A5434

An Act concerning short-term rentals of transient accommodations in residential zones and supplementing P.L.1975, c.291 (C.40:55D-1 et seq.).

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. This act shall be known and may be cited as the “Neighborhood Protection and Housing Affordability Act.”

2. The Legislature finds and declares that:

a. The rise and growth of transient space marketplaces such as Airbnb, HomeAway, and FlipKey, has caused debate among local governments, the hotel industry, the real estate lobby, housing activists, and local residents, about the impact that short-term rentals have on the availability and affordability of long-term rental housing and for-sale housing.

b. Academic research justifies concerns about the impact of short-term rentals on housing affordability and availability, indicating the need to adopt best practices to better regulate the short-term rental industry.

c. Short-term rentals reduce the affordable housing supply in at least two ways:

(1) Each housing unit that was previously a long-term rental, but is now listed year-round as a short-term rental through a transient space marketplace, has been removed from the long-term rental market and has essentially been added to the community’s supply of hotel rooms. This "conversion" of long-term rental units to short-term rental units often leads to increases in rent and reductions in the supply of affordable housing; and

(2) Market conditions that enable a property owner to rent out a short-term dwelling unit through a transient space marketplace for less than the cost of a hotel room, but more than the owner may derive from renting the unit long-term, incentivizes property owners to list units for short-term rental on a transient space marketplace rather than renting units long-term to local residents. This circumstance is a cause of decreases in the supply of housing.

d. According to a 2016 University of Massachusetts study concerning the impact of short-term rentals on the availability and affordability of housing in Boston, the growth of the short-term rental industry has decreased the supply of dwelling units available to potential long-term residents, and increased asking rents for long-term rental units.

e. Another independent academic study, published by researchers at the National Bureau of Economic Research, the University of California, Los Angeles, and the University of Southern California concluded that on a national basis "a 10 percent increase in Airbnb listings leads to a 0.42 percent increase in rents and a 0.76 percent increase in house prices."

f. The short-term rental industry has grown by more than 800 percent since 2011. Since a 10 percent increase in the number of short-term rental listings was found to lead to a 0.42 percent increase in rents, an 800 percent increase in short-term rental listings since 2011 may be responsible for a 33.6 percent increase in rents over that same time period, although the median household income in the United States grew only 18 percent between 2011 and 2016.

g. Although the expansion of the short-term rental market through their use of transient space marketplaces may enable property owners to maximize the income they may derive from renting their units, expansion of the short-term rental market has made it more difficult for local residents of a community to rent and reside in a dwelling unit in their community.

h. It is therefore necessary and appropriate to enhance the ability of local governments to regulate short-term rentals of property through transient space marketplaces, thereby encouraging the development and occupancy of dwelling units in residential areas for long-term occupancy.

3. a. As used in this section:

“Obtained through a transient space marketplace” means that payment for the accommodation is made through a means provided by the marketplace or travel agency, either directly or indirectly, regardless of which person or entity receives the payment, and where the contracting for the accommodation is made through the marketplace or travel agency.

“Professionally managed unit” means a room, group of rooms, or other living or sleeping space for the lodging of occupants in the State, that is offered for rent as a rental unit that does not share any living or sleeping space with any other rental unit, and that is directly or indirectly owned or controlled by a person offering for rent two or more other units during the calendar year.

“Transient accommodation” means a room, group of rooms, or other living or sleeping space for the lodging of occupants, including but not limited to residences or buildings used as residences, that is obtained through a transient space marketplace or is a professionally managed unit. "Transient accommodation" does not include: a hotel or hotel room; a room, group of rooms, or other living or sleeping space used as a place of assembly; a dormitory or other similar residential facility of an elementary school, secondary school, college, or university; a hospital, nursing home, or other similar residential facility of a provider of services for the care, support and treatment of individuals that is licensed by the State; a campsite, cabin, lean-to, or other similar residential facility of a campground or of an adult or youth camp; a furnished or unfurnished private residential property, including but not limited to condominiums, bungalows, single-family homes and similar living units, where no maid service, room service, linen-changing service, or other common hotel services are made available by the lessor, and where the keys to the furnished or unfurnished private residential property, whether a physical key, access to a keyless locking mechanism, or other means of physical ingress to the furnished or unfurnished private residential property, are provided to the lessee at the location of an offsite real estate broker licensed by the New Jersey Real Estate Commission pursuant to R.S.45:15-1 et seq.; or leases of real property with a term of at least 90 consecutive days.

