Short-term rental restrictions advance in Jersey City

Council will hold a special meeting to adopt a new ordinance

City council introduced ordinances that would severely limit short term rentals.
City council introduced ordinances that would severely limit short term rentals.

In a confusing and divided series of votes at its June 12 meeting, the Jersey City Council introduced two competing ordinances that would place severe restrictions on short term rentals, including those brokered through Airbnb.

Both ordinances are for the most part identical. The ordinance recommended by a committee of the council that included Council members James Solomon and Mira Prinz-Arey would require all short-term rentals to abide by the new rules.

A second measure drafted by Councilman Michael Yun would grant an exemption from the new rules to short term rental businesses already in operation before the new ordinance takes effect on Jan. 1, 2020.

“I think it is unfair to those operating these businesses to say they can no longer do it,” Yun said. “Many of these people have invested in property because back in 2015 this council said it was okay. Now some will lose their investment if we don’t exempt them.”

Dozens of people carrying protest signs for and against the ordinances filled the council chambers. The crowd included representatives from Airbnb, who appeared to be coaching residents who spoke against the ordinances in the public portions.

Because the introduction of each ordinance was voted on separately, some council members voted for both, while one councilman, Jermaine Robison voted against both. Yun voted against the ordinance proposed by Solomon and Prinz-Arey, and they reciprocated by voting against the one Yun proposed.

The Solomon and Prinz-Arey measure passed by a 7-2 majority, while the Yun ordinance passed 6 to 3.

The council will hold a special meeting later this month or in July to work out which of the two ordinances will be adopted.

Clarifying a controversial situation

The two ordinances came out of a council committee that had intended to merge previously proposed restrictions presented to the city council in May. Mayor Steven Fulop had asked the city council to adopt an ordinance with language that came close to banning short term rentals in Jersey City.

Solomon and Councilwoman Joyce Watterman proposed less odious restrictions, but still severely cut back on short term rentals. Solomon and Watterman wanted to allow small owner-occupied homes to continue to operate, but would require a number of key provisions such as health inspections, a record of guests, and a limited total number of days per year in which they could rent their units.

This comes at a time when New York City has been cracking down on short term rentals, and many of the major short term rental companies such as Airbnb are looking to Jersey City as an alternative.

Solomon said there has been a massive increase in short term rentals in Jersey City since the original 2015 city ordinance was passed to allow them to operate.

But he said many of the figures he has are estimates since Airbnb – the largest of the short term rental companies – will not share their records with the city. The city estimates come from reviews of various websites, and are likely lower than the actual numbers.

Based on the lower projections, Solomon estimated that 5 to 10 percent of downtown apartments are being used as short term rentals.

Opponents say both ordinances are still too draconian and would go far beyond merely registering those who operate short term rentals. The ordinances would limit the total time these residents could operate, and would restrict these to owner-operated homes of no more than four units.

Both ordinances would ban renters from subletting a portion of their rental unit for short term. Currently, a renter can make up a portion of the rent by renting out space even without the express permission of the building owner.

There have been a number of complaints about activities going on in some short term rental units such as wild parties, in some cases with no-one on site to address these complaints.

Short-term vs. long-term rental rates

Solomon said the expansion of short-term rentals in Jersey City has a negative effect on long-term rentals. First of all, short term rentals get significantly more in revenue than a long term rental does. This could skew rents higher on long term rentals.

Solomon also said by taking so many units off the market, there are fewer units to rent for long-term so that raises overall rents.

City officials acknowledge that short-term rentals can provide flexible housing options that provide travelers with safe accommodations and contribute to the local economy through buying locally and using other services. But they also see a downside because these units attract mostly tourists with no commitment to the neighborhood.

The ordinances, according to city officials, seek to balance the interests of long-term residents with the financial interests of property owners using short-term rentals as an income source.

Short term rentals are very lucrative. One estimate claims that a short term rental can generate three or four times as much as a long term rental can.

But Solomon believes that larger companies operating whole buildings as short-term rentals are reducing the total number of available long-term rental units, and this may also cause long term rental rates to rise.

Among other things, the ordinances create a Division of Housing Preservation that will oversee the rules for operation. The ordinances allow short-term rentals to operate in any residential neighborhood, but only in buildings of up to four units where the owner lives in one unit. These units may only rent up to 60 days per year. The ordinances prohibit renters from leasing out portions of their units, although a tenant currently doing so may continue until his or her lease expires with the owner.

The ordinances require those operating these short term rental units to register with the city, and must register someone who can be contacted in case of a problem.

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