Lower Votes to Add Occupancy Tax

VILLAS – Lower Township Council introduced an ordinance Sept. 7, authorizing the implementation of a 3% municipal occupancy tax, as allowed by state law. 
A state occupancy tax was originally applied to hotel and motel room rentals and is now being applied across the board on transient lodging. This includes so-called marketplace rentals, such as Airbnb and VRBO locations. 
In Lower Township, there are 750 marketplace rental and few hotels or motels. Township Manager Mike Laffey said counting the number of rooms is like trying to hit a moving target with all the property transfers that have happened in recent years. 
Pressed for an estimate of how much the 3% tax would raise for township coffers, Laffey said, “It’s tough to estimate, but maybe $750,000 to $1 million.”
The city of Cape May enacted a 2 percent municipal occupancy tax in July 2004, shortly after the state allowed municipalities to collect the tax. Cape May increased the tax to 3 percent, as allowed by law effective Jan. 1, 2021. They regularly anticipate $1 million in occupancy tax revenue. Middle Township also adopted the 3% occupancy tax in 2004. West Cape May added the municipal occupancy tax in August 2022.  
The additional funding is not all profit for Lower Township. After the Sept. 7 meeting, Mayor Frank Sippel said there are a number of costs that have risen due to the popularity of marketplace rentals. 
“The 3 percent covers the extra costs incurred by public works, the police department and code enforcement,” Sippel said.
Sippel and Laffey each said there has been more trash collection, code enforcement efforts, and police calls for noise and other complaints than normal due to all the marketplace rentals. 
According to Laffey, the township had to hire seasonal code enforcement officials. They have assigned the duty of tracking marketplace rentals to a staff member in the municipal clerk’s office. He said there are essentially five big entities handling marketplace rentals, and the township hired a company to keep track of the rentals within Lower Township. 
“We are now doing it in-house,” Laffey said. 
Essentially, whatever funds are raised from the municipal occupancy tax will go into the general fund for township expenses. 
Lower Township will be the fourth of 16 municipalities in Cape May County to take advantage of the municipal occupancy tax option. Certain municipalities already taxed short-term rentals, prior to the state granting a blanket allowance in 2004. Those included cities like Newark and Atlantic City, but also Wildwood, Wildwood Crest and North Wildwood. Each of those 5-Mile Island towns have a 3.15% tax, pre-determined by the state.
Own a motel, hotel or rental property? Do you vacation in Lower Township? How will this affect you? Email csouth@cmcherald.com or call him at 609-886-8600, ext. 128.