After clearing House, bill to regulate short-term rentals moves to Senate
By The Star Staff
The island House of Representatives has passed House Bill 1557, which regulates short-term rentals, with amendments that critics said failed to address factors tying short-term rentals to an intensifying housing crisis.
On Sunday, it was unclear whether the Senate would vote on the bill before the end of the day. Sunday was the last day to pass bills in the current session.
The House measure received the support of the majority delegation of the Popular Democratic Party (PDP), the Citizen Victory Movement (MVC), Dignity Project (PD) Rep. Lisie Burgos Muñiz, and independent Rep. Luis Raúl Torres Cruz.
However, in the final vote, Puerto Rican Independence Party (PIP) Rep. Denis Márquez Lebrón and New Progressive Party (NPP) Reps. Carlos Méndez Núñez, Lourdes Ramos Rivera, José Aponte Hernández and Jorge Navarro Suárez voted against the bill.
Márquez said there are residential areas where short-term rentals should be prohibited because they are commercial activities negatively impacting the communities.
He said a community in Trujillo Alto has noise and parking problems because a homeowner divided a house into eight short-term rental apartments, causing parking and noise problems. He also mentioned a complaint about someone who purchased seven apartments in a 12-apartment building and devoted them to short-term rentals.
“With the latest amendments, we are ignoring this problem,” Márquez said. “One of the biggest complaints of the communities is not being addressed. We have not created a balance.”
Rep. José Rivera Madera, the bill’s author and chairman of the House Tourism Committee that evaluated the measure, said the committee worked on a bill that was as fair as possible and harmonized the aspirations of all people.
“What this bill seeks is to regulate this activity in a macro way, providing as much space as possible for the municipalities to regulate what has to do with public order,” the PDP lawmaker said.
Rivera Madera said the committee welcomed various amendments suggested by government regulatory agencies, nonprofit organizations, and communities that have denounced the effects of the dramatic increase in short-term rental activity in residential areas.
One of the most important amendments introduced to the bill is the relaxation of the definition of “commercial activity.” The bill was modified to say short-term leasing is defined as a commercial activity only for tax purposes.
“We also understand that, as we saw in the public hearings, the majority of people who have short-term rentals in Puerto Rico are not as many people may think … but are people who bought a ‘second home’ and with that are generating extra income,” Rivera Madera said.
“Therefore, we have to ensure that they are not charged a commercial rate for water and electricity … and that it is not a very onerous charge that they are facing,” he said.
The lawmaker added that during the discussion of the measure, community residents stated that they feel threatened by the problems of displacement and affordable housing in long-term rentals that have caused the proliferation of short-term rentals around the island.
Likewise, he said, communities have pointed to problems of garbage, noise, lack of parking, and concern for safety before the arrival of short-term rentals in their areas of residence.
Meanwhile, NPP Minority Leader Méndez Núñez criticized the measure.
“At first there was talk of increasing the tax on these short-term income facilities to nine percent to allocate some resources to the municipal governments so that they could cover the expenses for this type of activity in each of the municipalities,” Méndez Núñez said. “With these amendments, it turns out that the municipalities were left with nothing and with the same problems as before.”
The NPP spokesman stressed that problems caused by short-term rentals must be addressed through amendments to the Municipal Code of Puerto Rico rather than through the Tourism Company, as the proposed law states.
Méndez Núñez added that his most significant concern about the amendments to the bill is the definition of commercial activity.
“The definition considered is going to be the hook that government agencies and private agencies are going to use to define what is an activity that provides non-residential income, and in this way what LUMA Energy will put commercial meters on,” he said. “Perhaps an issue we want to resolve in the metropolitan area may be a tax burden for other areas that handle this commercial activity. That definition would result in a new tax for the citizen with a short-term rental [structure] on his farm.”
Torres Cruz, the independent legislator, disagreed with the NPP spokesman, arguing that the bill addresses his concerns.
“On page 5, line 12 of the bill, it is made very clear that the definition of economic activity is solely for tax purposes and not for the characteristics and classifications of the property where this type of economic activity is carried out,” Torres Cruz said.
MVC alternate spokesperson Mariana Nogales Molinelli took a turn to announce her vote in favor of the measure.
“This measure is a start to regulating a commercial activity that has gotten out of control,” she said. “The bill contains definitions and records that are more comprehensive than those that currently exist.”
Nogales Molinelli added that matters related to the facilities tax could be addressed in the next four years.
“That this legislation fell short, yes, but it is a step in the right direction to address a social problem that affects many communities,” she said.