The internet has made it possible for short-term room rental businesses to spring up without adhering to local or state laws, and in areas not appropriate for them.
Many municipalities in New Jersey have responded sensibly by simply banning these rogue boarding houses. Atlantic City is taking the path better suited to a seaside resort of allowing them, but with firm oversight of guest behavior and utterly modest fee and licensing costs.
City Council has crafted ordinances regulating rentals on services such as Vrbo and Airbnb after more than two years of complaints by residents about noise, parking, trash and other neighborhood disturbances. They should become law soon, with some final adjustments.
The city hired a tech company to survey the online short-term renters in the resort and found out there are about 700 of them. Since only 85 such properties have bothered to register with the city (and pay a modest seasonal fee), that means there are several hundred outlaw businesses taking advantage of Atlantic City’s services and market without paying for its upkeep and operation like all of the legitimate businesses in town.
City Council has proposed charging them an annual fee of $2,000 for short-term rentals with occupancy for up to eight, and $2,400 for up to 16. When they apply for a license, they’ll also pay a one-time fee of $150.
Frankly, such payments look small compared to what regular businesses must bear. If these properties just paid taxes at business-assessment levels, we suspect they’d pay much more than a couple thousand extra a year.
The city also intends to crack down on owners of short-term rentals who allow repeated violations of rules by guests. Those with two verified complaints will face possible license revocation, fines up to $2,000 a day and even possible jail time. “The city is doing all it can do to keep the neighborhoods as peaceful as possible,” said Dale Finch, director of licensing and inspections.
As a study last year by the liberal think tank Economic Policy Institute found, these online rentals benefit travelers and property owners at the expense of their localities. They also can increase local housing costs and undermine hospitality industry employment.
And the property owners getting hundreds or thousands of dollars a night “are disproportionately white and high-wealth households” that can afford to own housing in addition to their primary residences, EPI said. Their proliferation might increase the burden on disadvantaged Atlantic City residents rather than ease it.
Resort municipalities may decide that their accommodations industry is robust enough to benefit from a new segment. If they do, they would be foolish to have it cannibalize existing hotels, motels, bed and breakfasts and others by letting the newcomers operate outside the law and without paying a share of resort costs.