Ruggiero bill would allow municipalities to classify busy
short-term rentals as commercial property
STATE HOUSE – As short-term rentals have increasingly become a major segment of the tourism market, governments have grappled with the appropriate ways to regulate them to ensure safety and fairness, and prevent them from becoming a nuisance to residential neighborhoods.
To help Rhode Island cities and towns with that effort, Rep. Deborah Ruggiero (D-Dist. 74, Jamestown, Middletown) has introduced legislation (2020-H 7850) to enable municipalities to classify dwellings that are rented for more than 30 non-consecutive days in a year as commercial properties.
The bill is aimed at helping municipalities to collect appropriate taxes from properties that are, for all intents and purposes, operating as businesses, and to prevent de facto unregulated hotels or bed-and-breakfasts from changing the character of residential neighborhoods.
Representative Ruggiero said the bill is particularly aimed at the proliferation of non-owner-occupied buildings that are being purchased solely for use as short-term rentals.
“Short-term rentals on third-party platforms like AirBnB present a new set of challenges to local and state regulators. When the short-term rental concept began five years ago, homeowners defrayed their property taxes by renting rooms in their homes,” said Representative Ruggiero. “This has morphed into investors buying up properties in neighborhoods, taking affordable housing off of the market and running businesses in residential neighborhoods, which can alter a neighborhood.”
Under the bill, a city or town council would need to adopt an ordinance in order to begin reclassifying properties in the manner described in the bill. The “30 non-consecutive days” stipulation would prevent the reclassification of ordinary rental properties, although they are already considered commercial if they have more than five units.
“This is a local governance issue, since every municipality is different. The state should not be telling a municipality how to manage short-term rentals, but this enabling legislation gives towns one more tool in the tool box, providing they pass an ordinance,” said Representative Ruggiero.
The bill was introduced Feb. 26 and is before the House Municipal Government Committee. It is cosponsored by Rep. Lauren H. Carson (D-Dist. 75, Newport), Rep. Camille F.J. Vella-Wilkinson (D-Dist. 21, Warwick), Rep. Jason Knight (D-Dist. 67, Barrington, Warren) and Rep. Robert E. Craven (D-Dist. 32, North Kingstown).
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