Airbnb presents fresh challenges in Atlantic City, and possible opportunities

City Councilman Jesse Kurtz says he does not oppose the rise of internet-based vacation rentals such as AirBnB or VRBO in a resort town that has long depended on tourist revenue.

He just wants the city to be ready for what’s coming. The services are growing rapidly, and could be in line to disrupt the accommodations industry the way ride sharing platforms like Uber and Lyft have reshaped how people get around.

In other shore towns, such as nearby Ocean City, most of the issues raised in the community have focused on the impact of alternative bookings on hotels, motels and traditional weekly rentals. Some bed and breakfast inns have reported a drop in bookings, possibly linked to the rise of internet-based booking sites, and many suggest owners are skipping steps such as obtaining mercantile licenses and getting the annual safety inspections that go along with them.

But in Atlantic City, the top concern seems to be the impact on neighbors from short-term rentals, more like the efforts of many towns at the Jersey Shore to rein in so called “animal house” rentals, where neighbors complained about underage drinking, loud music and worse. The situation that brought the most complaints are when a group of people rent a house for a day or two for a special occasion. Neighbors say where there should be 10 people staying, there are 30.

“We welcome everyone to come to Atlantic City to have a good time,” Kurtz said in a recent interview. “But you still have to respect the fact that there are people who have to get up and go to work.”

Kurtz, in his first term representing Atlantic City’s 6th Ward, seems to have hit a nerve with the issue. He’s held public meetings and given interviews on the impact of a new kind of rental, and sought guidance on what if anything the city should do about it.

“I don’t like the idea of elected public officials acting like we have all the answers to every question,” he said. He wants to consult the residents.

On July 5, he led a public meeting at City Hall, where more than 70 residents turned out with tales of wild all-night parties, lost sleep and public urination by drunken visitors. Officially a meeting of City Council’s licensing, inspections, health and technology committee, it also included Councilman Kaleem Shabazz and members of the city administration.

Several speakers said the houses are being rented for a night or two for bachelor parties and other events, leading to loud and raucous behavior. One after another, the neighbors spoke of sleepless nights and blow-out parties every weekend, disrupting otherwise quiet residential blocks.

The term Vacation Rental By Owner, or VRBO, on the internet goes back to the 1990s, according to a piece in futurestay.com. The same article indicated the vacation rental industry is worth more than $85 billion worldwide, and the site HomeAway.com, which is connected to VRBO.com, offers more than 2.8 million rooms, more than the four biggest hotel chains in the world.

“At the meeting, most had concerns, but a majority saw that this is here to stay,” Kurtz said. On-line rentals are convenient and could open new markets for Atlantic City. But issues remain.

Quiet streets meet all-night parties

“It is a mess. It has the potential to be a mess, because they’re there for a couple nights, on the weekend, and they leave the mess there,” one resident said at the meeting. “And so, I’m against it. I don’t like it.”

Kurtz represents the south end of Atlantic City, near the border with Ventnor, where there are a number of year-round neighborhoods. In a recent interview, he said the biggest impact of the trend seems to be a section of his ward known as Lower Chelsea and at the other end of the city, in the Inlet section in the north end.

At the July 5 meeting, members of the city administration said the city has a long-standing rule allowing for summer rentals, and that there are no minimum stay restrictions on the books. In other words, there is no rule against renting a house for the weekend, even if the neighbors are against it. 
It’s not all bad news, according to Kurtz. Some investors are buying houses in Atlantic City with the aim of turning them into short-term rental properties, which is helping increase property values. And they bring business to the city that is not directly related to gaming, which has been a priority in the face of closed casinos.

“Fundamentally, we are a tourist town, and the new growth in online platforms is an amazing opportunity,” Kurtz said. “It’s also disruptive to existing residential communities. We have to show that we’re pro-tourist and pro-business.”

It’s not the technology, it’s the behavior

Those speaking at the meeting, and neighbors interviewed for this piece, said it didn’t matter to them whether the renters booked online of through a Realtor, what they cared about was the behavior in the neighborhood.

“I’ll bet you 80-plus percent are really decent people that you’d welcome back in a heartbeat,” said Jerry Kehner. He and his wife, Mari, own their home in the Lower Chelsea neighborhood, and have been pushing for better control over short term rentals.

