A long-dormant bill to regulate short-term rentals through Airbnb and similar companies sprang to life on Beacon Hill Thursday, with the House and Senate passing a last-minute compromise measure and sending it to Governor Charlie Baker’s desk.
The fast-track moves, days before the two-year legislative session ends Jan. 1, came after years of debate, and weeks of negotiations over how best to tax and regulate the booming business of renting homes by the night.
Should Baker sign the proposal into law, the rules would take effect July 1 and could transform the landscape of an industry whose scope ranges from second homes on Cape Cod to apartment buildings in Boston and Cambridge to vacation retreats in Western Massachusetts.
House and Senate lawmakers in July passed a similar bill to assess taxes on short-term rentals, mandate hosts to carry insurance, and require that they be registered with the state. But Baker blocked it, saying the rules were onerous for people who rent their homes only a few nights a year.
The parties involved in the legislation have spent the last few weeks trying to hammer out a compromise, hamstrung by the complexity of passing a law during an informal session, when a single “no” vote can kill a bill.
They emerged Thursday with a plan that would require all hosts to register and carry insurance, and would impose taxes on short-term rentals — but exempts people who rent their homes 14 or fewer nights a year. A small contingent of lawmakers passed it in the House late Thursday morning, and the Senate voted just a few hours later.
Members of the governor’s staff were involved in negotiations over the bill, but Baker himself, who would have 10 days to sign it into law if it’s passed, was noncommittal Thursday afternoon.
“I didn’t know it passed until five minutes ago,” he said, shortly after the House vote. “Let me read it.”
The bill would subject short-term rentals to the same 5.7 percent state tax now paid by hotels — which the state estimates would raise at least $25 million annually. It also would allow cities and towns to levy their own taxes of up to 6 percent, except in Boston, where it would be 6.5 percent — once again, exempting occasional hosts. Additional taxes would be levied on hosts who own multiple units and, eventually, in Boston, Cambridge, and a handful of other cities that support the Massachusetts Convention Center Authority, but only after bonds are paid off on the Boston Convention and Exhibition Center in South Boston.
Cities including New York and San Francisco have used short-term rental registries to rein in the industry, but this bill would make Massachusetts the first state to require all hosts to register. That, more so than the taxes, has been the focus of debate in recent months.
Hotel industry groups and housing advocates pushed for a comprehensive registry that would allow people to see if their neighbors were renting a house or apartment short-term. Cambridge and Boston, meanwhile, have passed regulatory regimes of their own, but say a statewide registry would aid enforcement, which in Cambridge has been hampered by hosts not signing up.
Airbnb, which has sued in federal court to overturn Boston’s regulations, has pushed back on the statewide bill, saying a full registry could put hosts’ privacy at risk and warning of undue burdens on hosts who only infrequently rent out space.
In August, Baker tried to split the difference, proposing an exemption from the registry for people who host 14 nights or fewer, but the bill’s supporters objected, saying professional, full-time hosts would use that provision as a loophole to avoid scrutiny altogether. The measure passed Thursday requires all hosts to register, but exempts occasional hosts from taxes. And it would create a state registry, but only list the community and street name, not specific addresses, though cities and towns could choose to publish full addresses.
Representative Aaron Michlewitz, a North End Democrat who was the House’s chief negotiator, said the bill required compromises on all sides.
“It was a complex issue with a lot of intricacies,” he said. “There was some good and healthy discussions and negotiations between the House, Senate, and governor’s office, which I think has provided a better bill at the end of the day. We’re happy to have it completed.”
Not everyone sees it that way.
“This bill raises serious concerns for the thousands of Bay Staters who share their home to make a little extra income,” Airbnb said in a statement Thursday afternoon after the House vote but before the Senate’s. “In addition to undermining the governor’s effort to shield hosts’ personal information, the bill would impose significant burdens on individual hosts, many of whom rent their homes for just a few weeks a year.”
The company asked Baker to veto the bill and have lawmakers revisit the matter in next year’s session, which starts in January, when there will be time for a full debate.
Senator Michael J. Rodrigues, one of the Senate negotiators, said Baker has given “no ironclad assurances” that he’ll sign the bill, but that lawmakers worked “very, very closely” with his office to craft the compromise.
“I’m confident the governor will be happy with it,” Rodrigues said.
And after four years of debating short-term rental rules, it’s time to pass something, said Paul Sacco, president of the Massachusetts Lodging Association, a hotel trade group. The bill that leaped to life Thursday may not be perfect, but it’s better than starting over, he said, and he urged its passage.
“At this point,” Sacco said, “why not?”