N.J. may soon tax, regulate Airbnb, online rentals

Brent Johnson, NJ Advance Media for NJ.com

Online marketplaces such as Airbnb that offer short-term housing rentals would face new taxes and regulations in New Jersey under a pair of bills that state lawmakers have begun advancing.

The state Assembly's tourism committee passed both measures Monday -- one which would tax the companies the same way hotels are in the Garden State and another that would establish regulations in the state for the ever-growing industry.

Such marketplaces have gained popularity in recent years, allowing people to list and book apartments, houses, villas, and even castles throughout the world for a night, a week, or a month. The most famous is Airbnb, a San Francisco company that boasts having listings in 65,000 cities and 191 countries.

In New Jersey, about 6,100 residents hosted sites through Airbnb last year, renting to about 257,000 people. That resulted in $50 million in income for the renters.

Advocates say the marketplaces give property owners a chance to make money and travelers a larger pool of places to stay.

But critics say hotels and the housing market are taking a hit because of the services, while some municipalities in New Jersey have passed ordinances to restrict the marketplaces out of fear they are compromising safety and the quality of life in their towns.

Sponsors of the bills say New Jersey's laws needed to be updated to mesh with the rise of the industry.

The first bill (A4441) -- which the panel passed, 7-0 -- would impose the same taxes and fees on the marketplaces that hotels and motels must pay in the state.

"The fact that taxes are not paid for stays at locations rented through sites like Airbnb but are applied to stays in hotels is an unfair advantage that hurts the hospitality industry and takes funding away from municipalities for important programs," said one sponsor, Assemblywoman Annette Quijano (D-Hudson). "This bill levels the playing field and provides tax fairness for the entire hospitality industry in New Jersey."

Under current state law, New Jersey imposes sales and use taxes, as well as hotel and motel occupancy fees, for each occupied room. It also allows municipalities to impose various taxes and fees. If passed by both houses of the Legislature and signed by Gov. Chris Christie, this measure would expand the law to include short-term rentals.

Peter Schottenfels, a spokesman for Airbnb, testified in favor of the bill Monday, saying the bill would have generated $6 million in state and local taxes in New Jersey had it taken effect last year.

The second bill (A4587) -- which the committee cleared, 5-2 -- would change the fact that such rentals are not regulated at all in New Jersey.

"We want residents and tourists to enjoy the options provided by companies like Airbnb, but not at the expense of neighbors who live there on a permanent basis," said one sponsor, Assemblywoman Valeri Vaineri Huttle (D-Bergen). "This legislation creates a baseline registry that municipalities can implement as they see fit."

The measure would allow municipalities to license short-term rentals and to pass ordinances that would prohibit property owners from offering their space for more than 30 days if it's their primary residence.

The legislation does not apply to seasonal rentals, such as timeshare or summer homes.

Schottenfels of Airbnb testified against this bill, calling it a "solution in search of a problem."

Sister legislation for either bill has not yet been introduced in the state Senate, the upper house of the Legislature. Both the Assembly and the Senate have to pass identical legislation for it to reach the governor's desk.