Massachusetts Gives Cities its Blessing to Tax Airbnb

Instead of preempting cities, the state is following Boston's lead. 

Boston Mayor Marty Walsh. (AP Photo/Michael Dwyer)

In June, Boston Mayor Marty Walsh signed an ordinance regulating short-term rentals. Now, the Massachusetts state legislature appears to be following his lead.

Last week, House and Senate negotiators agreed to legislation that would allow cities to tax short-term units at a rate of up to 17.5 percent, WBUR reports. Taking a cue from New Orleans, Seattle and Nashville — where similar policies have been debated — legislators also allowed cities to tie their local taxes to affordable housing development, effectively blessing the creation of informal linkage fees.

Massachusetts would become the first U.S. state to maintain a central registry of units under the bill, to be overseen by the Executive Office of Housing and Economic Development. The legislation extends the state’s current 5.7 percent hotel tax to most short-term rentals while giving municipalities the option of tacking on an additional 6 to 9 percent, depending on how many units the owner is renting out, according to CBS Boston.

“We felt strongly that having some funding go toward more affordable housing was a critical piece and were happy to have it in the bill,” Representative Aaron Michlewitz said, according to WBUR.

Airbnb criticized the initial bill as “onerous and overly burdensome,” WBUR reports. In a statement, Airbnb spokesperson Crystal Davis said last week: ”While we appreciate the Massachusetts Senate and House for their progress on home sharing policy and taxation, 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.”

Boston Mayor Marty Walsh commended the legislature, however.

In June, Walsh signed an ordinance banning the listing of “investor units” rented out by people who don’t live on or near a property, as Next City reported. All owners wanting to list properties on sites like Airbnb would need to register with the city and pay permit fees ranging from $25 to $200 under the ordinance.

Linking short-term rental taxes to affordable housing — which the state bill allows — was debated in Nashville earlier this year. While some short-term rental critics wanted to phase out the practice entirely, one council member proposed adding a fee on the units. That tax would benefit a local consortium of nonprofits and religious entities that build below-market-rate housing.

Last November, Seattle also passed legislation to tax short-term operators. The funds were intended for both affordable housing and the city’s Equitable Development Initiative, which combats displacement.

The new taxes proposed in the Massachusetts bill would take effect in January 2019 for all units booked after the first of the year.

Rachel Dovey is an award-winning freelance writer and former USC Annenberg fellow living at the northern tip of California’s Bay Area. She writes about infrastructure, water and climate change and has been published by Bust, Wired, Paste, SF Weekly, the East Bay Express and the North Bay Bohemian

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Tags: affordable housingbostonairbnb

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