“Transient space marketplace” means a marketplace or travel agency through which a person may offer transient accommodations to customers and through which customers may arrange for the occupancy of transient accommodations. “Transient space marketplace” does not include a marketplace or travel agency that exclusively offers transient accommodations in the State owned by the owner of the marketplace or travel agency.

b. A zoning ordinance may provide that buildings and structures located within specified districts shall be used exclusively for residential purposes, and may further specify areas within each such district within which buildings and structures, or parts thereof, may be rented for a short term as a transient accommodation. The total land area within which a zoning ordinance may specifically authorize the use of a building or structure as a transient accommodation shall not exceed 25 percent of the total land area of the municipality.

c. A person shall not offer occupancy of a transient accommodation, nor contract for the short-term rental of a transient accommodation, if the building or structure is located within an area zoned exclusively for residential purposes, unless the applicable zoning ordinance specifically authorizes the use of that building or structure as a transient accommodation.

d. A person who violates the provisions of this section shall be liable to a civil penalty of not more than $250 for a first offense, not more than $500 for a second offense, and not more than $1,000 for a third and every subsequent offense, which shall be collected in a summary proceeding before a court of competent jurisdiction pursuant to the provisions of the “Penalty Enforcement Law of 1999,” P.L.1999, c.274 (C.2A:58-10 et seq.).

e. (1) An action for the recovery of a civil penalty for violation of this section, or of an ordinance adopted pursuant thereto, shall be within the jurisdiction of and may be brought before the Superior Court or municipal court for the municipality in which the property is located.

(2) Monies collected pursuant to this section, or an ordinance adopted pursuant thereto, shall be forwarded to the municipality in which the property is located. The municipality in which the property is located:

(a) may deposit an amount equivalent to the costs reasonably incurred in administering and enforcing this section into the general fund of the municipality; and

(b) shall deposit the balance of the amount collected into the affordable housing trust fund of the municipality for use on low-income housing or moderate-income housing needs, as defined in section 4 of P.L.1985, c.222 (C.52:27D-304), to the extent the municipality maintains such a fund, and if the municipality does not maintain such a fund, to the State Treasurer, for appropriation to the “New Jersey Affordable Housing Trust Fund,” section 20 of P.L.1985, c.222 (C.52:27D-320), for the purpose of developing and supporting housing programs that create for-sale and rental affordable housing.

4. This act shall take effect on the first day of the third month next following enactment.

STATEMENT

This bill provides that a municipal zoning ordinance may specify areas of the municipality within which all buildings and structures are required to be exclusively used for residential purposes. Additionally, the bill authorizes a municipal zoning ordinance to further specify areas in each exclusively residential district within which buildings and structures, or parts thereof, may be rented for a short term as a transient accommodation, so long as the total land area in which property may be rented for a short term as a transient accommodation does not exceed 25 percent of the municipality’s total land area.

The bill also prohibits buildings and structures, and parts thereof, located within areas zoned exclusively for residential purposes from being rented for a short term as a transient accommodation, unless the municipal zoning ordinance specifically authorizes the use of that building or structure as a transient accommodation.

A person who violates the provisions of this bill would be liable to pay a civil penalty of not less than $500 for a first offense, not more than $1,000 for a second offense and not more than $1,500 for a third and every subsequent offense. Penalties are to be collected in a summary proceeding before a court of competent jurisdiction pursuant to the provisions of the “Penalty Enforcement Law of 1999,” P.L.1999, c.274 (C.2A:58-10 et seq.).

An action for the recovery of a civil penalty for a violation under the bill, or under an ordinance adopted pursuant thereto, is within the jurisdiction of, and may be brought before, the Superior Court or municipal court for the municipality in which the property is located. All monies collected pursuant to the bill or an ordinance adopted pursuant thereto, are to be forwarded to the municipality in which the property is located. The bill: allows a municipality to use an amount equivalent to the costs reasonably incurred in administering and enforcing the bill and to deposit that amount into the general fund of the municipality; and requires a municipality to use the balance of the amount collected for low-income housing or moderate-income housing needs, as defined in section 4 of P.L.1985, c.222 (C.52:27D-304), and to deposit the balance of the amount collected into the municipality’s affordable housing trust fund, to the extent the municipality maintains such a fund, and if the municipality does not maintain such a fund, to the State Treasurer, for appropriation to the “New Jersey Affordable Housing Trust Fund” for the purpose of developing and supporting housing programs that create for-sale and rental affordable housing.