The City Council Committee on Government Operations held a hearing on April 18 regarding an order that “seeks to accept an adjustment of the local room occupancy excise rate by .05 percent points to 6.5 percent for all lodging establishments,” according to City Councilor Michael Flaherty.
In addition, the order also seeks to allow the city to adopt three local options: a local room occupancy excise tax up to 6.5 percent on all short-term rentals, a three percent local community impact fee on professionally managed short term rental stays, and an additional local community impact fee on short term rental stays in locally defined, “owner adjacent” units, Flaherty said.
“These local excises and community impact fees will help mitigate the potential impact of short term rentals on our long term housing stock,” Flaherty said. “Monies collected through these local excise and community impact fees will be a dedicated source of revenue for housing and homelessness efforts here in the City of Boston.”
The order for these fees comes on the heels of the city regulatory law for the short-term rental industry that went into effect on Jan. 1. The state also saw a law change earlier this year for the industry, and that law will go into effect on July 1 of this year.
In 2009, the state allowed for an increase in the rate from four percent to six percent. Given the most recent changes at the state level, Justin Sterritt, Budget Director for the City of Boston, said that they “decided to take a look at a kind of holistic approach” and level the playing field at 6.5 percent.
“The orders that have been submitted today are vital to ensuring that the city can continue to invest in critical housing and homelessness efforts,” Sterritt said. He said this order will generate $5 million annually that will be put towards housing and homelessness programs and services. “In FY20, this includes $4 million to fund supportive housing creation and $1 million to support youth and young adult homelessness initiatives,” he said.
Sterritt said that the room occupancy tax will still keep Boston below major competitive cities like San Francisco and Chicago, “so we are confident that this will remain competitive,” he said. He said that they do not anticipate that the increase (about a dollar per average nightly rental) will have a major effect on people staying in these places.
Laila Bernstein, Deputy Director for the Supportive Housing Division of the Department of Neighborhood Development, talked about Mayor Martin Walsh’s 2015 plan to end veteran and chronic homelessness. She talked a little bit about the outcomes of that plan and why the department is seeking additional funds through this order. “When we started the effort, there were 612 chronically homeless individuals in the City of Boston and since then we have housed 735 chronically homeless individuals,” Bernstein said. “However, we are not at zero chronic homelessness, which was the Mayor’s plan. More names keep showing up.” She added that they have also “leveraged or created” 300 new units of permanent supportive housing, but more resources are needed to create even more housing.
They are also changing the way they go about ending chronic homelessness, Bernstein said, by switching from a method of making sure people were compliant with a treatment plan before housing could be offered. The new method “reverses it, saying that housing is a right and people need a platform of stability before they can start to look at other issues that they may want to work on,” she said.
Bernstein said that $4 million of the revenue raised from this proposal will be directly funneled towards creating more permanent supportive housing, “and it will amplify the work that we’re already doing.” She said the remaining million dollars would be used to end homelessness among youth and young adults.
“The vast majority of this new five million will come from the existing lodging establishments, so those are mostly hotels and motels throughout the city,” Sterritt said, and “we’re pretty confident that we’ll collect the full five million.”
Amy Coolidge, Vice President of Community and Government Relations for Pine Street Inn, said that Pine Street Inn is in support of the proposal for funding for permanent supportive housing because “we know it works. We’ve been doing it for over 30 years, before there was even a name for it.”
Eric, a resident of supportive housing, explained how he used to have to “show up for my appointments, I couldn’t make excuses” in order to get the keys to his home.
“I showed up 15 minutes early, I walked from Jamaica Plain to Boston Housing to be there three hours early just to make sure that I was on time to sign two papers. That’s how hard I worked with nothing in my pocket but lint. And these are the things that our folks out on the streets have to work just as hard as well,” he said.
He said he was previously depended upon the shelter system which “had an adverse affect” on his health and medical issues. While staying in the Shattuck shelter, he said he developed a sore on his foot which resulted in him needed half of his foot amputated.
“When I go and put the keys into my front door, I feel like I’m a part of society again,” he said. “I took a shower to be here. I shaved.” He thanked the City Council for being “world class,” and urged them to adopt this order so more money would be allotted towards supportive housing.
“For me, supportive housing works. Everybody deserves a chance. With this entity that you guys are going be voting on soon, that will help that. It will help people show up for life,” Eric said. “And that’s what I’m doing today, I’m showing up for life.”