Study: 95% Of Nantucket’s Short-Term Rentals Would Be Outlawed By Article 60

Nearly all of Nantucket’s short-term rentals on the market today would be outlawed (at least initially) and the town would lose millions in tax revenue each year if voters approve the hotly debated Article 60 at next month’s Town Meeting. Those were among the conclusions of a new study released this week by the University of Massachusetts Amherst’s Donahue Institute.

The study was commissioned and paid for by The Alliance to Protect Nantucket’s Economy, an entity created by The Copley Group, a company which owns and operates 12 short-term rental properties on the island.

The Economic & Public Policy Research group at the Donahue Institute was tasked with assessing the number of short-term rentals on Nantucket that would be subject to new regulatory conditions if voters approve Article 60. Rod Motamedi, the assistant director of the Donahue Institute, was the project lead for the study and said his group’s analysis showed that about 95 percent of Nantucket’s roughly 2,200 short-term rentals listed on public web sites like Airbnb and VRBO would not comply with the requirements of Article 60.

“There would be basically no overnight lodging on Nantucket, at least immediately,” Motamedi said, other than hotels and inns which make up just 8 percent of the island’s current total of lodging rooms. But, he stressed, that is a snapshot of the immediate aftermath of the passage of Article 60, as the study did not attempt to project how market conditions or uses would change and adapt to the approval of the warrant article.

“We focused on current uses, not into the future - we didn't look at five years from now or how property owners would adjust their behavior,” Motamedi said.

Read the study presentation by clicking here

Article 60 is a citizen petition put forward by Emmy Kilvert which has generated intense debate and even prompted the online vacation rental giant VRBO to jump into the mix and lobby against it. The warrant article is just the latest in a succession of citizen petitions spear-headed by the political action group ACK Now over the past three years to curtail short-term rentals on the island that they believe are negatively impacting year-round neighborhoods and the housing market. None, so far, have passed.

Kilvert and the proponents of Article 60 define it this way: “Article 60 is a zoning amendment that legalizes short-term rentals (STRs) in residential neighborhoods under one simple condition – STR use must be less than residential use. (Residential use means any use by the owner for any length of time or any rental longer than 31 days). Long-term rentals (>31 days) by homeowners or commercial interests are not affected. Prohibits strictly commercial STR businesses in residential districts.”

Kilvert on Thursday dismissed the UMass study as “an embarrassment” while maintaining the Article 60 is a “modest, common-sense approach” to the issue that would protect Nantucket homeowners’ tradition of using their residences for vacation rentals, while prohibiting full-time commercial short-term rentals.

“First, despite the fact that we assume this report was bought and paid for by opponents of Article 60, it includes a disclaimer on the very first page that states it ‘does not attempt to project how market conditions or current uses would change into the future should Article 60 pass’,” Kilvert wrote in an e-mail to the Current responding to the study. “In fact, other than demonstrating what we already know -- that STRs are exploding across the island, with a 26 percent increase in the last two years alone – there doesn’t appear to be any meaningful take-away from this report. Unfortunately the bottom line is this document is an embarrassment to whoever wrote it and whoever paid for it – and it’s not surprising that there are no authors listed. It’s certainly not a credible discussion of Article 60. Whoever wrote it clearly didn’t read or didn’t understand the plain language of the article. And, in fact, they also don’t understand common sense, because right up front they say that they don’t consider ‘residential use’ to include use by a homeowner (p.3) – which is beyond absurd. The report also claims that there are only 114 Nantucket residents who short-term rent their home – which is also absurd and not credible.”

Kilvert was referring to the study’s mention of the state Department of Revenue’s short-term rental registry showing only 114 of Nantucket’s 2,293 short-term rentals as “owner-occupied.”

Despite the fact that the study was commissioned by The Alliance to Protect Nantucket’s Economy and The Copley Group, Motamedi defended the independence of the Donahue Institute team that authored the study.

“We acknowledge the group (that commissioned the study) is opposed to the article, but we were not asked to do advocacy work nor do we do any advocacy work,” he said. “The original conversation was ‘we would like you to do a study on this article, because we're opposed to it.’ We said we're happy to do it, but we're not in business to produce results our clients like. We agreed to produce a study that looked at data objectively

“It's very simple,” Motamedi added. “No one project is worth all the projects. If we skew things or force the data to fit a narrative, it harms every project we’ve ever done because they become suspicious by association, it harms every study we would do in the future because no one would want to hire us.”

Another aspect of the study which we asked Motamedi about was the fact that a portion of the analysis relied solely on Nantucket short-term rentals found on public web sites like Airbnb and VRBO. It did not include rentals listed only through on-island real estate firms, data which belongs to the Nantucket Association of Real Estate Brokers. It is an argument that short-term rental interests have made repeatedly at the town’s Short-Term Rental Work Group meetings and other forums: you can’t draw conclusions or draft regulations unless you have all the data.

“I think that’s fair,” Motamedi said. “We are missing the leases. I do think NAREB is interested in, or has an interest in releasing that information in an aggregate way. But from what I’ve seen in the papers and arguments over the years, the app-based rentals are the thing the people have the most qualms with and this does capture all the app-based rentals.”

Some of the other conclusions listed in the report:

•  "The primary effect of this regulation is to force owners of STRs to choose between renting their home to someone for most the year, moving to Nantucket themselves, selling the home, renting under the table, or renting for 32 days to a group that shares time in the property over the course of a month."

• "The ambiguity of the article's language means that its eventual impact and enforcement are unclear. However, based on most logical interpretations, owners who cannot spend at least half the year on the island but would still like short-term rental income, can rent out their home to “long-term” renters for most of the year in order to become compliant."
• "This might boost the number of longer-term rentals on the island; however these would not necessarily be year- round rentals. They could be rentals for 8 or 9 months a year, where the renter then must vacate the property at the start of the summer season when STR rates reach their maximum."
• "It is also possible that wealthier vacation homeowners will opt out of the rental market entirely (both short and long term) to maintain flexibility in using their space while keeping lower maintenance costs. This regulation would primarily impact homeowners who use short-term renting to afford owning a house on the island."