Middletown council refers short‑term rental tax/classification issue to tax committee after lengthy debate

An extended council debate about short‑term rental (STR) rules, grandfathered registrations and tax classification culminated in a council vote to refer a narrow, high‑priority question to the town’s Tax Exploration Committee.

Residents and property owners described cases in which people who registered as STRs before the ordinance change but never actually operated the rentals are now being classified as nonresidents for tax purposes and assessed a higher tax rate. Speakers estimated the group affected numbered in the 30–40 range. Councilors raised legal and policy questions about whether a prior registration that was never used creates a permanent grandfathered right, and how abandonment and special‑use rules should apply.

The solicitor advised that a permanent, case‑by‑case exemption would require a change to the ordinance and could have broad effects because any exception tied to a class (for example, active‑duty military) could apply to others in similar circumstances. The solicitor also said that, under state law and court precedent, a use that has never been exercised prior to an ordinance change may not be an automatic grandfathered legal nonconforming use.

After lengthy discussion about enforcement, abandonment doctrine, and the town’s goal of encouraging long‑term housing, council members voted to send the specific tax/classification question — described by members as affecting roughly 34 residents who had registered but not operated STRs — to the Tax Exploration Committee for a focused recommendation. Councilors emphasized they want an opinion that considers both the STR ordinance and the town’s two‑tier resident/nonresident tax policy.