. Wu said she expects Walsh to reintroduce the measure after gathering information for a data collection system.

“There are important distinctions between the different kinds of people who are hosts,” she said. “Having the ability to distinguish between them, who’s able to access the platform, how much they’re asked to contribute back to the city are important components. I think it’s important it leaves local control in place.”