Could a new bill in New Jersey cripple Airbnb's growth?

Even by college-housing standards, Chrissy Hartman’s property was trashed.

There was dirt. Bedbugs. Plenty of wear and tear. For eight years, the  four-bedroom South Philadelphia rowhouse had been passed from one group of students to the next. By the end of 2014, she decided it had seen enough.

“I was ready to sell because I didn’t want to deal with it,” Hartman said. “But someone at work asked, ‘Why don’t you try Airbnb?’ I hadn’t heard of it.”

So she decided to give it a shot. At the time, the service that allows homeowners and leasers to rent out their space technically was not legal in Philadelphia, and the 38-year-old interior designer was not looking to put in much effort. Hartman cleaned, posted photos of vacant rooms, and explained that, in time, the space would be furnished.

By the end of the first day, she had six requests to rent.

“I had five days to get it ready,” she recalled. “I said, 'I guess I’m doing this.' ”

It’s been a little more than two years, and her sparse listing has become a well-oiled machine. With a five-star rating, 132 reviews, and a “Superhost” designation, Hartman has made Airbnb a substantial side job, renting for half the year and profiting tens of thousands of dollars per year.

Things have been going so well, in fact, that Hartman even tossed around the idea of buying a property to rent through Airbnb at the Jersey Shore — until she learned of one bill moving through the state Assembly, that is.

Following cities and states nationwide, New Jersey has become the latest to take steps toward cracking down on the popular yet controversial service. Earlier this year, two bills targeted at regulating Airbnb were introduced by two Democratic assemblywomen. Both measures passed out of committee with bipartisan support.

One, introduced by Assemblywoman Annette Quijano (D., Union), aims to impose the New Jersey sales-and-use tax, as well as the hotel and motel occupancy fee, on “transient space marketplaces” — sites such as Airbnb and VRBO that now operate tax-free. If the bill passes, guests would pay the taxes, and Airbnb would collect and remit proceeds to the state. Municipalities could impose additional fees.

New Jersey’s bill is similar to agreements Airbnb has brokered across the United States in an attempt to curry favor with local governments. By agreeing to allow it to collect and turn over taxes, Airbnb has argued, the communities reap funds they would not receive otherwise.

Already, Airbnb collects Philadelphia’s 8.5 percent hotel tax and Pennsylvania’s 6 percent hotel occupancy tax — earning the city $3.1 million since June 2015 and Pennsylvania $2.7 million since June 2016, the company says.

Airbnb supports Quijano’s bill. Yet the second measure has not earned similar support from the company or some hosts. Introduced by Assemblywoman Valerie Huttle (D., Bergen) in January, that bill would allow municipalities to ban sites such as Airbnb from conducting “short-term rentals," basically renting spaces for fewer than 30 days — something many New Jersey towns have already begun doing. (Current law permits municipalities to restrict rentals.)

In addition, Huttle's bill also would set up a licensing and regulatory system for Airbnb and similar sites to be run by municipalities that choose to do so. The most significant regulations would include requiring hosts to register and pay a $50 annual fee, banning hosts from registering more than one property, and restricting hosts who are not present inside the property to renting the entire unit for a maximum of 30 consecutive days a year. If present, a host could rent a partial space — for example, a spare room — for an unlimited number of days.

The bill does not apply to seasonal rentals that are not occupied for more than 125 days a year.

Huttle, who is in her sixth term, has argued that the regulation is a necessary step toward ensuring more community safety. Although hotels and other lodging sites are subject to rules and zoning regulations, Airbnb, she argues, allows anyone to open up a home, which she says can create uncertain situations for neighbors, as well as guests renting the uninspected properties.

“The goal here is not to stunt a creative business, but to protect residential neighborhoods,” she said.

Airbnb, however, has characterized Huttle’s bill as one “unlike anything else in the country.” By restricting hosts who want to rent an entire property from doing so for more than 30 consecutive days per year, the bill would “hurt a lot of people who share their homes for a couple of weeks in the summer or holiday season,” said Andrew Kalloch, a lawyer for Airbnb.

“The most draconian part of this bill is the fact that this bill exists at all,” Kalloch said. “It's the fact that they are dictating that [municipalities] have to regulate in a specific manner.”

In the United States and abroad, governments have taken steps to regulate the sharing economy's latest rising star. France, for example, has levied heavy fees on hosts who violate local laws, while Philadelphia has had one of the most progressive stances, legalizing Airbnb and allowing hosts to list properties for as many as 180 days a year. Currently, Airbnb said, Philadelphia has 6,400 hosts, each earning a typical $4,000 a year.

Like Uber, Airbnb has come in for significant criticism. In March, a website known as "Inside Airbnb" that describes itself as an "activist project" claimed Airbnb served as a racial gentrification tool in New York City, with mostly white hosts displacing residents in historically black neighborhoods. In cities with tight housing supply, opponents also have argued that Airbnb can drive up rental and home prices.

There are 6,100 Airbnb hosts in New Jersey — 1,200 of whom have properties in Burlington, Camden, Gloucester, Atlantic and Cape May Counties, according to the company. Hosts there typically earn about $7,800 a year.

Diane Carter, 69, is one such host. In Beach Haven Borough, Ocean County, she lists a tiny garage apartment behind her home for $115 a night. It amounts to about $12,000 a year, she said — significant when you're retired.

Because Carter rents the space only while she's there, she would be exempt from Huttle's proposed regulations. But as a resident of a Shore town that thrives on tourism, Carter said she fears that if Beach Haven restricts Airbnb, it could stunt the local economy.

"Most vacation rentals are Saturday to Saturday," she said. "Airbnb fills a great need for people who just want to come for a weekend."

With possible restrictions looming, the bill has been enough to deter  Hartman from moving forward with her second Airbnb plans. 

"I probably won't do it," Hartman said. "I think it could really hurt the market, especially for those that rely on that income."

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