Every now and then a fresh face emerges in local government who is not afraid to embrace controversial new
ideas and find new revenue sources instead of just resorting to raising taxes and trying to make pockets of people feel good with pretty promises.
It is not surprising that Mayor Steven Fulop led Jersey City to become the first municipality to allow home-sharing platform Airbnb to operate within its borders.
Under its ordinance, Jersey City homeowners are able to rent out their home for less than 30 days via the Airbnb platform. However, they will not be responsible for collecting the city’s hotel tax, which was extended to short-term rentals this spring. Pursuant to an agreement with Jersey City, Airbnb has agreed to charge and collect the six percent tax on all rentals.
Disruptive business models have historically wreaked havoc on regulators at all levels. From collecting taxes on purchases made on Amazon.com to overseeing the sale of Tesla vehicles sold in local malls, states and local governments have difficulty fitting innovative ventures into often decades old laws.
Not surprisingly, Jersey City has elected to take a different path. Since taking office, Mayor Fulop has made waves. Most notably, he completely overhauled the city’s controversial tax abatement policy and made Jersey City the first municipality in New Jersey to require employers to provide workers with paid sick leave.
In support of his latest trailblazing initiative, Mayor Fulop authored an editorial for The Huffington Post. “[G]overnment is often accused of being late to the table (or tablet) when it comes to new technology and new ways of doing things. Government has the reputation – and it’s often fair – of being a bit of a Luddite,” he wrote.
Citing the government’s effort to deter Americans from adopting the automobile over the horse and buggy, Mayor Fulop essentially argues that the government should get out of the away or eventually get run over.
“Indeed, if there are concerns about a new technology or platform or industry, the way to address those concerns is not by trying to eliminate what’s new,” Mayor Fulop argues. “Instead, as Bill Clinton said, ‘We have to make change our friend’ which is what we’re doing in Jersey City with regard to Airbnb.”
Financially speaking, the decision to allow Airbnb to operate within the city’s borders makes sense. According to the Fulop Administration, the agreement will increase city revenues by roughly $1 million a year, which represents a 14 percent increase in hotel-tax revenue. If all goes as planned, municipalities across New Jersey may again be following Jersey City’s lead.
Donald Scarinci is a managing partner at Lyndhurst, N.J. based law firm Scarinci Hollenbeck. He is also the editor of the Constitutional Law Reporter and Government and Law blogs.