Amendment #1 to H.4287

HOUSE . . . . . . . No. 4314

The Commonwealth of Massachusetts
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HOUSE OF REPRESENTATIVES, March 19, 2018.

The committee on Ways and Means, to whom was referred the Bill regulating and insuring short-term rentals (House, No. 4287), reports recommending that the same ought to pass with an amendment substituting therefor the accompanying bill (House, No. 4314) [Representative Boldyga of Southwick dissents].

For the committee,

JEFFREY SÁNCHEZ.

FILED ON: 3/19/2018

HOUSE . . . . . . . . . . . . . . . No. 4314

The Commonwealth of Massachusetts

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In the One Hundred and Ninetieth General Court
(2017-2018)

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An Act regulating and insuring short-term rentals.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

SECTION 1. Section 6 of chapter 14 of the General Laws, as appearing in the 2016 Official Edition, is hereby amended by adding the following 2 clauses:-

11. Shall establish and maintain a short-term rental registry to record the name of each host and the corresponding address of each residential unit offered for short-term rental under chapter 64O. The commissioner may charge a reasonable fee for such registration.

12. Shall maintain on the department’s website an easily searchable and regularly updated list of addresses of all residential units offered for short-term rental registered in the short-term rental registry established in clause 11, excluding the names of the hosts of said properties.

SECTION 2. Section 16 of chapter 62C of the General Laws, as appearing in the 2016 Official Edition, is hereby amended by inserting after subsection (g) the following subsection:-

(g1/2) Every host, or by agreement, hosting platform, as defined in section one of chapter sixty-four O, subject to taxation under chapter sixty-four O, shall file a return with the commissioner for each calendar quarter. The commissioner may by regulation require returns under this section to be filed on an annual rather than a quarterly basis or on such other basis as he may determine and to have different filing periods for different groups of hosts or hosting platforms. Every such return shall be filed within twenty days after the expiration of the period covered thereby.

SECTION 3. Section 21 of said chapter 62C of the General Laws, as so appearing, is hereby amended by striking out, in lines 161 and 162, the words “chapter 64G and chapter 64L” and inserting in place thereof the following words:- chapter 64G, chapter 64L and chapter 64O.

SECTION 4. The General Laws are hereby amended by inserting after chapter 64N the following chapter:-

CHAPTER 64O: SHORT-TERM RENTAL EXCISE

Section 1. As used in this chapter the following words shall, unless the context clearly requires otherwise, have the following meanings:

“Commissioner”, the commissioner of the department of revenue.

“Department”, the department of revenue.

“Host”, an investor host, a professionally managed host, or a residential host.

“Hosting platform”, a person or entity that provides a service through which hosts may offer a residential unit for short-term rental to an occupant through a website, software, online-enabled application, mobile phone application or other similar advertising process, and for which the person or entity collects or receives, directly or indirectly through an agent or intermediary, a fee.

“Investor host”, whoever rents between 3 and 5 residential units for short-term rental.

“Occupant”, a person who, for consideration, uses, possesses or has a right to use or possess a residential unit offered for short-term rental.

“Professionally managed host”, whoever rents 6 or more residential units for short-term rental.

“Property manager”, an individual who is responsible for the upkeep and maintenance of residential units and is available either on-site or on-call 24 hours per day.

“Residential host”, whoever rents 2 or fewer residential units for short-term rental.

“Residential unit”, a room, group of rooms or other living or sleeping space for the lodging of occupants; a single-family dwelling, multi-family dwelling or residential dwelling unit in a multi-unit structure; or a condominium, cooperative, timeshare or similar joint property ownership arrangement, including vacation rentals.

“Short-term rental”, the rental of a residential unit for a duration of less than 28 consecutive days for a fee; provided, however, “short-term rental” shall not include the rental of those accommodations which are defined in section 1 of chapter 64G.

