Westport voters will weigh whether to boost local lodging tax

WESTPORT — Airbnbs are on the rise and popular in town.

But taxes on transactions for these and other short-term rentals could also soon be on the rise.

Voters at Annual Town Meeting, planned for May, will deliberate on whether to raise the local lodging tax from 4% to 6%, a fee that will impact hotel, Airbnb and vacation rentals by owner via the company Vrbo.

Town Administrator Timothy King proposed the hike because it will generate approximately $100,000 in additional revenue to a town that started 2020 with a proposed fiscal 2021 draft budget in the red.

Selectmen Chairwoman Shana Shufelt, at the March 2 meeting, proposed that the board conduct more research.

King confirmed this week that the proposal will move forward and voters will weigh in on it in May.

Richard Lafrance, CEO of Lafrance Hospitality Inc., questions if the increase will adversely affect the town’s revenue stream by driving away tourism.

He says it could also threaten his business clientele.

Lafrance Hospitality owns the 133-room Hampton Inn on Old Bedford Road and this fall is planning to open TownePlace Suites by Marriott, a 90-room facility, next door facing State Road.

Lafrance says his business will likely be affected the most by the prospective tax hike.

He contended that his hotel business attracts corporate entities, and he often has to compete with neighboring Fall River, which also attracts corporate clientele to its Airport Road hotel plaza.

Like Westport, Fall River imposes a 4% local lodging tax.

The Industrial Park businesses in the city, due to the city’s investment in hotel property, can offer better rates to consumers.

If Westport’s tax rose to 6%, it would put Lafrance hotel rooms at a disadvantage, Lafrance says.

“Corporate people are paying more in Westport than in the (Fall River) Industrial Park. ,,, We are not competing at a level playing field,” he said.

Lafrance also questioned the timing of the proposal — hotel room vacancies are on the rise due to the coronavirus outbreak.

Local real estate professionals Maury May and Arlene Cloutier weighed in. Both are no longer involved in short-term rentals, but they both agree that taxes like these are passed on to the consumer.

“Massachusetts and Rhode Island have been battling this concept the past few years since the rise of AirBNB (and) Vrbo. The new taxes will get passed on to the consumers,” Cloutier said.

Despite these issues, budget meetings earlier this year have centered around the town’s lack of funds, and King proposed not funding some positions that officials had originally agreed to fund, such as an assistant town planner.

Police Chief Keith Pelletier and Fire Chief Brian Legendre gave presentations requesting more staffing, and said that staffing within their departments has not increased in decades, despite more emergency calls and demands on the departments.

Finance Committee Vice Chairwoman Karen Raus said the Finance Committee had not yet discussed the proposed lodging tax rise and how it would affect the budget.

At the March 2 meeting, Selectman Richard Brewer questioned if the rise would be too much of an impact on the business community and their consumers. Brewer noted at the meeting that short-term renters and hotel patrons pay a state tax near the 6% mark.

The local lodging tax increases that tax burden to more than 9%. Brewer said the increase would more than double the state tax and put the total to nearly 12%.

The state tax is now 5.7%, with Westport adding an additional 4%, making it 9.7% at the moment.

“This is a new issue and has not received very much attention. We need to determine the effect on businesses and on individuals who rent, with my concern being the average person who rents either their home or rooms on a short-term basis,” Brewer said in an email after the meeting.

“I am not surprised that I have not heard from anyone, but that may change when the financial impact is understood. My interest in the issue is for people to be informed.”

King and selectmen passed on proposing another additional tax — the community impact fee.

King said state law allows communities to adopt a community impact fee, a 3% tax, which would be in addition to the lodging tax increase.

King and Selectman Vice Chairman Brian Valcourt explained that these taxes are better suited for communities along the Cape, which attract seasonal vacationers for longer periods of time, and use the funding to repair damage to properties or infrastructure.

Valcourt said the seasonal rental demands in Westport are not strong enough to warrant the additional fee.