ORDER-2019-40 : Acceptance of Section 3A of Chapter 64G as amended by Section 6 of Chapter 337 of the Acts of 2018

Transcript (~15 min @ 1:11:45)

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▶ 1:11:50 Speaker 1: recess

▶ 1:12:27 Francis X. Wright Jr.: return session for the legal and legislative committee of the melrose board of aldermen when we recessed we had placed on file the first item on our agenda

▶ 1:12:50 Michael P. Zwirko: mr chairman i moved it to take items excuse me take orders two zero one nine dash four zero and order two zero one nine dash three nine out of order this evening and place order two zero one nine dash three four at the base of those alderman zyrko has moved to take orders

▶ 1:13:06 Francis X. Wright Jr.: three and four which are orders two zero one nine dash forty and two to zero one nine dash three nine out of order we have two city officials who have been here um all day they're here for these items i don't believe these items will take much time before we return to the line bikes so The motion of Alderman Zwirko is before you. Second. Seconded by Alderman Medeiros. All in favor? Aye. The items will be taken out of order. Order 2019-40, acceptance of Section 3A of Chapter 64G as amended by Section 6 of Chapter 337 of the Acts of 2018.

▶ 1:14:03 Francis X. Wright Jr.: We have a motion to, well, we have suspended the rules already. We have a request that the city solicitor come to the microphone.

▶ 1:14:19 Francis X. Wright Jr.: Thank you, Mr. Chairman. So, if I may, I am the sponsor of this order. I sponsored this order soon after it was passed by the state legislature. I believe you can update us on what we can do, must do, or actually at this point perhaps

▶ 1:14:35 Speaker 1: no longer need to do. Sure. Thank you, Mr. Chairman and members of the committee. So the purpose of the order, as you and I discussed prior to submission, was to impose an excise tax on short-term rentals, Airbnbs and similar uses that appear to be growing over time here in the community and elsewhere. In order to do that, a municipality would have to adopt the provisions of Section 3A of Chapter 64G. Since the time of submission of this order, the Department of Revenue, Division of Local Services, and we conversed with Alderman Medeiros on this, has issued an FAQ, Frequently Asked Questions, where we had previously adopted that provision of Mass General Law as relates to motels and hotels the same provision remains in effect and would continue to apply now to short term rentals so there is no need for the board to hold another acceptance vote of that section of the statute and that's as a result of the FAQ issued by the division of local services subsequent to the filing of that order correct I appreciate your correct your informing the board of that in the public correct and just so the members in the public understand once this excise tax is in place it would require operators of the short-term rentals to register with the Department of Revenue in registering with the Department of Revenue they would then be obligated to make direct they would pay the DOR directly per transaction that these tax receipts wouldn't be collected locally they would be paid out from the operator to the Department of Revenue and the Department of Revenue would then on a quarterly basis disperse the excise portion back to the city of melrose by the operator you mean uh companies like home away airbnb correct correct or any other entity operating these types of short-term rentals but it wouldn't be on the individual property owner per se correct thank you do you have any questions for the city solicitor thank you mr chairman um you may not know the answer to this

▶ 1:16:47 Michael P. Zwirko: and apologies in advance but i think i remember that boston had put something forth i want to say towards the end of december on this and that almost immediately uh the operator airbnb filed suit against that and i'm just curious um do you can you speak to any like legal standing of this i know that the state obviously um promulgated these efforts so uh where does this whole Airbnb home away operator rental market stand if you get my

▶ 1:17:21 Speaker 1: understanding is there was some kind of an action filed against the city of Boston I don't know the status of that as far as I'm understanding your question correctly is it whether or not this tax is authorized the quit and

▶ 1:17:35 Michael P. Zwirko: thank you for for the update the question isn't whether the the tax is authorized I guess and I have no problem going forward I think this is really you forward-thinking proposal for both the state and this board but I I guess I'm just wondering what the if we know where the lead any settlement in terms of the legal component of this will ultimately be I mean is Airbnb has there been a threat by Airbnb or home away or similarly situated companies to challenge what Massachusetts has put forth do we feel that this is settled

▶ 1:18:09 Speaker 1: law that this is going to operate I mean my view would be I don't represent the Commonwealth of course but my view would be that we wish you did well my view would be that that is a valid exercise of the legislature's taxing authority yeah and that our ability to accept that statute locally it just emanates from the legislators legislators taxing authority one of the things I would point out and I think this is the point you're trying to drive home is the the city of Melrose should consider an alderman Rita and I discussed this possibly imposing some kind of regulatory requirement whether it be a local registration requirement here in Melrose whether that be through an ordinance a traditional ordinance or through a zoning ordinance that's something that you probably should consider I suspect in Boston that might be part of the issue but a registration requirement probably would help a track who's operating in the city and if someone is operating unlawfully in the city would give us a bit more teeth to locally enforce it right thank you for

▶ 1:19:11 Michael P. Zwirko: that I because the time that this order was filed and the FAQ I would like to move that the the DOR or the DLS rather FAQ be attached to this order if I may

