Brewster wants to withdraw from the water protection fund and introduce an accommodation tax

Brewster could become the first town in Cape Town to withdraw from the Cape Cod and the Islands Water Protection Fund.

The select committee believes Brewster can do better without the other 14 member cities.

The Water Protection Fund

The Cape Cod and the Islands Water Protection Fund was established by the state legislature, at the request of the Cape Town delegation, in 2018. The idea was to primarily fund large sewage projects in Cape Cod, such as sewers. The state collects accommodation taxes from Cape Cod, sends the funds to the CCIWPF which then distributes them to the member municipalities when they have an eligible project.

The CCOWPF raises funds from a 2.75% tax on lodging (hotels, motels, short-term rentals) collected by the state in the 15 member cities. In its four years of existence, the fund had raised $39 million and distributed $30.5 million to Cape for projects such as the downtown Orleans sewer ($14.9 million ), $5.5 million for the Harwich sewer and more. Further funding is pending for other cities.

To date, Brewster visitors and innkeepers have contributed approximately $2.6 million to the fund, but have not received any money for work on water quality projects, primarily because the city has major work in the near future.

After a 4-0 vote at Monday’s board meeting, voters will be asked at the fall town hall to opt out, scrapping the 2.75% local lodging tax. In a second article, they will be asked to adopt a state option for a 3% tax on short-term rentals. Most of that money could be used for water quality projects at the city’s discretion. Over time, Brewster could raise more money with this tax than it would receive from the CCIWPF.

Withdrawal will require a two-thirds vote at the town hall.

“City staff contacted the DEP (Department of Environmental Protection) for clarification on potential financial support for capital projects after Horsley and Witten presented an updated plan,” the administrator said. of the city, Peter Lombardi, during Monday’s board meeting. “We are planning $30 million in major capital water quality projects. Of those likely to receive a grant (from the CCUWPF), it’s just over $4 million.

Brewster Options

Brewster is eligible for some short-term CCIWPF funds for small projects such as testing alternative septic systems near ponds and certain septic system upgrade expenses. The potential big ticket for the city is a possible local sewer/treatment plant project costing $10-15 million that could receive 25% funding – but that project is far in the future.

Lombardi explained that Brewster currently levies a 6% tax on hotels and motels and short-term rentals, generating about $2.3 million a year. The 3% short term rental tax would be in addition to this. While the current 6% gets about $1.1 million a year (during a pandemic), Lombardi said Brewster can expect $500,000 a year from the new tax. This tax can be adopted by a majority vote in the municipal assembly.

Some of that money should go to other uses under state law — 35% should go to affordable housing or infrastructure. Lombardi said all of the proposed water quality work could be called “infrastructure.”

If the 3% tax were to be approved at the municipal assembly in May, it could come into effect on July 1. Board member Kari Hoffmann favored implementing the tax before the summer tourist season to generate more revenue, but other board members wanted to wait and see what happened with the tax. CCIWPF tax and what the legislator could do. As a result, the vote on implementation was pushed back to the fall town meeting.

Lombardi noted that there is opposition to the withdrawal as the city has received letters, so two-thirds approval is not a sure thing. The two articles, abolition and introduction of a new tax, will have to be linked during the meeting. Council Member Ned Chatelain objected to both taxes being in effect at the same time. He pointed out that combined with other existing state taxes, this would create an 18% lodging tax in Brewster. But he also supported presenting the two items at the spring town meeting in May.

Lombardi said he would also like to create a water quality stabilization fund to receive funds from the 3% impact tax if passed. It would also require two-thirds approval at the municipal assembly.

Brewster actually has no major water quality projects scheduled in the current five-year capital plan. The eventual local sewer/treatment project exceeds five years, if ever, and depends on the functioning of current nitrogen mitigation efforts. The city plans to spend about $175,000 on consulting next year, which may qualify for a CCWPF grant.

The debate was deepened, revolving around the timing of withdrawal and the potential new 3% tax on short-term rentals.

“I recommend that we stay until the fall to give our representatives time to make our case,” said board chair Cindy Bingham. Dave Whitney also leaned towards expectation and their view ultimately prevailed with the withdrawal issue pushed back to the fall. Board member Mary Chaffee was recused from the discussion because she operates a rental.

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