OCEAN CITY — A law firm representing Airbnb alleges two members of City Council had conflicts of interest when they voted to approve a new tax on short-term rentals.
In a letter sent in August, and obtained from Airbnb on Monday, attorneys with the law firm Lowenstein Sandler said both Jody Levchuk and Peter Madden had conflicts of interest that should have meant their recusal from the July 15 vote.
Council approved the ordinance 4-3, creating a new “transient accommodations fee” on lodging booked through Vrbo, Airbnb and other online marketplaces.
“If either of these two individuals had recused themselves, the ordinance would not have passed,” reads the letter signed by attorneys Christopher Porrino and Parimal Garg. The letter urged the city to rescind the ordinance.
Porrino is a former state attorney general who served as chief counsel for Gov. Chris Christie, while Garg served as chief counsel for Gov. Phil Murphy.
Garg declined to comment on the issue Monday, and said Porrino would also not discuss the matter.
Ocean City’s attorney, Dottie McCrosson, also said she could not comment on the letter, citing the potential for litigation.
The letter was dated Aug. 7. Its contents were first reported last week by Politico.
An official with Airbnb said Ocean City’s 3% tax on his and other businesses violates equal protection rights.
Madden is a real estate broker, while Levchuk owns rental property in Ocean City. According to the letter, Madden also facilitates rentals in the city, including the rental of a $45,000-a-month property on Pinnacle Road that would not be subject to the 3% tax.
“As a result, Mr. Madden directly benefits from the imposition of this tax, and under the Local Government Ethics law, he should have recused himself from this vote,” the letter states.
Madden said he does not believe there is any conflict of interest, and that he does not anticipate that the ordinance will be revisited.
Levchuk did not immediately respond to a request for comment Monday.
“Mr. Levchuk acknowledged during the council meeting that he had received a message from an individual asking him to recuse himself,” the letter states. “He noted that he is an owner of rental properties in Ocean City and stated that he sometimes uses Airbnb or Vrbo.”
According to the Airbnb attorneys, the imposition of a 3% tax makes renting through Airbnb less appealing and can mean more direct rentals, which can benefit property owners like Levchuk.
“Notably, under the law, it is not relevant whether the public official is actually motivated by his or her own financial interest while taking action,” the letter states.
At the July vote, Levchuk said he did not see any conflict. Council member Sean Barnes, one of the no votes, had indicated an intention to abstain, but he did cast a vote in the roll call.
Those booking online rather than at a hotel or through a Realtor will pay 3% more next summer under an ordinance approved by Ocean City Council 4-3.
Barnes had argued against the ordinance, saying it amounted to the city picking winners and losers in the local economy.
The city could bring in about $1.8 million a year from the new tax, although officials emphasized that is only an estimate. The tax is expected to take effect in 2026.
In late 2024, council considered a different version of the tax, amending the ordinance on its introduction to include hotels, bed-and-breakfasts and other means of renting in the city.
When the ordinance returned for a public hearing and final vote, many in the community turned out in opposition and the ordinance was defeated unanimously. The ordinance approved this summer exempted hotels, motels, properties rented through Realtors and other methods from the new tax, which applied only to rentals through online marketplaces.
A corporate spokesperson for Airbnb did not answer questions about the potential for legal action, saying the company had nothing to add to what was included in the letter.
Shortly after the vote, Airbnb released a statement arguing the tax violated equal protection rights under the New Jersey Constitution.
A corporate spokesperson for Expedia, which owns Vrbo, did not immediately respond to a request for comment.
Contact Bill Barlow:
609-272-7290
bbarlow@pressofac.com
X @jerseynews_bill
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