THE JERSEY SHORE LODGING & RENTAL (JSL&R)
SPECIAL ECONOMIC DEVELOPMENT DISTRICT.
REFERENCE MATERIALS UTILIZED: The analysis of current gross
revenue of existing properties i.e. motels, etc. now paying the tax is
based on published figures from the state of NJ which can be obtained by
the following link:
The information on
Seasonal rental figures was obtained from a study commissioned by the
New Jersey Realtors Association, a link to copy of which is available
at the following web location:
This Bill if adopted at minimum will benefit the State of New Jersey and
the affected Municipalities in excess of $112,591,722.00 (113M).
OUTLINE OF PROPOSED BILL:
INTENT OF THE BILL:
To provide desperately needed tax relief to the Seasonal Jersey Shore
Lodging Properties, i.e. Motels, Hotels, B&Bís located within ĺ of a
mile from the Atlantic Ocean in communities which are primarily seasonal
INCLUSION IN THE BILL:
Lodging properties having less than 200 rooms or who operate primarily
on a seasonal basis made up by primarily small mom and pop motels,
hotels B&Bís and additionally to include all properties offered for rent
for less than 90 days, such as homes, apartments, condos, etc. within
these districts which are presently not included.
PROPOSED TAX STRUCTURE:
The bill would apply a 5% state sales tax along with a 2% Municipal Tax
on all lodging properties as newly defined within the (JSL&R) district.
The municipalities will have no option with regard to collecting and
receiving the 2% and must direct that 33% of the revenue derived from
the 2% tax be directed towards tourism marketing on behalf of the
IMPACT OF THE BILL:
a. To provide
economic relief to seasonal tourism business, by lowering the total
amount of tax collected from customers of the seasonal lodging sector,
and thereby stabilizing existing seasonal lodging properties and further
promoting investment and improvement to those properties.
b. To provide the
lodging sector along the Jersey Shore a competitive edge over other
destinations located in nearby states by marketing the lowered tax rate
and thereby increasing the number of overnight visitorís spending money
in all areas of the communities within which these properties are
c. To equitably and
fairly provide a level playing field for the existing lodging properties
i.e. Hotels, Motels, B&Bís, currently subjected to the combined sales &
lodging tax by including all properties, homes, condos, apartments etc.
in the application of the special reduced tax and thereby being able to
reduce the total amount of tax charged by 8% while increasing revenue to
the State of NJ and local municipalities by increasing the total number
of properties collecting the tax.
NOTE: Hotels and lodging properties share the same customers,
"Tourists along the Jersey Shore". If it is equitable and fair to tax
Hotels & Lodging properties customers, than Seasonal Rentals which are
not actually rented for the season (90 days or more), must also have the
application of the law and subsequent tax equitably and fairly applied
to them as well. (Equal Protection as afforded to all citizens and
businessís under the United State Constitution.)
ECONOMICS OF THE BILL:
d. The inclusion of
all rental properties i.e. homes, condos, apartments etc. rented for
less than 90 days within these districts along with the tax cut, it is
estimated the total number of units would be multiplied by factor of 5
times the number of units collecting the tax and therefore provide
more revenue than is currently collected even with the tax
rate reduced to a total of 7%.
Lowering the tax rate to 7%
for Seasonal Lodging properties will provide the Jersey Shore a
completive edge over other destinations mostly located in nearby states.
The anticipated result of a lower tax rate should provide an increase in
total overnight visitors for the region thereby increasing further the
amount of revenue collected on behalf of the state and local
EXCLUSIONS FROM THE BILL.
A. Communities who
enjoy extended seasons of 8 or more months or properties which consist
of Banquet and restaurant facilities capable of accommodating 200
overnight accommodation units and/or banquet facilities of 300 or more.
B. Atlantic City.
C. All communities
not otherwise deemed seasonal by analysis and depiction on a map to be
drawn as may be further determined by the legislature during further
deliberation on the merits of the bill.
For clarification, all seasonal rental units regardless of location
should be held to be responsible for the collection of both sales and
applicable lodging taxes.
ANALYSIS OF ECONOMIC IMPACT TO THE STATE AND MUNICIPALITIES THROUGH
IMPLEMENTATION OF (JSL&R) ZONING DISTRICTS
In 2006 a study was commissioned by the New Jersey Association of
Realtors entitled (NJRA), ďAn Analysis of Extending New Jerseyís Sales
and Use Tax to Seasonal Home Rentals.Ē http://njhoteltax.com/Reports/Seasonal_Rental_Report.pdf
b. According to the (NJRA)
study on page 3 of the study, 70% of the 109,075 seasonal rental units
or 76,233 units exist in Ocean and Cape May County. See (NJRA).
c. According to (NJRA)
the average peak season 2006 weekly rate in Ocean County was $1,902.00
and off peak weakly rate was $1,345.00.
d. According to (NJRA)
the average peak season 2006 weekly rate in Cape May County was
$2,768.00 and off peak weakly $1,318.00.
Figures for Monmouth & Atlantic County were not provided in the study
and therefore the total number anticipated should exceed the statistical
predictions set forth within this overview.
8. FINDINGS: based on information provided in the (NJRA)
a. SEASONAL RENTAL
REVENUE: In 2006, in Ocean & Cape May Counties only, using the (NJRA)
total estimated seasonal rental units not presently collecting the tax
results in an estimated 76,353 units. Applying the (NJRA)
estimated average peak rate of $2,330 per week for just the10
week peak season, the total amount of gross revenue not
presently being collected on is, $1,779,024,900 (1.779B)
@ 7% this would yield the state is,
$124,531,743, additional tax revenue.
This figure does not take into account the other 42 weeks of off
season rentals, nor does it include figures for Monmouth or Atlantic
8. FURTHER FINDINGS:
THE PRESENT AMOUNT OF TAX COLLECTED FROM:
a. The Hotel, Motel Lodging sector in 2008-2009 as per state
records for Ocean and Cape May Counties collected $11,278,410.00,
based on a sliding interest rate scale, due to the legislative right of
each municipality to determine if and how much of the 3% local tax is to
b. For the tax period based on 2008-2009 the state of NJ reported
revenue of $11, 278.410.00 for Ocean and Cape May counties. Based
on an estimate of an average 6.5% rather than the full 8% the estimated
total gross revenue for those properties was approximately $180,000,000.00
c. Applying an additional 7% state sales tax now applicable to all
sales from lodging units of the properties whose estimated total gross
income is $180,000,000 (180M). The state collects additional
revenue amounting to $12,600,000.00 (12.6M).
d. The combined total of all revenue collected in Ocean and Cape
may Counties, Sales and Occupancy taxes is estimated at
e. In conclusion the result from the inclusion of all seasonal
rental properties along with the reduction of the applicable tax to a
total of 7% will result in the state of New Jersey and the affected
municipalities receiving a total increase of $112,591,722.00 (113M)