Edgartown seeks to restrict fractional ownership properties

Just a week after the annual spring town meeting, some Edgartown officials have already set their sights on the next town meeting in an effort to help address the housing crisis.

The Edgartown planning board quickly and unanimously approved a proposed warrant article Tuesday that would strictly regulate what has been an increasing volume of fractional ownership properties in town. 

Voters in Tisbury are already slated to weigh in on a similarly crafted article at their town meeting on April 25. Also on Tisbury’s warrant next week is a proposed amendment to the town’s zoning bylaws that would lift restrictions on construction of accessory dwelling units (ADUs). 

Although not considered at Edgartown’s recent town meeting, town officials plan to consider a similar ADU amendment in the near future, as well as the restrictions on fractional ownership, which were met with overwhelming support by the town’s planning board Tuesday.

If greenlit by voters in the fall, the bylaw would prohibit all jointly owned properties that fall under the definition of fractional ownership.

Fractional ownership describes properties owned by multiple parties who each own a percentage, along with sharing usage rights. Planning board members say they pose a direct risk to the town’s year-round residents and their access to stable, year-round housing.

Similar to timeshares, fractional ownership properties operate through central management agreements, and by limiting shareholders’ occupancy to a certain time frame.

Under the joint ownership structure, share owners have full discretion regarding selling, purchasing, renting, or further dividing their interest in the property. 

“Instead of having two or three or four people share use of a structure, it can turn into 52 people who share the use of a structure,” planning board administrator Doug Finn said. 

“If you can buy two weeks on Martha’s Vineyard for a low cost of $45,000, that sounds great,” he said of the appeal. But when you have dozens of owners, the overall price of that house in its entirety quickly exceeds the house’s value. 

“Suddenly it’s $20 million for what should be a $6.5 million property,” Finn said. “And suddenly the market goes nuts.”

“This has the ability to escalate real estate values,” planning board member Mike McCourt said. “We don’t need to do that.” 

McCourt briefly suggested eliminating allowance of all fractional ownerships in all of Edgartown, before he agreed to the proposal which would prohibit them in residential areas only. The change would still allow fractional ownership in the town’s business district, but that would require a special permit.

Per the recommended warrant language, the purpose of the zoning bylaw amendment is “to preserve and protect housing stock in the town from the market pressures attendant to fractional ownership, interval, and timeshare uses, and to protect neighborhoods from the impact of such uses.”

The needs of transient occupants, or shared-interest owners, “are averse to the interests that ought to be protected and preserved in residential neighborhoods, because commercial uses for transient occupants may sacrifice other values critical to residential neighborhoods,” the proposed article states. “The town deems it necessary and appropriate to protect the existence of year-round residences and the quiet and peace of the town by preventing unwarranted commercialization from encroaching therein, including commercialization caused by the misuse of single-family residences.”

Planning board member Scott Morgan advocated for the new bylaw, but pointed out possible impacts it could have on local, longtime homeowners. 

“There are so many locals that are being chased off the Island,” he said. The restrictions could “hamstring a local from really cashing in on a house if they decide to leave.”

The warrant article will now be taken up by Edgartown voters at the next special town meeting, which is likely to take place in the fall.

“I hope there are enough locals that really understand the importance of their neighborhood to vote this through,” he said. “I hope there’s enough locals left that care about the quality of life and the neighborhoods here, and what seems to be disappearing.”

Specifically on Martha’s Vineyard, fractional ownership has the potential to “absolutely cripple our housing market,” planning board chair Lucy Morrison said. The Island’s housing market “doesn’t need another blow right now.”

“For years now, we’ve been dealing with the weekly rentals, the Airbnb’s,” planning board member James Cisek said, expressing his concern that if not regulated now, fractional ownership properties could “morph” into subrentals and subleases, which would leave the town with little or “no control.”

“This would be a step in the right direction,” he said.