Nantucket Voters Ban Corporate Ownership Of Short-Term Rentals

A ban on the corporate ownership of short-term rentals was adopted by Nantucket voters on Tuesday.

Article 60 was a general bylaw amendment proposed by the Select Board as a compromise with the sponsors of competing citizen petitions related to short-term rental restrictions. The warrant article was adopted with 592 votes in favor and 545 opposed.

The bylaw amendment is intended to "prohibit additional corporate ownership and discourage investment-only ownership of residential properties for the exclusive purpose of operating them as short-term rentals rather than housing for either full-time or part-time residences."  It also prohibits new short-term rentals in housing units designated as affordable housing or income-restricted.

Former Select Board member Bruce Miller successfully lobbied for an amendment that would eliminate legacy status for existing short-term rentals owned by corporations.

Exceptions to the prohibition in the bylaw include limited liability companies, trusts, and "S corporations" controlled by a "natural person."

The language of the bylaw defines a corporation as "All businesses and charitable entities required to file Articles of Incorporation and Annual Reports with the Massachusetts Secretary of State or an equivalent agency of another state..."

The deal to put forward Article 60 as a compromise proposal was reached by a small group that included town counsel John Giorgio working with citizen petition sponsors Steven Cohen and Michael Kopko, along with Select Board vice chair Brooke Mohr and Finance Committee chair Denise Kronau. The compromise represented a melding of two competing citizen petitions with the Select Board’s own short-term rental bylaw amendment it had proposed for the Annual Town Meeting.

"This was one of the really foundational things we all agreed on," Kopko said. "We need to protect the traditional practice by year-round residents and seasonal property owners of renting their properties...This does provide a framework and a baseline and let's stop kicking the can down the road."

The article was amended twice on Town Meeting floor by two former Select Board members: Melissa Murphy and Bruce Miller.

Murphy’s amendment was to allow timeshare units to provide an alternative proof of rental aside from the short-term rental tax for the exemption.

“I am the owner of a business which operates as a managing agent for timeshare and time interval ownership dwelling units and we can obtain certificates of registration, but they are exempt from the short-term rental tax so we can’t prove historically they have been able to rent,” Murphy said. “My amendment allows for these units to provide an alternative proof of rental so they can continue to rent their properties.”

Miller’s amendment struck “corporations” from section K of the article and revised it to the following version:

“Any person or other legal entity, except corporations, but including LLC’s, Trusts, and S corporations, which paid the rooms excise tax on a Short-Term Rental dwelling unit in any calendar quarter prior to January 1, 2024 and which owned the property prior to May 7, 2024, shall be exempt from the requirements of sections H, I, and J of this Chapter until the dwelling unit is transferred or conveyed, or the Rental Certificate is not renewed or is revoked by the Board of Health. If a property is bequeathed to a person or other beneficiary through a will, trust, or other instrument, the new owner may continue to engage in Short-Term Rental activities in accordance with this section.”

“I hope this speaks for itself,” Miller added. “We just had a huge fight (over article 59) about the need to regulate commercial short-term rentals. If we leave this in, we will allow all existing short-term rentals to continue in perpetuity. I think we should take this out and incorporate some sensible regulation of short-term rentals when we reconvene in the fall.”

Select Board member Matt Fee reiterated during the discussion leading up to the vote that in a prior Select Board meeting he had voiced concerns about loopholes in Article 60 and felt there were details that needed to be sorted out and revisited in the special town meeting in the fall. He said he felt a yes vote would be “premature.”