CAPE MAY POINT — Borough Commission discussed the potential implementation of a rental tax on transient accommodations Nov. 25.
Deputy Mayor Elise Geiger said she began researching the possibility of taxing short-term rentals, especially after reviewing five-year beach revenue projections.
“Right now, beach revenues do not cover 100 percent of the cost,” Geiger said. “It’s basically covering 78 to 80 percent.”
She estimated the borough could collect $100,000 a year in rental tax, noting both Lower Township and West Cape May had enacted the tax and Stone Harbor is putting one in place.
“West Cape May collects $170,000 to $190,000 a year,” Geiger said. “West Cape May has a total of 310 permits versus Cape May Point’s 181 permits.”
The advantage for Cape May Point is that there would be no administrative costs, Geiger added.
The state enacted a law in October 2018, amending it in August 2019, to impose a sales tax and allow municipalities to add an occupancy tax on transient accommodations, which are units offered through online marketplaces such as Airbnb and VRBO.
These accommodations include professionally managed units but do not include hotel or motel rooms or leases of more than 90 days.
“Any rental that takes place through a realtor is exempt from these taxes if it’s executed by a real estate broker,” Geiger said. “If a property owner owns three houses anywhere in the state of New Jersey, then transient units are subject to the tax.”
Benefits
Commissioner Suzanne Yunghans said Geiger’s points were well taken, since the borough is not balancing the budget for beach fees.
“The only other option is to start increasing beach tag costs, and we’re already at the top of the county,” Geiger said, adding that instead of putting the burden on borough property owners, transient renters would pay it.
Yunghans said she was in favor of putting together an ordinance on transient accommodations, and she was glad the public could weigh in on the discussion.
Solicitor John Amenhauser said there is a model ordinance that several towns have enacted, which Cape May Point could utilize and tailor to the borough.
Mayor Anita VanHeeswyk recused herself from the discussion because she owns rental property.
Resident Sally Allison said she supported Geiger’s suggestion for taxing transient accommodations.
“I think it’s a very good idea and I know that [Geiger] is looking for revenue for the beach, the equipment and the cost of salaries,” Allison said. “I think what we really have to consider is the renters and the extra amount of trash, recycling and extra cars in town, as well as problems with parking.”
Allison also asked about rental units having ID stickers on the front door. She said people renting through Airbnb and VRBO may not have stickers and are renting through the borough, which is a financial loss.
“I think we can re-request they can be placed where they can be seen on doors,” Geiger said. “If you don’t have glass anywhere [on the door] it may be difficult.”
Geiger also added that Cape May has software to hunt down properties renting through Airbnb and VRBO that are not registered with rental permits.
Lead-based paint ordinance tabled
In other business, Borough Commission tabled an ordinance implementing the state requirements for lead-based paint inspections for properties with rentals of six months or more.
Resident Michael Puzio pointed out inconsistencies between the ordinance and the state code. He said some sections required inspections every two years, while the state code calls for every three years.
“Towns such as Lower Township, Middle Township, Wildwood and Wildwood Crest all call for three-year inspections in their ordinance,” Puzio said.
Clerk Elaine Wallace said the borough was adopting the same ordinance as Cape May, since the city will be doing inspections as part of a contract.
“We adopted the same thing they did for consistency,” Wallace said.
Puzio added there was a section omitted in the borough’s ordinance regarding inspections and evaluations for single-family or two-family, seasonal rental dwellings rented for less than six months each year by tenants that do not have consecutive lease renewals.
Amenhauser said that if it was omitted from the ordinance, it was because it was omitted from Cape May’s ordinance. Wallace added it was not their intent to inspect anything rented for less than six months.
Borough Commission tabled adoption of the ordinance to discuss changes further, and it will be discussed again during the Dec. 9 meeting.
By RACHEL SHUBIN/Special to the Star and Wave
