OCEAN CITY – A divided City Council has introduced an ordinance that would impose a 3% fee on short-term rental properties booked through online platforms, but not through real estate agents.

By a vote of 5-2 on June 26, the council introduced the ordinance setting the fee on rentals booked through companies like Vrbo and Airbnb.

The city calculates that the new tax could mean $1.8 million in revenue for the town based on an estimated $60 million worth of transient bookings per year.

Councilman David Winslow said the new revenue stream would “reduce the burden on our taxpayers” and dismissed the argument that the tax would hurt city tourism. He noted that many other municipalities have an occupancy tax with no adverse impact on the number visitors.

But Councilmen Sean Barnes and Keith Hartzell voted against the ordinance introduction, with Barnes saying he was concerned that the tax would not be applied to hotels and motels as well. “I am just looking for equity,” he said. Hartzell said he would not support any new taxes until the city tackled its “spending problem.”

Two members of the public also spoke against the ordinance at its introduction.

Susan Cracovaner said, “Although this is a tax levied in other places, it is yet another cost increase facing a select group of tourists, in addition to the beach tag and parking fee increases of last year.”

Resident Jim Kelly urged the council to get an analysis done to see the likely impact of the occupancy tax on tourism.

In 2021 Cape May City raised the occupancy tax it already applied to motels and hotels from 2% to 3%, and also applied that tax to short-term rental properties. Both Lower and Middle townships apply the state maximum 3% local tax to short-term rentals.

Councilman Jody Levchuk said he sees the new tax as a way to offset the cost for increased city services needed as short-term rentals become a more popular way for people to come to Ocean City.

The ordinance as introduced requires that the visitors, not the property owners, pay the tax. It specifically bars property owners from just absorbing the cost.

Ocean City has tried and failed in the past to establish an occupancy tax. In 2024 an attempt to impose a 3% fee on short-term rentals booked through online services was part of an ordinance that also included hotel and motels. Intense lobbying from the chamber of commerce and local hotel owners defeated the measure.

The new ordinance is scheduled for a public hearing and a vote to adopt at the council meeting July 17. If adopted the measure is then sent to the Treasury Department for review and approval.

Contact the reporter, Vince Conti, at vconti@cmcherald.com.