Council scraps ordinance on short-term rentals

A committee will devise a new ordinance to set up regulations

Opponents of short term rentals outnumbered supporters at a recent council meeting.
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Opponents of short term rentals outnumbered supporters at a recent council meeting.

With hundreds of people gathered in the council chambers on May 8, the city council tabled an ordinance that would have restricted Airbnb and other short-term rentals in Jersey City.

The ordinance, introduced in April, brought out armies of people for and against it, inflating the meeting’s public speakers list to more than 112 people, a record for public comment, according to City Clerk Robert Byrne.

The council voted to establish a committee of its members to come up with a new ordinance that may incorporate revisions that were submitted by Councilman James Solomon at the May 6 caucus.

Cities like Jersey City have found it difficult to manage the popularity of new technology-based companies like Airbnb, where people rent out their own homes, rooms, or even beds in rooms via the internet and make extra income. Airbnb already oversees income tax reporting on these rentals.

Representatives for property owners engaged in the short-term rental of residential units said they were willing for the city to impose new regulations. But they said they are concerned by the severity of the proposed fines, a rule limiting short-term rentals to 28 days, and allowing short-term rentals only of owner-occupied properties.

Councilman Michael Yun, who appeared to support residents renting out apartments for short term, opposed some of the restrictions.

Because the proposed changes could become a model for other communities throughout New Jersey, officials with Airbnb strenuously opposed the new restrictions.

Airbnb Head of Northeast Policy Josh Meltzer, in a letter sent to Mayor Steven Fulop in early May, said his company is “deeply concerned” about the proposed stricter changes. He pointed out that since the city passed its first ordinance in 2015 regulating short- term rentals, Jersey City has received about $4 million in hotel taxes.

Meltzer called the 2015 ordinance “one of the most progressive” home-sharing laws in the county.

City officials, however, argue that the 2015 ordinance was never intended to allow illegal hotels to operate in the city, but to allow property owners to maximize the value of their property through short-term rentals.

Location, location

Jersey City, with its proximity to North Jersey entertainment venues and to New York City, is the primary destination in New Jersey for many tourists. Airbnb estimated that Jersey City had more than 180,000 guests in 2018, allowing hosts in Jersey City to make as much as $32 million.

But a massive expansion of short-term rentals has caused the Fulop Administration to rethink its support.

In 2015, the city estimated that 300 to 400 residential units were rented out on a short-term basis via Airbnb and other online services. Four years later, city officials say this figure is about 1,300 per night, mostly in downtown Jersey City. This is about seven percent of the total units available, or about 1 in 15 units downtown.

While this has brought income to property owners and to some degree local businesses like restaurants, a large number of these rentals are to tourists who take advantage of easy transportation from downtown Jersey City to New York City where they spend most of their money.

Solomon said downtown has seen a massive increase in short-term rentals since 2015, and expects the growth rate to continue. Solomon said the expansion has also caused a spike in local rents.

Many of these rentals are operated through corporations owning or managing buildings that have in effect become hotels. Solomon said studies show that short-term rentals raise the rents for long-term residents by reducing the number of long-term rental units available.

Rethinking the earlier ordinance

While Airbnb saw the 2015 law as progressive, city officials were not comfortable when they passed it.

The mayor and council pushed through the 2015 regulations as a way to have some control over the budding industry. These regulations permitted homeowners and certain lessees to rent their homes for less than 30 days. Airbnb also agreed to charge and collect the standard hotel tax from their participants in the city.

While the Fulop Administration touted the agreement in 2015, privately Fulop said government has little power to prevent it, and the agreement allowed the government to regulate the practice to some extent. Solomon said Airbnb has grown into a substantial cottage industry, especially downtown.

Opponents of the short-term rentals claim there have been serious issues involving some short-term rentals, such as loud parties, trash, and the spread of bedbugs.

In response to a rash of complaints by neighbors of short-term rentals, the mayor’s office presented the council in April with an ordinance that imposed new, stricter regulations that some Airbnb supporters and users claimed would strangle the budding industry.

While the city had the right to deal with complaints under the old ordinance, the new ordinance would allow the city to inspect, and to issue severe fines. The ordinance would also restrict short-term rentals to only those properties of three units where one of the units is occupied by an owner or manager.

Pushback

Some of those operating these short-term rentals claim that the city already has the ability to crack down on “bad actors,” and object to the local inspections, claiming that the state already inspects multiple-unit dwellings of four or more.

In reviewing the proposed ordinance, some council members agreed that the limitations might be too stringent

Council President Rolando Lavarro said he has received a massive number of emails for and against the new stricter regulations.

The ordinance requires the owner of a short-term rental unit to pay an initial $500 registration fee and a $300 renewal fee each year.

Solomon proposed changes that would allow owner-occupied properties to rent up to 60 days, rather than 28 days, and would reduce some of the registration and other costs. Solomon also proposed limiting inspections.

The administration wants new rules implemented by the beginning of 2020. Lavarro said the new council committee will invite the public to comment with the aim of having a new ordinance ready for introduction by the June 16 meeting.

These committee meetings will allow both sides to give input and help determine the final details of the new ordinance.

For updates on this and other stories check hudsonreporter.com and follow us on Twitter @hudson_reporter. Al Sullivan can be reached at asullivan@hudsonreporter.com