Committee Calls for Comprehensive Ordinance in Cape May

CAPE MAY – Cape May’s Municipal Taxation and Revenue Advisory Committee (MTRAC) is calling on the city to do a “big job.” 
In an Aug. 3 presentation to Cape May City Council, MTRAC chair Dennis Crowley said the city needs a comprehensive ordinance dealing with the commercialization of residential space.
The presentation states the “game had changed,” claiming the city’s code is not updated. Reality is a world with a large internet-enabled transient marketplace, with condominium complexes transformed into condotels, one-bedroom rentals advertised as sleeping six, and where someone can renta pool by the hour online.
The city’s code dates to a world before the smartphone, a world in which the commercial and the residential were easily separated and where the city could live with the ambiguity of a small overlap between the two. 
The code is also the natural child of 20 years of various administrations and councils, each of which dealt with the immediate issue with seemingly no eye for the overall picture. 
The result is a set of rules that touch on aspects of commercial rental, with no overall coherence and with large areas of uncharted territory.
MTRAC’s intervention led to a recent city ordinance that will extend the occupancy tax to the transient marketplace in time for the 2022 season and to the increase in the municipal occupancy tax rate, from 2% to 3%. The goal was to remove the burden from the general property tax rate.
Now, MTRAC is telling the city leaders that they need to bring the municipal code up to date with the changes in the commercial rental marketplace. Failure to do so may carry liability penalties for the city, place the health and safety of visitors at unnecessary risk, and leave the city shooting in the dark, as it designs and apportions resources for municipal services. 
The other result is an unwelcomed burden on the property tax rate paid by the only people who vote for those city leaders.
The presentation came with data that may shock the sensibilities of some whose mental map of Cape May is bound by its historic district and Victorian setting. 
One-third of Cape May’s residential units are condos. Many of these are purely investment vehicles, some bunched together into condotels.
A condotel, of which there is a handful in Cape May, is a perfect example of what the committee is getting at. 
A condotel is a condominium project that operates as a hotel, although the individual units remain individually owned. A management company provides some of the expected hotel amenities, like a reservation system and a check-in desk, along with housekeeping and concierge services. The management earns a percentage of the rental payments. Unit owners are free to arrange short-term rentals of their units to paying guests.
One Cape May condotelhas over 80 individually owned unitsthat identify as a “hotel” as the means by which the entire establishment, with its individually owned units, pays the city for one $75 mercantile license, which is fine under the city’s current code. 
MTRAC recommendsreplacing several fees imposed by unconnected ordinances with a single tourism assessment fee on entities that do not pay the occupancy tax.
In the end, MTRAC laid out for the city the component pieces of a comprehensive ordinance. It made some recommendations on content, regarding some of those component parts. It showed how other resorts developed and use comprehensive ordinances. 
Also, it made clear to the city leaders why they need such an ordinance and the dangers inherent in not having one, dangers that will only increase as the marketplace’s reality continues rapidly moving away from the antiquated picture contained in the city’s present code.
Crowley was complimentary of the present council, which was largely constituted only eight months ago. 
“They have shown a willingness to listen,” he said. 
“Too many other councils would not even do that,” he added. 
The committee has seen some of its recommendations enacted, but Crowley admits this is different.
“This is a big job,” Crowley said, and “a hard one.”
To contact Vince Conti, email vconti@cmcherald.com.