US Cities Look to New Jersey on Short-Term Rental Rules for Airbnb

Jersey City Voters Delivered Blow to Home-Share Site

Jersey City Mayor Steven Fulop told reporters that new controls on short-term rentals are "not out of line with other cities." (City of Jersey City)
Jersey City Mayor Steven Fulop told reporters that new controls on short-term rentals are “not out of line with other cities.” (City of Jersey City)

New Jersey’s second-largest city is getting inquiries from local governments nationally regarding stricter short-term rental regulations that voters approved in a landslide referendum because of concerns about home-share rentals through Airbnb.

Despite a bitter multimillion-dollar campaign waged by Airbnb, Jersey City residents upheld an ordinance, supported by Mayor Steven Fulop’s administration, tightening rules regarding the rentals. The tougher restrictions got an overwhelming endorsement on Election Day, with about 70% of voters supporting them, 18,027 to 8,206.

Fulop presented a postmortem on the monthslong short-term rental battle, which drew national attention, and referendum results during a news conference Wednesday. The mayor offered preliminary indications that San Francisco-based Airbnb’s defeat on the Hudson River waterfront would in fact “set the tone” and resonate with other cities.

“The impact of this referendum is obviously going to be far greater than just Jersey City,” the mayor said. “We’ve already had several mayors from much larger cities across the country reach out to us for a draft of the ordinance. And I suspect that people seeing here in Jersey City that it wasn’t even a close vote, it was a 70% massive, massive statement by residents speaks to kind of where the national trend is on this.”

The mayor later declined to specify who had contacted Jersey City about short-term rental regulation.

“It would be inappropriate to say who is considering it before they speak to their respective councils and teams,” a spokeswoman for Fulop said in an email. “That said, they are similar size or larger than Jersey City and not in the New York metro market.”

Jersey City’s new regulations will take effect Jan. 1, and the city will be hiring additional staff and inspectors over the next two months to enforce them and handle the newly required registration of short-term rental hosts, Fulop said.

Widespread Scrutiny

In a statement Wednesday, Airbnb called the registration process “onerous” and described Jersey City’s ordinance as placing “severe restrictions on short-term rentals.”

Airbnb and companies like it, such as VRBO, have come under increased scrutiny and local regulation by towns and cities as short-term rentals have grown in popularity by offering a less-expensive alternative to hotels for travelers. Short-term rental rules have been already been passed in cities such as New York, where they are in litigation, as well as Boston; Chicago; Washington, D.C.; and Los Angeles, where they took effect Nov. 1.

“Obviously it’s been a conversation in New York,” Fulop said. “They’re in court over this exact conversation around short-term rentals.”

But attempts at such controls have failed in some cities, including San Diego, which rescinded its regulations after Airbnb got petition signatures against the measures.

Any threats or restrictions to Airbnb’s growth may turn off investors when the company does its planned initial public offering next year.

A group supported by Airbnb, Keep Our Homes Jersey City, gathered enough signatures, more than 20,000, to call for a referendum vote on the ordinance, passed in June, which put tighter regulation on short-term rentals.

Airbnb and its hosts in Jersey City charged the city’s rules would financially hurt families that earned much-needed extra income by renting space in their homes, and that home-sharing provided an economic boost to the city. They also criticized Fulop for having the support of the area’s hotel industry and a powerful New York hotel union.

Airbnb had also noted that Jersey City was the first city in the world to legalize short-term rentals back in 2015, but Fulop said the company’s way of doing things had changed substantially since then, which lead to the ordinance.

“When we embraced home-sharing Airbnb in 2016, end of 2015, there were about 300 listings in the city, and it was home-sharing in the truest sense. It was somebody … sharing a bedroom or an apartment in their home to supplement their income,” the mayor said.

“And we thought that was reasonable, and we were supportive of that,” Fulop said. “Over time, that has changed as Airbnb’s business model has changed. It’s grown from the 300 [listings] that was in 2015-2016 to 3,500 that exist today every single night, of which 70% of those are multiple owner-listed commercial operators. It’s operation of an illegal hotel essentially.”

Investors are buying five or six residences on a single block in Jersey City “and transforming the entire character of a neighborhood with an unregulated hotel,” according to the mayor.

“So we thought some reasonable regulations made sense,” Fulop said. “We are not out of line with other cities on this.”

Jersey City’s Rules

The new rules prohibit renters from serving as Airbnb hosts. They also set a 60-day cap for short-term rentals if an owner is not on site, and bar Airbnb and other short-term rentals in properties with more than four units.

A residence’s owner-occupier can still be an Airbnb host, after registering with the city for a fee, according to the mayor.

“The person who is renting a bedroom or an apartment in her home to supplement her income, she was doing it yesterday, and she’s still able to do it today,” Fulop said. “Nothing has changed for her. The person who’s bought five or six homes on a block and is now crying a hardship, that’s not them struggling to pay their mortgage. That is a business that they’re operating that’s an unregulated hotel, an entirely different scenario.”

The registration fee will be $250 the first year, and $200 annually after that, according to the city.

In its lengthy statement Wednesday, Airbnb said Jersey City isn’t significant to its business, but that it had “an obligation to stand up for our hosts and their rights.”

The company also noted it had seen agreeable home-sharing rules put in place around the globe and the United States.

“Around the world, hundreds of municipalities — from nearby Philadelphia and Buffalo to Los Angeles and Seattle — have figured out a path forward for home sharing that protects the short-term rental community while putting in place clear rules of the road,” Airbnb said. “We have established 500 government partnerships globally, including in countries like China and Cuba.

Fulop estimated that once Airbnb makes “their final filing” on spending for its campaign against Jersey City’s regulations, it will show the company’s bill was $5 million. The New York Hotel and Motel Trades Council, a union group, and the hotel industry put about $1 million behind a coalition that supported the short-term rental rules.

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