Rental Tax Vote In Ocean City Violated Ethics Law, Airbnb Says: Report

OCEAN CITY, NJ — Airbnb is accusing two Ocean City councilmen of violating ethics laws by voting for a new rental tax when they should have recused themselves, according to reports.

A letter from attorneys representing Airbnb, initially reported by Politico, says that both Jody Levchuk and Pete Madden had conflicts of interest and should not have voted on the ordinance this past July.

The ordinance puts a 3 percent tax on rental properties booked through the transient marketplace, meaning rentals like Airbnb and VRBO. It narrowly passed with a 4-3 vote. Read more: 3% Occupancy Tax Gets Narrow Approval In Ocean City

Madden is a real estate broker who also facilitates rentals, according to the letter. Levchuk owns rental properties, and in fact acknowledged during the July meeting that he had been asked to recuse himself. Neither of their rentals would be subject to the tax.

"Mr. Levchuk thus claimed that because rental property owners like himself can choose to rent directly or can choose to utilize Airbnb or Vrbo, there cannot be a conflict of interest," the letter reads.

If both of the men had recused themselves, the vote would have failed, the letter notes.

"If business shifts from Airbnb towards direct rentals, which are more profitable for property owners like Mr. Levchuk, it stands to reason that Mr. Levchuk will benefit," the letter says. "And this shift in business is not mere conjecture. Mr. Levchuk himself said at the council meeting that if the ordinance passed, potential renters would learn that they could book directly with the owner and avoid the 3 percent tax, which would cause accommodations obtained through transient space marketplace rentals to go down."

This shift would at the very least be an "indirect financial interest," according to the letter.

Airbnb called for the ordinance to be rescinded.