Urging Voters To Vote "NO" On Article 59

To the editor and my fellow Nantucketers: Accelerated growth on Nantucket is affecting all residents. Many folks are discussing how Nantucket's popularity with its sky-high house prices is causing a loss of community members because they cannot find affordable housing or do not wish to sacrifice their lifestyle to live on Nantucket.

Furthermore, the island's growth has greatly impacted our local government. The Town's budget is 40 percent larger than five years ago. The cost to run the landfill is up over 46 percent. Voters approved a $6.8 million permanent override last year for “affordable housing.” Other increases include the accumulated debt that pays for significant capital improvements, some of which are not even bonded yet.

The growth comes from different areas: An increase in the year-round population, the need to provide more services, and the recent surge of short-term rentals (STRs) in residential neighborhoods.

Although we could discuss the many nuances of STR ownership - from definitions to locations - two points are clear:

1) Investor-owned, commercial STRs are businesses that do not belong in residential neighborhoods

2) The percentage of time that STRs are used for for-profit purposes should be taxed at commercial rates like all other businesses on our Island.

Although the Town shares in the State’s 5.7% room occupancy tax revenues, a few additional financial facts are noteworthy.

1) Commercial real estate (property) tax rates are 1.7x higher than properties assessed as residential. Therefore, the Town’s real estate tax revenues are lower by ~70% for each property taxed as residential that should be taxed as commercial. In effect, commercial and for-profit businesses should bear a much greater tax burden than local residents. (In addition, for those local residents who are entitled to a residential exemption, this tax burden could be even higher.)

2) Real estate taxes are “zero-sum”. If STRS used for for-profit (as opposed to residential) purposes would be taxed at commercial rates, the real estate tax burden for local residents would decrease. In essence, the way things stand now, from a real estate tax perspective, local residents are subsidizing for-profit STR usage without receiving the commensurate financial benefit.

3) Unfortunately, the Massachusetts Department of Revenue and Massachusetts General Law (M.G.L. c. 59, §2A(b)) regulate these tax issues. These policies and laws would need adaptation to allow for financial fairness for individual Nantucket residents.

The point is clear. STRs used for for-profit purposes are not paying their fair share of the real estate tax bill. Individual Nantucket taxpayers are subsidizing for-profit interests.

And an important note. Going forward, if any Nantucket resident wishes to rent their home that would be up to them. The Town, as well as Nantucket residents, would not be put in the position of saying who is “in” and who is “out.” This “selecting” just makes for bad blood and never-ending arguments and warrant articles galore at Annual Town Meetings. Differences of opinion such as the Hilary Rayport versus Linda Williams controversy or the issues surrounding “primary versus accessory use” or the onerous Nantucket Zoning By-law change voting would fade from view. The “STR battlefield” must return to the pleasant camaraderie of Nantucket that we all enjoyed.

Bottom line, the real issue is one of tax fairness. Those of us that live on Nantucket, and do not short-term rent, shouldnot have to subsidize commercial and other for-profit interests for which we get no return!

One has to wonder how many millions of dollars a year are leaving the island in the wallets of STR investors while local residents are being asked to pick up the tab.

In summary, according to the Cambridge Dictionary, commercial means “intended to make money.” Therefore, the percentage of use of residences that qualify as STRs (for-profit purposes) should be taxed at commercial rates. Although the members of the short-term rental work group (STRWG) might have been well-meaning people, the output of the group memorialized STRs as for-profit entities without addressing these tax fairness issues.

Until the tax fairness issues are addressed, I urge voters to attend Annual Town Meeting on May 7^th to vote "NO" on Warrant Article 59.

Thank you very much.

Sincerely,

Eric Silfen MD