According to Jersey City officials, an 83-unit complex in Journal Square has been operating as a hotel in violation of a 2013 tax abatement agreement with the city.
The city’s Division of Taxation put the developer Chosen Condominiums Urban Renewal on notice in an Oct. 16 certified letter claiming the developer’s property at 3075 John F. Kennedy Blvd. has been operating as the “Caprice Hotel,” instead of the market rate residential rental complex they said they would build in 2013.
In 2013, the City Council approved a 12-year tax abatement for 3075 John F. Kennedy Blvd. with the goal of incentivizing new residential development in Journal Square.
According to the ordinance, which was approved 8-0 in May 2013, Chosen Condominiums Urban Renewal would construct a total of 83 market-rate residential rental units with 3,700 square feet of commercial space and a garage with 19 parking spaces, contribute $130,050 to the city’s Affordable Housing Trust Fund and pay $143,180 to the city as an Annual Service Charge in exchange for the 12 year tax exemption.
According to the city, operating this development as a hotel has deprived the city of adding more housing units to the already limited housing supply.
The Oct. 16 letter says Chosen Condominiums Urban Renewal also failed to submit Auditors’ Reports and a Total Project Cost Audit in violation of the Tax Abatement Agreement as well as any Ownership Disclosure Statements in violation of the Financial Agreement.
“The city hereby declares Chosen to be in default of the Financial Agreement and instructs Chosen to cease and desist the operation of a hotel at the premises immediately and to submit all reports required by section 7.2 of the Financial Agreement within Thirty (30) days from the date of this letter, otherwise the city will terminate the tax exemption granted to Chosen and the property owned by it will be returned to the conventional tax rolls,” states Ernest Broja in the Oct. 16 letter.
As of Friday, units at the “Caprice Hotel” also called “Caprice Suites,” were still available on hotel booking websites ranging from $135 per night to $180 per night.
This is the third default declared on a tax abated property this year, and the “first from the developer operating an illegal hotel” according to a press release from the city, which added that it is the latest in a series of tax abatement crackdown efforts by the administration, including several projects which have been fined, and in some cases, have had their abatements terminated for violations ranging from failure to file requisite compliance documents to unfulfilled local hiring requirements.
Fulop: Vote ‘Yes’ on Nov. 5
Mayor Steven Fulop used this as an example as to why residents should vote yes on Municipal Question 1 on the Nov. 5 ballot, which would approve additional regulations on short-term rentals.
“Had Chosen been honest with the City Council, the tax abatement would have been structured differently, and the neighbors in the area would have been made aware of the 83 strangers moving in and out daily right next door, impacting the entire neighborhood’s quality of life and safety,” said Mayor Fulop. “This is just another example [of] why Airbnb needs regulations.”
In June, the Jersey City council passed an ordinance that prohibits short-term rentals for more than 60 days in properties where the owner does not live onsite. It prohibits short-term rentals entirely in buildings with more than four units and renters are not allowed to serve as short-term rental hosts.
To operate a short-term rental under the ordinance, property owners are required to obtain a permit through the city’s Division of Housing Preservation. Each permit is valid for one year and must be renewed annually.
The ordinance also phases out existing short-term rental contracts on Jan. 1, 2021.
Members of the short term rental community opposed the ordinance and successfully put the ordinance to a public vote by referendum by submitting 2,406 petitions with approximately 19,656 signatures.
Airbnb officials say short-term rentals boost the local economy and the city’s restrictions would limit residents’ ability to make ends meet.
Last week, the internet association released a report stating short term rental in Jersey City has created an additional $40 million in economic activity through bookings for the city and its residents.
Those who want to uphold the city’s amended ordinance with the new restrictions on short-term rentals will vote “yes” on Nov. 5. Those who wish for the amended ordinance on short-term rental regulations to be repealed will vote “no.”