Section 2. An excise is hereby imposed upon an occupant of a residential unit offered for short-term rental for the total amount of rent for each short-term rental, at the rate of 4 per cent by a residential host; 5.7 per cent by an investor host; and 8 per cent by a professionally managed host. No excise shall be imposed if the total amount of rent is less than $15 per day.

Section 3. (a) Any city or town may impose a local excise tax upon an occupant for the total amount of rent for each short-term rental at a rate of up to, but not exceeding, 5 per cent by a residential host; 6 per cent by an investor host; and 10 per cent by a professionally managed host. No excise shall be imposed if the total amount of rent is less than $15 per day.

This subsection shall only take effect in a city or town accepting the provisions of this section by a majority vote of the city council with approval of the mayor, in the case of a city with Plan A, Plan B or Plan F charter; by a majority vote of the city council, in the case of a city with Plan C, Plan D or Plan E charter; by a majority vote of the annual town meeting or a special meeting called for that purpose, in the case of a municipality with a town meeting form of government; or by a majority vote of the town council, in the case of a municipality with a town council form of government. The provisions of this section shall take effect on the first day of the calendar quarter following 30 days after such acceptance, or on the first day of such later calendar quarter as the city or town may designate. The city or town, in accepting the provisions of this section, may not revoke or otherwise amend the applicable local tax rate more often than once in any 12 month period.

(b) Any city or town which accepts the provisions of subsection (a) shall enact ordinances or bylaws requiring all residential units offered for short-term rental within the city or town to undergo a safety inspection before said residential units shall be rented. The city or town shall have 60 days after the address of a residential unit is listed on the department’s website, as required under section 6 of chapter 14, to inspect said unit. If the residential unit is not inspected within 60 days, the host may offer the residential unit for short-term rental on a temporary basis. The cost of the inspection shall be charged to and paid by the hosts. After the initial safety inspection, cities and towns shall determine the frequency of any subsequent inspections.

(c) Any city or town which accepts the provisions of subsection (a) may require a host to demonstrate that a residential unit is not subject to any outstanding building, electrical, plumbing, mechanical, fire, health, housing or planning code enforcement, including any notices of violation, notices to cure, orders of abatement, cease and desist orders or correction notices.

(d) Any city or town which accepts the provisions of subsection (a) shall distribute an amount equal to 50 per cent of the excise tax collected by professionally managed hosts pursuant to this section to programs addressing either local infrastructure needs or low- and moderate-income housing programs.

Section 4. Any city or town, whether or not such city or town has accepted the provisions of section 3, may enact ordinances or bylaws under this chapter.

Any city or town, whether or not such city or town has accepted the provisions of section 3, may establish penalties for failure to comply with ordinances or bylaws enacted by said city or town under this chapter.

Any city or town, whether or not such city or town has accepted the provisions of section 3, may restrict short-term rentals, including but not limited to, a restriction on the number of days hosts may rent out residential units, a requirement that hosts obtain a business licenses and a requirement that each residential unit is the host’s primary residence.

Section 5. Any excise tax imposed pursuant to sections 2 and 3 shall be paid by the occupant. Hosts, or by agreement, hosting platforms, shall pay the excise to the commissioner at the time provided for filing the return required by section 16 of chapter 62C. Hosts, or, by agreement, hosting platforms, shall add to the rent and shall collect at the same time and in the same manner from the occupant the full amount of the excise tax. Any excise tax shall be stated and charged separately from the rent and shown separately on any record thereof at the time the transfer of occupancy is made, or on any evidence of such transfer issued or used by the host or hosting platform.

Hosts, or by agreement, hosting platforms shall pay any local excise tax imposed under section 3 to the commissioner at the same time and in the same manner as the state excise tax. All sums received by the commissioner shall be distributed, credited and paid at least quarterly by the state treasurer upon certification of the commissioner to each city or town that has adopted the provisions of section 3 in proportion to the amount of such sums received from the short-term rentals in each such city or town.

The commissioner shall make available to any city or town requesting such information the total amount of room occupancy tax collected pursuant to section 3 in the preceding fiscal year in the city or town requesting the information.