▶ 1:19:25 Francis X. Wright Jr.: in further response to all the Missouri Co I and the city solicitors comments I have had conversations with Paul Johnson the inspectional services director as relates to implementing some type of registration licensing ordinance which were allowed to under the new statute and I don't want to speak directly for him but our conversations were along the lines of he thought it was important because he does not know where these operations are taking place across the city and there are issues of health and safety that he could see becoming an issue and life safety potentially you can imagine there may be circumstances where if somebody's renting out a room or even some type of in-law or what you know you need to have certain parameters Matt as relates to the building code you know two means of egress that type of thing so I he's extremely busy yeah he asked me if I could be patient and work with him on that so of course I agreed and I intend to be working with him and the city solicitor and trying to put something together so that we can at least create some type of registration perhaps permitting system so that the this the city officials who need to know which would be our inspectional services our public safety officials know where people may be operating short-term rental units thank you any other

▶ 1:21:12 Monica C. Medeiros: questions thank you thank you chairman Wright and I know you were trying to get this out there and make sure that we're taking advantage of all opportunities seeing that this FAQ has come out would you recommend that we move forward with the recommendation for leave to withdraw

▶ 1:21:34 Monica C. Medeiros: withdraw the order since we've already accepted the statute in 2009 as I'm

▶ 1:21:39 Francis X. Wright Jr.: sitting at the chair I guess I'll allow someone else to make the motion either withdraw our table so file about that table place on file I'm sorry okay so I

▶ 1:21:49 Monica C. Medeiros: will move to recommend that this ought to be placed on file we have motion by

▶ 1:21:59 Francis X. Wright Jr.: Alderman Medeiros to place this matter on file seconded by Alderman Lemmerman I'm sorry and on discussion just also mentioned that I had

▶ 1:22:08 Monica C. Medeiros: had an opportunity to speak to attend the division thank you the Mass Municipal Association annual meeting workshop with the division of local services I believe Alderman Butcher was there as well and I do believe that they said that they expected that DOR should be able to provide us with a list of

▶ 1:22:41 Monica C. Medeiros: those who have registered and who they are you know collecting taxes from from the individuals but we'll see as that moves forward so just informational

▶ 1:22:50 Jennifer L. Lemmerman: thank you thank you thank you and I don't have any further questions I just wanted to echo Alderman Medeiros point and say thank you to the maker of the order and the chair of our committee Alderman Wright I know that this was an issue that kind of wound its way through the state legislature for a while as soon as it was resolved our the maker of the order was bringing it forward to us and continuing to think about opportunities to bring revenue into the city which we all know right now is a critical thing for us to be doing so just wanted to point that out and say thank you Thank You president Lemmerman

▶ 1:23:26 Manisha Bewtra: Alderman Bewtra thank you um thank you for putting this order forward and I just had a couple questions regarding the excise tax itself do we have I think as I read it understood it in the FAQ the funds go to the general fund do we have any option to designate those funds go to a specific place or do they have

▶ 1:23:50 Speaker 1: to go tax by statute would go to the benefit of the general fund if the city were to adopt additionally under this statute what's referred to as the impact fee that impact fee on a prorated basis I believe 35% of it would have to go into a restricted fund for the benefit of affordable housing production and development in the community and the remaining 65% would revert to the general fund now the the impact fee as I understand the statute applies or could apply it assuming acceptance to what are called professional operators which means essentially that you're you're a you're running multiple short-term rentals in the same community at multiple more than one property so if you had someone who was operating on three three-family homes and they were operating in Airbnb out of all three three-family homes they technically would be considered a professional operator subject to the not only excise

▶ 1:25:03 Manisha Bewtra: tax but also to the community impact fee got it so folks who would be say renting out their house for the summer would not be through Airbnb or something like that

▶ 1:25:14 Speaker 1: would not be subject to the impact fee if they were only renting out one house got it they were renting out two houses then under the statute and the FAQ they would be subject to the impact fee great thank you for clarifying that there's

▶ 1:25:30 Francis X. Wright Jr.: all my questions for now any further questions thank you just a quick follow

▶ 1:25:32 Kate Lipper-Garabedian: up on that do we need to do anything proactively to be able to participate in the community impact fee or are we all or is that also covered by our

▶ 1:25:45 Speaker 1: participation under this so as I'm reading this and as I'm reading the the FAQ with respect to the impact fee it appears that a separate acceptance vote is required to do that the question however is whether or not there are a sufficient number of properties in Melrose being used in such a way that would justify the impact fee we don't I don't have that data this evening and I don't know if we have that data compiled it as of this point in time right okay

▶ 1:26:13 Kate Lipper-Garabedian: so presumably we might get that from dor or through our own registry and it might behoove us to consider adding that because if you did have so we have a housing shortage and in some ways in this area so to the degree that if it's possible that we have anyone who would qualify for that we might want to have

▶ 1:26:34 Speaker 1: that in place to be able to take correct I think that's a very worthwhile effort

▶ 1:26:38 Francis X. Wright Jr.: okay thank you so much any other questions any other comments no we have a motion to place this item on file all in favor no where the item is placed on file item 4 on our agenda is order 2019-39 accepting clause 22 H of section 5 of chapter 59 of the general laws as amended by section 15 of chapter 218 of