THE JERSEY SHORE LODGING & RENTAL (JSL&R)
SPECIAL ECONOMIC DEVELOPMENT DISTRICT.
NOTE: 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: http://www.state.nj.us/treasury/taxation/hotelcounty.shtml.
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: http://njhoteltax.com/Reports/Seasonal_Rental_Report.pdf
NOTE: 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:
1. 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 in nature.
2. 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.
3. 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 municipality.
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 located.
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.
1. 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.)
5. 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%.
e. 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 municipalities.
6. 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.
a. NOTE: 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.
7. ANALYSIS OF ECONOMIC IMPACT TO THE STATE AND MUNICIPALITIES THROUGH IMPLEMENTATION OF (JSL&R) ZONING DISTRICTS
a. 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) study.
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.
i. This figure does not take into account the other 42 weeks of off season rentals, nor does it include figures for Monmouth or Atlantic Counties.
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 be collected.
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 (180M).
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 $23,878,410.00 (23.8M).
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) in revenue.