“The owners present a very rosy picture,” he said, with promises of investment in improving properties and the careful screening of guests. “Then you live it, and it’s not the way they present it.”

Aside from the horror stories, he said the residential neighborhoods just can’t accommodate the additional people, not to mention the influx of cars in neighborhoods where parking is already tough.

“This has become a free-for-all,” said Mari Kehner. When they elevated their home after Hurricane Sandy, and when they did repairs after a fire, they had to go through an extensive process to get all the needed permits, inspections and approvals. Many of the short-term rental properties just post online and start renting, she said. “Nobody seems to be monitoring it.”

Look at new rules, and enforce existing

Atlantic City is a party town. It has been for generations, long before the first Casino opened in 1978. Think Boardwalk Empire during Prohibition, continuing for decades at nightclubs like the 500 Club, Club Harlem or a half-dozen more.

Kurtz made clear he doesn’t want to change that reputation, just maybe keep the parties out of the residential neighborhoods. Someone renting with their family for a week, or a young person who likes to cook and wants to stay somewhere with a kitchen rather than a hotel room, are a good fit for a neighborhood, he said. Those are not drawing the complaints.

“But when it comes to a bachelor or bachelorette party, absolutely that would do better in a hotel with a bar, with a dedicated security staff, somewhere that’s set up to handle it,” he said. “That’s something that doesn’t make sense in a short-term rental platform.”

One step could be better enforcement of existing rules, from inspection requirements to noise rules, Kurtz said. He also wants to look at other answers, he said, including creating specific fees for short-term rentals to bring them closer to what’s paid for a hotel room. In New Jersey, a hotel or motel guest pays an additional 5 percent occupancy tax on rooms, over and above the sales tax. That brings the total tax on hotel rooms to close to 12 percent.

This summer, the New Jersey Legislature approved a bill imposing sales and use tax on short-term rentals, one aimed at companies like VRBO. The bill specifically mentioned the Atlantic City luxury tax and the city’s promotional fee, as well as Cape May County’s tourism tax, fees and charges paid on hotel rooms but not overnight residential stays. None of the seven sponsors and co-sponsors of the bill were from Atlantic or Cape May counties, and all are Democrats.

But on Friday, July 21, Republican Gov. Chris Christie vetoed the bill, stating that it would “do real harm” to the state’s economy.

“The tax increase proposed in this bill would not only impact New Jersey property owners who have – for generations – made their homes available for short-term rentals, but would also disproportionally increase the cost of visiting New Jersey shore towns and other tourist destinations,” reads a statement from the governor. “This area and its economy cannot and should not be jeopardized.”

According to Kurtz, some owners do not know the rules, or don’t realize that they are supposed to get an inspection and a mercantile license just like those renting through a Realtor.

“There is a challenge in enforcing the rules. City government has to be smarter in enforcement, and the public should be more diligent,” he said.

One of the speakers at the July 5 meeting said she was reluctant to call the police for a noise complaint, fearing it could take officers away from more serious crime. The uniform crime statistics put together by the New Jersey State Police for 2015 – the most recent data available – showed 3,622 crimes in Atlantic City for the year, including 628 violent crimes. That included seven murders.The city faces other problems as well, including a state takeover of the city’s finances that started last year.

But Kurtz rejects the idea that the city has more important things to worry about than internet rental services.

“I am not taking on this issue exclusively. I’m very active in other issues,” he said. “As an elected official in Atlantic City, with the city being at a crisis point, you have to walk straight and chew gum at the same time. You have to focus on a number of issues at once.”

With a population of a little over 30,000, Atlantic City welcomes about 3 million visitors a year, he said. It’s in a unique position as a shore town with big city issues. He believes by working with the property owners, the neighbors and the city, this new kind of rental system could be a boost for Atlantic City.

“I really think if we do this the right way, it’s a way of growing instead of contracting,” he said. “Whether people like it or not, this is very popular, and it’s growing in popularity.”

Kurtz said he has reached out to some of the short-term rental sites to work on improving enforcement and hopefully ease some of the issues for neighbors. No one from Airbnb.com or VRBO, two of the largest internet vacation rental sites, responded to a request for comment for this story. One owner contacted for comment said he would speak about the issue, but did not return the call, and was not available on subsequent attempts to reach him.