By RACHEL SHUBIN
Special to the Star and Wave
CAPE MAY POINT — Operators of short-term rental properties now will have to pay the borough 3 percent of their related income.
Following a third reading, Borough Commission passed an ordinance Jan. 6 imposing the municipal occupancy tax on transient accommodations.
Deputy Mayor Elise Geiger brought the discussion forward in November after researching the possibility of taxing short-term rentals, particularly following a review of five-year beach revenue projections.
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. Rentals that take place through a real estate agent are exempt from these taxes if they are executed by a real estate broker.
Borough resident Rich Johnson said he was trying to determine who is included and who is not included within the ordinance.
“We’re piggy-backing on the state,” Geiger said.
Johnson inquired whether a person who rented a property directly would be subject to the fee.
“You have to actually go get the key from the real estate agent and a couple of over things, so it mostly covers the transient marketplace,” she said.
Geiger said that if a property owner owns three houses anywhere in New Jersey, the transient units are subject to the tax.
“It becomes a category called professionally [managed unit],” Geiger said. “If they don’t use any of the marketplaces, they would not have to pay.”
Johnson asked whether the state collects the money and then returns it to Cape May Point. Geiger said yes, the state sends a check and there is no fee for doing so.
“We have 90 days after we let the state know [for this to go into effect], so we should be able to get the major portion of the rental time frame,” Geiger said.
Resident Sandy Allison asked whether the tax applies if a person has their property listed with an agent and is also renting it via Airbnb or VRBO.
“If the payment goes through any of those transient marketplace mechanisms, the fees will be collected,” Geiger said. “When you think about it, it’s a big chunk of change, so nobody is going to want to have the state of New Jersey coming after them with delinquent sales tax and occupancy tax.”
Resident Jean Biesecker asked how the borough would enforce the ordinance.
“I think the enforcement mechanism is the big arm of the state of New Jersey collecting their taxes,” Geiger said. “If you don’t want to let the state of New Jersey know that you’re doing this, some day if you’re ever caught, you’re going to have a lot of back taxes to pay.”
Biesecker clarified that it would be an honor system implementation.
Geiger said it was an individual responsibility to collect the tax and pay it to the state, and that it was not the collection of the 3 percent that is driving the implementation.
“The beauty of this, and why a lot of other municipalities have gone forth with this, is we do not have any requirements where we have to take administrative time out to implement or enforce,” Geiger said. “It basically is managed for us and we will get a check.”
Water main break
During the first week of January, Cape May Point Public Works dealt with a water main break on Cambridge Avenue.
Commissioner Suzanne Yunghans thanked the staff, along with the public works departments from both Cape May and West Cape May, which helped out.
“Note the collaborative community spirit here [that] Cape May Point, West Cape May and Cape May all support each other when a pipe breaks,” she said. “[They assist] with whatever equipment, parts and manpower is needed. A huge thank you to all of them because it was a cold, windy day.”
Other business
The borough passed a resolution to partner with Triad Associates on a grant application to the New Jersey Department of Community Affairs for funds to build a park. A key part of the proposal is matching funds from the community.
“There is an opportunity for Cape May Point to apply for a local recreation improvement grant to support the plans for Veterans Memorial Park,” Yunghans said. “The borough is working with the Veterans Memorial Park Committee.”
Yunghans added a thank you to the community for its monetary gifts to the Veterans Memorial Park Trust.
Mayor Anita VanHeeswyk noted Borough Administrator Ed Grant retired and Jim Craft has been appointed as interim administrator.