"Illegal Rental Cars" - Is The Town Headed For A Showdown With Turo?

A showdown appears to be brewing between the town and Turo, the giant online car-sharing platform, as well as several smaller rental vehicle businesses operating on Nantucket.

A formal complaint regarding “illegal car rentals” was submitted to the Select Board earlier this summer by an attorney representing two of the island’s largest rental car businesses: Nantucket Rent-A-Car and Affordable Rentals.

The basis for the complaint is a section of the town code - Chapter 58 - which governs rental cars on Nantucket through a medallion system and caps the number of rentals at 700 for the entire island. The regulations require companies to obtain a medallion from the town for each rental car they are operating and establish a fine of $300 per day for any violations.

Attorney John Perten, who represents Nantucket Rent-A-Car and Affordable Rentals, submitted a list to the town of more than 150 individuals renting vehicles through Turo, along with the names of four small rental car companies, alleging they are all renting cars on Nantucket illegally without medallions.

“Unless the town enforces its by-law, the island will continue to be flooded by illegal car rentals which will negatively impact the town's quality of life through additional traffic congestion,” Perten wrote to the Select Board. “Neither the town nor my clients can turn a ‘blind eye’ to this very real problem.”

After more than an hour of discussion Wednesday night, the Select Board voted unanimously to send a letter to those advertising rental cars without a medallion to clarify the existence of the bylaw, launch a formal outreach campaign, and ask staff to develop recommendations for an enforcement plan.

“This is patently unfair what is happening,” Select Board member Matt Fee said. “We have rules. It’s not legal. People are ignoring the rules. We’re not enforcing the rules and it’s growing into a bigger issue from when it was six or eight cars two years ago and we stuck our head in the sand when it was brought up to us and we didn’t do anything. It’s a major, major issue. I don’t accept there’s nothing we can do.”

On Thursday, Nantucket Police Department Lt. Angus MacVicar said some initial steps toward enforcement had already been taken.

"The Nantucket Police Department spoke with three of the four operators," MacVicar said, referring to the companies named in the complaint letter. "Two of the three operators we spoke to have taken down their website and the third has agreed to do the same. We are still working on contacting the fourth operator. We will continue to monitor this situation and take appropriate follow-up measures to address any violations."

Indeed, the websites for Nantucket Classic Rental Cars, ACK Jeeps, and ACK Rentals  - all three of which were named in Perten's letter - were not functioning as of Friday morning. 

The proliferation of cars being rented through Turo - which allows individual owners, or “hosts,” to rent their vehicles on the company’s online marketplace - prompted the Nantucket Rent-A-Car and Affordable Rentals to lawyer up. Other rental car company owners, including Nantucket Windmill Auto Rental’s Ray Conlon, spoke out at Wednesday night’s meeting.

“It’s not fun to live here anymore: you can’t get anywhere,” said Conlon, who has owned Windmill Auto Rental since 1985. “This explosion of the number of cars is directly attributable to these illegal cars. The number of these illegal cars exceeds the number of all the parking spots on Main Street, Centre Street, Broad Street, and all the small streets in the middle of town plus the Stop & Shop lot. These cars are choking the downtown area.”

In a follow-up letter to the original complaint submitted to the town, attorney John Perten also took aim at Nantucket Memorial Airport, which he called “complicit in the continued flaunting” of the town bylaw, and accused the Airport Commission of attempting to negotiate a contract with Turo that would allow it to rent cars from the airport without medallions.

Nantucket Memorial Airport manager Noah Karberg addressed the situation at Wednesday night’s board meeting and acknowledged that Turo rentals had undercut the business of the airport’s three “brick-and-mortar” rental car operators: Hertz, Nantucket Island Rent-A-Car, and Windmill Auto. Those businesses typically complete 43,000 contract rental days over an average year, Karberg said, they employ dozens of workers, and generate roughly $1 million in annual revenue for the airport.

“This summer I took a look at our initial numbers, the ones available to me through July, and car rental operator gross income is down approximately 14 percent on the basis of a 21 percent reduction in contract rental days and this is despite steady airport passenger activity year over year and to me implies the loss of up to 9,000 contract rental days by the year’s end from Turo or similar car sharing services,” Karberg said. “I’m concerned about the viability of our three companies as continued pressure on them could cause us to lose one of them…I’ve looked at the gross numbers, and I can verify it’s real.”

Karberg said he’s developing policy options for the Airport Commission and that the airport has a role in the conversation, but added that because of the medallion issue - which he called the most important influence on airport policy and a “shared destiny” - he said the situation is truly in the Select Board’s court to decide.

The Select Board acknowledged that Chapter 58 of the Nantucket town code was adopted in 1988, well before the widespread use of the internet and decades before the creation of car-sharing sites like Turo. But Fee emphasized that the medallion system and the cap of 700 rental cars were implemented to get a handle on problems Nantucket is still grappling with today: the number of vehicles on the island, traffic congestion, and parking.

“We didn’t want Nantucket to become like Disney, or when you go down to Orlando or Hawaii and you get off the airplane and there are 5,000 vehicles,” Fee said. “We didn’t want a sea of parked cars at the airport...If we ignore this, we are undermining ourselves.”

Asked for his input, town counsel Brian Riley acknowledged the issue and that it appeared the medallion system was being circumvented. The problem, Riley said, was how to enforce the town code.

“From an enforcement perspective, the problem is, just like with Uber and taxis, is that everything happens online including the exchange of fees,” Riley said. “So you’re trying to find someone handing their keys off to someone who will take it for a week, and the same thing happens a week later. I’m not sure how the police or anyone else can enforce that. Could we send some sort of cease and desist to Turo? I expect they wouldn’t pay much attention to it. Could you reach out to people advertising on Turo? There wouldn’t be anything wrong with that, but people may feel that everything happens online and they’re not going to be caught and have to pay $300. That’s the problem.”

Another factor, according to the town’s licensing administrator Amy Baxter, is that many of the people renting vehicles on Turo are year-round island residents working to supplement their income and make ends meet on Nantucket. The bylaw at this point, she said, was so dated that enforcement and its applicability to the reality of life in 2023 were questionable.

“We’ve been dealing with this, and there’s a lot more that needs to be done for this bylaw to work with the Nantucket we have now,” Baxter said. “A lot of people on Turo are residents trying to survive and trying to find revenue for themselves. It’s difficult time-wise for us to go after this with compliance and finding them. How do we make this work in 2023? Things that worked in the 1990s don’t apply. We’re trying to be fair about it but there are a lot of other holes here that we need to focus on before we start fining folks.”