Housing Bank idea lives on

After motioning to indefinitely postpone the Housing Bank article at Edgartown’s annual town meeting in April, selectman Michael Donaroma suggested the town establish a committee to review the Housing Bank idea.

A committee hasn’t formed, but a working group to establish that committee and brainstorm affordable housing ideas such as a possible 0.5 percent real estate transfer tax met on Tuesday at Edgartown Town Hall.

The group consisted of Donaroma, affordable housing committee member Christina Brown and chair Christine White, Dukes County manager Martina Thornton, Housing Bank advocate Steve Ewing, and planning board chair Fred Mascolo.

Donaroma floated the idea of a 0.5 percent tax that would go toward affordable housing, modeled on the 2 percent fee the Martha’s Vineyard Land Bank receives from every real estate transaction on the Island.

“We have a format we could try to look at, try to follow,” Donaroma said.

During the meeting, town administrator James Hagerty told the group Edgartown receives about $1 million each year from the rental taxes on hotel and inn rooms. With the rental tax expanded to Airbnbs and other short-term rentals that are more than 14 days, that revenue is expected to grow, but it’s not clear by how much. Since the town depends on the revenue from the room rental tax, and projections for how much new revenue it will grow are not clear, the group decided it was best to not discuss using money from the expanded tax for housing.

The expanded tax has pulled in more revenue for the town, but numbers are below Martha’s Vineyard Commission (MVC) projections. According to Hagerty, revenue from May to July, the first quarter of FY20, was $592,428, a 30 percent increase from the previous fiscal year. 

While the law went into effect in January, municipalities did not start collecting the tax until July 1. The tax only covers property owners who have registered.

The commission projected Edgartown would pull in $2.1 million a year by estimating half of Edgartown’s seasonal short-term rentals to be 1,772, with an average rent of $3,000 per week over 10 weeks, at a 4 percent local tax rate.

Despite an increase in the first quarter, Hagerty told the group it was too early to make further projections.

“Is it going to be 30 percent more? I don’t know. I can’t make that projection. Are these off-season months going to be 30 percent more? I don’t know,” Hagerty said.

The revenue from the short-term rental tax is regulated by the state’s Department of Revenue, and then goes to Edgartown’s free cash, the town’s balance remaining after the town has satisfied its debts. Free cash can be appropriated out by a majority town meeting vote.

Thornton said there would need to be support for legislation from each Island town for a 0.5 percent transfer tax. From there, they would have to figure out if the revenue went to the town where the sale was made, or if it would go toward one regional pot.

“Maybe some of the towns who are not starting these discussions might not start it because they thought it was going to be the short-term rental tax revenue, but if you’re talking about a different stream, maybe they might be more acceptable,” Thornton said.

Brown added that ideas should be left open, and the group agreed they weren’t committing to a 0.5 percent tax, and would brainstorm ideas with other towns. She said the group should gather data on how much revenue a 0.5, 1, or 2 percent tax would generate.

Selectman Art Smadbeck, who was listening from the audience, suggested the group should formulate the direction they want to go in before they talk to other towns. 

“This seems like a different thing to push right now. Let’s try something else,” Donaroma said. “We’re not locked into anything right now; we just need some info.”