Section 6. Hosts shall comply with any and all applicable municipal, state and federal laws, including but not limited to the collection and remittance of required excise taxes.

Professionally managed hosts shall employ a property manager for each residential unit and maintain $1,000,000 or more in liability insurance offered for short-term rental.

Hosts shall retain and, upon receipt of written request, make available to the department or to the city or town, short-term rental records, including, but not limited to, those records demonstrating a host’s place of primary residence and the number of days per calendar year a residential unit has been rented for short-term rental, including the specific dates and the duration of each stay.

Hosts shall register each residential unit with the short-term rental registry maintained by the commissioner pursuant to section 6 of chapter 14.

Hosts shall be required to provide notice to all insurers of the host’s intention to use the residential unit as a short-term rental.

Hosts shall post inside the residential unit information regarding the location of all fire extinguishers, gas shut off valves, fire exits and fire alarms in the unit and building.

Nothing in this chapter shall confer a right to lease, sublease or otherwise offer a residential unit for short-term rental where such use is prohibited by a homeowner’s association agreement or requirements, a rental agreement or any other restriction, covenant, requirement or enforceable agreement.

Section 7. Prior to any host listing a residential unit for short-term rental through a hosting platform, the hosting platform shall ensure that the host has registered the residential unit with the short-term rental registry maintained by the commissioner under section 6 of chapter 14 and shall provide notice to the host that this chapter regulates short-term rentals and establishes state and local excise tax obligations.

Hosting platforms that execute the financial transaction between hosts and occupants shall maintain liability insurance of not less than $1,000,000 to cover each residential unit offered for short-term rental. Such coverage shall defend and indemnify the host and any tenants or owners in the building for bodily injury or property damage arising from the short-term rental.

Hosting platforms that execute the financial transaction between hosts and occupants shall collect and remit any taxes required by this chapter. Hosting platforms shall maintain records of any taxes collected that have been remitted to the commissioner and shall make these records available to the department upon request.

Hosting platforms shall provide notice to all potential hosts that standard homeowners or renters insurance may not cover damage or injury to a third-party related to short-term rentals.

Hosting platforms and hosts shall not discriminate on the basis of race, sex, gender identity, ethnicity, sexual orientation, age, religion, disability or nationality.

Section 8. For residential units subject to rent control provisions, hosts shall charge no more than the prorated maximum amount allowed.

Section 9. No excise shall be imposed, pursuant to this chapter, for a short-term rental if the occupant is an employee of the United States military traveling on official United States military orders which encompass the date of said occupancy. Each host and hosting platform shall maintain such records to substantiate exemptions claimed under this section.

Section 10. The provisions of chapter 186 shall not apply to short-term rentals.

SECTION 5. Chapter 175 of the General Laws, as appearing in the 2016 Official Edition, is hereby amended by inserting after section 4E the following section:-

Section 4F. Insurers that write homeowners and renters insurance may exclude any and all coverage afforded under a policy issued to a homeowner or lessee for any claim resulting from a short-term rental under chapter 64O of the general laws.

Insurers that exclude the coverage described in this section shall not have a duty to defend or indemnify any claim expressly excluded by a policy. Nothing shall preclude an insurer from providing coverage for short-term rentals if the insurer chooses to do so by contract or endorsement.

SECTION 6. Section 1 shall take effect on January 31, 2019.

SECTION 7. Sections 2, 3 and 4 shall take effect 1 year after the effective date of this act; provided, however, that the department of revenue shall establish rules and regulations for the collection and remittance of taxes pursuant to section 2 and section 3 of chapter 64O of the General Laws, inserted by section 3 of this act, on or before January 31, 2019.

SECTION 8. Cities and towns shall conduct initial inspections on short-term rental units listed on the registry, as required under section 3 of chapter 64O of the General Laws, not later than 6 months after the city or town accepts the provisions of said section 3 of said chapter 64O.