On heels of interim commission report, Carson submits bills for transparency, equity in short-term rental industry
STATE HOUSE – After several months of studying the challenges faced by the state and municipalities in regulating the short-term rental industry in Rhode Island, Rep. Lauren Carson has introduced legislation aimed at improving regulatory compliance and transparency, as well as enabling local controls on the industry’s growth.
Representative Carson (D-Dist. 75, Newport) is the chairwoman of the Special Legislative Commission to Review and Provide Recommendations for Policies that Deal with Numerous Economic and Social Short-Term Rentals Issues, which has been meeting since September to explore the various issues facing the state and its communities in relation to short-term rentals.
That commission this week issued an interim report that noted a lack of coordination between the state registration system and the handful of municipal registration systems around the state, as well as a lack of transparency in the way short-term rental platforms remit the hotel, sales and municipal taxes they collect and submit on behalf of property owners.
“There’s a lot of inconsistency between the numbers of short-term rental registrations the state has recorded and the registrations some cities and towns have. It’s likely that many homeowners who are offering rentals aren’t aware that they might have to register with both. It also should be easier to verify the proper registration of any particular rental that is offered on these platforms. Now that we’ve had a few years of experience with registration, we can see there’s definitely some room for improvement in our systems for tracking short-term rentals. For the sake of public safety, economic fairness and transparency, we should make adjustments so registration is more effective in providing the information we need,” said Representative Carson.
The commission has not yet recommended or endorsed any legislation to enact substantive policy changes, but on her own, Representative Carson has introduced two new bills concerning short-term rentals.
The first (2024-H 8182) that would require that every Rhode Island property listed on any short-term rental platform display in its listing a valid state registration number, with its expiration date. Violations would be punishable by fine of $250 per day, with every property constituting a separate violation.
The legislation expands the information the state would collect at registration to include whether the property is owner-occupied, whether the rental unit is an entire house, a condominium or a room, and the number of properties the owner is offering for short-term rental on the platform.
Additionally, the bill enables municipalities to enact ordinances in compliance with applicable state and municipal zoning laws, issue licenses and charge fees to cover their costs relating to short-term rentals.
A separate bill Representative Carson has introduced (2024-H 8183) would add full houses and condominiums to the properties that are subject to the 5% hotel tax when they offered for short-term rental. The new revenue generated would be distributed to the municipalities where the rental is located, and must be used exclusively for municipal infrastructure improvements, riverine and coastal resiliency and housing.
“This bill tackles two issues at once: First, it addresses an inequity between hotels, which are subject to this tax, and many short-term rentals, which currently are not. And even more importantly, it generates revenue for communities to address some of their most pressing, expensive challenges, some of which are connected to the use of homes as vacation rentals. Short-term rentals are indisputably part of the tourism industry, which relies heavily on the safety and resiliency of our coastal resources. They are also a contributing factor in our housing crisis, so it is very fitting to allocate this funding to housing, infrastructure and resiliency along our coasts and water,” said Representative Carson.
A third bill (2024-H 8146) that Representative Carson has introduced is a recommendation from the short-term rental commission; it extends the commission’s life and reporting deadline to Sept. 30, 2025. In its interim report, the commission noted it has considerably more work to do provide recommendations on better coordination of the state and municipal registration systems and policies.
Additionally, the commission has raised concerns about a lack of transparency around tax compliance by the rental platforms. Currently, the platforms remit the taxes they collect in aggregate by municipality, without any breakdown showing the properties for which they were collected, or how much for each.
“We have identified several policy areas that need to be addressed, but we need to collect more information and develop recommendations for improvements,” said Representative Carson.
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