Nantucket voters will consider new regulations on short-term vacation rentals, renewing a debate over property rights, enforcement and housing policy.

Nantucket has some of the nation’s priciest real estate including a thriving short-term rental industry that brings vacationers to an estimated one in six homes on the island each year. 

What was once a source of additional income for island residents is being transformed in the Airbnb era. Vacation rental sites such as Heirloom now advertise luxury compounds equipped to accommodate dozens of guests and renting for nearly $3,700 per night. 

Nantucket voters will consider three articles designed to address the issue at the May 2 annual town meeting, but with two different sponsors and strategies to govern short-term rentals in the future. 

A nonprofit group, ACKNow, says the Airbnb effect has driven up costs and diminished the island’s supply of rental housing. More than 600 year-round rentals were removed from Nantucket’s housing stock between 2010 and 2018, according to U.S. Census Bureau data. 

The group’s citizens petition, which is article 43 at the town meeting, would require non-full-time residents to obtain a special permit from the town Zoning Board of Appeals to offer short-term rentals as an accessory use. 

ACKNow, whose executive director is former Nantucket Select Board member Tobias Glidden, did not respond to messages from Banker & Tradesman seeking comment. In advocacy materials, the organization says “investors, from Boston to China, are buying homes on the island and turning them into tricked-out short-term rentals.” 

A 2021 Massachusetts Supreme Judicial Court ruling has implications for Nantucket and other Bay State communities debating new short-term rental regulations.

In an IRS filing reporting its 2019 finances, the organization reported $200,000 in contributions and $105,000 in expenses, including $61,538 for the salary of Executive Director Julia Lindner. The sole $200,000 donation came from Peter McCausland, the former CEO of Airgas Inc., who sold the Radnor, Penn. distributor in 2016 for over $10 billion. 

The proposed regulations appear to target high-end services such as the Nantucket Collection, a venture by Boston-based developer Copley Group featuring bespoke touches such as concierge service that makes dinner reservations and organizes boating tours for guests. 

The firm rents 13 luxury homes on the island, which it acquired and renovated with designs by Joseph Olsen Interiors. It promotes the properties as offering “the benefits of a boutique hotel with the space and comfort of vacation living.” 

A representative listing, 38 Pleasant St., features a six-bedroom home and carriage house near downtown and lists weekly rentals peaking at $20,000 from mid-June through mid-September. 

The firm’s director of operations is Ben Levenson, son of Copley Group founder and CEO Norman Levenson. Copley Group referred requests for comment to The Alliance to Protect Nantucket’s Economy. 

Potential Blow to Tourism Industry 

A business group, The Alliance to Protect Nantucket’s Economy, is already mobilizing another public relations campaign against ACKNow’s 2022 proposal. It’s preparing a direct mailing to island residents urging them to support the pair of town-sponsored articles and reject ACKNow’s approach. 

Alliance members say the new restrictions proposed in Article 43 would deal a blow to the local hospitality industry, while discriminating against the property rights of non-full-time residents. 

“It is an attempt to hurt Nantucket’s economy and to strip private property rights for owners that have had them for generations,” said Ryan Castle, CEO of the Cape & Islands Association of Realtors. 

A group of Nantucket residents believes short-term rentals are helping drive up the cost of rental housing for year-round island residents, and is asking local voters to rein in the industry.

The Alliance cites a May 2021 study by the University of Massachusetts-Amherst’s Donahue Institute that median rents on Nantucket decreased in the previous decade from $1,872 to $1,665 between 2010 and 2019, according to U.S. Census Bureau data the institute analyzed. The island’s 12,000-plus housing units serve a year-round population of approximately 11,000 people and 3,700 households, an unusually low proportion of occupied dwellings, the report stated. 

The study also challenges ACKNow’s argument that short-term rentals drive up the cost of year-round housing for working-class households. It cited an analysis of over 1,700 registered short-term rental properties that have changed ownership since 2010, and found they had median sales prices of nearly $1.6 million, and were unlikely to affect the local supply of lower-cost housing. 

Town officials are sponsoring four articles of their own that would impose new regulations on short-term rentals. Property owners would have to register short-term rentals with the town Board of Health, provide a point of contact to address problems at the address within two hours, show proof of liability insurance and submit to inspections upon reasonable notice. Another zoning amendment would allow the Planning Board to ban short-term rentals in apartment buildings. 

The proposals also give the Board of Health the power to enact additional regulations on noise, overburdening of parking and nuisance conditions. Enforcement would include fines per day ranging from $100 for initial offenses to $300 for third and subsequent offenses. 

“It’s important to have a registration system, and we want to hold to account the bad actors,” the Realtors association’s Castle said. 

Nantucket’s existing system has prompted legal disputes over town officials’ interpretation and enforcement. 

In February, resident Catherine Ward filed a civil suit in Land Court against the Zoning Board of Appeals after it upheld the building commissioner’s ruling that short-term rentals at a neighboring property at 9 West Dover St. is a permitted use by-right in the town’s residential old historic zoning district. 

The owners, Linda and Peter Grape of Wellesley, advertise the property for weekly rentals at weekly rates up to $8,000 and do not use it as a residence, the lawsuit states. The property, located 25 feet from Ward’s back door, hosts numerous parties involving drinking games and music blasting so loudly that Ward is unable to watch television indoors or entertain guests, the complaint states. 

A message with the Grapes seeking comment was not immediately returned. 

Officials Cite Conflicts of Interest 

The prevalence of vacation rentals in the island’s housing market has even interfered with local officials’ ability to publicly debate the topic. Two select board members recused themselves from discussions this winter, citing conflicts of interest.  

Steve Adams

Dawn Hill Holdgate and Melissa Murphy said they derive income from short-term rentals and can’t participate in discussions, according to reporting by N magazine. The three remaining members discussed the topic at a meeting in late February, but declined to take a position. Only one, Matt Fee, responded to requests for comment from Banker & Tradesman. 

“I’m concerned about the long-term impacts allowing any entity to operate a STR anywhere on the island will have on our community,” Fee said in an email. 

The proposals have generated extensive public comment. Residents submitted 52 pages of letters to the Planning Board, some expressing concern about the growing number of “short-term high-frequency rentals” driven by Airbnb-type listing services. 

One resident cited the example of a 10-bedroom, 2,627-square-foot vacation rental advertised on the luxury vacation rental site Heirloom as an example of the changes in the market. 

“This is not a mom-and-pop operation – it’s a professional, commercial concern, a new use and a new operating model. These well-financed investor-driven projects maximize ‘stays,’ resident Hillary Hedges Rayport said in her letter. “To me, this project exemplifies where an unregulated free market for STRs will take us.”