CAPE MAY – The Municipal Taxation and Revenue Advisory Committee (MTRAC) returned before Cape May City Council Nov. 3 to continue urging the city to develop a comprehensive ordinance dealing with short-term rental properties.
According to MTRAC Chair Dennis Crowley, the increasing “commercialization of the city’s residential properties” requires a comprehensive set of regulations located in one place and free of contradictions.
Crowley urged early action on such an ordinance given the imposition in 2022 of a municipal occupancy tax of 3% on what is termed internet-enabled transient short-term rentals.
“We are going to have problems if we don’t have the regulations in place,” Crowley said.
“There will be many questions we just will not be able to answer,” he added.
Crowley spoke of nearby towns that have comprehensive ordinances. He listed the towns and included the municipal code chapter that houses the regulations in each one. His list showed the areas of deficiency MTRAC has found in Cape May’s municipal code.
Crowley singled out the lack of an overall policy statement, clear and unassailable definitions, property registration requirements, occupancy standards, inspection requirements, and more. MTRAC made its first pitch for a comprehensive ordinance in August. This time, the committee returned with a draft.
Part of MTRAC’s recommendations also includes a change to the fee structure. Crowley criticized the current city practice of charging the same fee regardless of the size of the rental property.
“A one-bedroom condo and a house that sleeps 10 or 20 people are charged the same,” he said.
He pointed to the obvious relationship between the capacity of a rental and the claim on municipal services that rental property makes over a year.
“The licensing fees make little sense,” Crowley said.
He also pointed to a change taking place in the ownership of residential property in the city.
“Cape May has morphed into a large business with respect to the commercialization of its housing stock,” Crowley said.
He cited the results of an investigation into property records, which showed many LLCs, trusts, corporations, and other such entities in the owner’s column.
Property values in the city have exploded, Crowley said, and with that has come a different type of investment. He pointed to a need to codify the existing conditions and create and codify standards for the future.
In this presentation, Crowley was talking about the need for the city to adapt to changes in the ownership and use of its housing stock. The council heard him and pledged to review the draft ordinance.
Given the shift in residential ownership explicitly detailed in MTRAC’s research, the council may also have heard a more implicit call to think about what these changes mean for the historic city and how else the city’s leaders might respond.
When considered with the census report that the city lost 23% of its permanent population in the last decade, MTRAC’s research may be providing another view into fundamental changes underway.
To contact Vince Conti, email vconti@cmcherald.com.
