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Real Estate - Residential

Short-Term Rentals Debate Carries On

By Cece Nunn, posted Jan 13, 2017
Tom Hissam refurbished his home at 2601 Park Ave. to turn it into a short-term rental as he tries to sell it. (Photo by Chris Brehmer)
Deanna Mummert, a retired John Hopkins professor from Massachusetts, said recently that she enjoys being able to stay in Wilmington for short periods to visit her daughter, son-in-law and three grandchildren.

She typically rents a place for two to five months.

“I certainly wouldn’t want to be limited [to short amounts of time] because I don’t want to stay in a hotel,” said Mummert, who usually lodges in downtown properties owned by David Billitto and his wife, Pam Jorgenson.

At a recent meeting in The Beam Room at Front Street Brewery, property owners who rent their homes to visitors like Mummert expressed their worries that changes to Wilmington’s current guidelines, which lack clear definitions, will harm their investments and the city’s economy.

Park Avenue home owner Tom Hissam characterized the mood during the Dec. 13 session, which included about 60 owners, property managers and others interested in learning more about the city’s potential plans.

“Everybody’s frustrated,” Hissam said, as he encouraged those present to form an organized group to present their concerns.

The first blow to the kind of rentals that the meeting participants were discussing in December came when film tax incentives failed to be renewed at the end of 2014, replaced by a grant program that diminished the number of projects coming to Wilmington, according to property owners.

Joan Gerity of NC Coast Properties, who has worked with Hissam on his property, said in the past, 90 percent of the business for rentals she manages came from the film industry.

“That went away. We managed to resurrect doing the short-term rentals,” Gerity said.

Billitto said the kind of properties that the film industry used to rent for stays of weeks and months “really would be put in jeopardy to put a traditional renter into those homes I think sometimes. The renters that would take care of that property long-term, they’re out there, but not everyone is that person. When we lost that, I think people started doing a little bit more shorter term, fill in the gaps, and we’re all sitting here waiting, hoping I think, for film to return …,” he said.

In the meantime, city officials have been working on a draft proposal that could make changes to the way short-term rentals are regulated in parts of Wilmington, not just downtown. Currently, the city has guidelines written when short-term rentals were not as prevalent.

“Because there is no specific definition of short-term rental in the [city’s Land Development Code], the two existing LDC definitions applied to this issue are housing unit and family,” according to a report compiled by city staff members last year. “Whether the entire house or only a single room is rented, the required rental period must be at least seven days and the total number of occupants, including the primary tenant, if applicable, must meet the definition of family, namely, not more than three unrelated persons.”

But any potential changes to those definitions are far from being set in stone, and there’s room for compromise, city officials say.

“We’re still working on the problem,” said Wilmington City Councilman Kevin O’Grady, who has said he doesn’t believe short-term rentals belong in residential districts.

A forthcoming proposal, discussed at a city council retreat in November, isn’t expected to be brought up again at a meeting until next month.

“Our plan is to bring a draft back to the city council in time” for a February council briefing, said Glenn Harbeck, director of planning, development and transportation for the city of Wilmington.

Along with that presentation, staff members plan to gather more information from council members about what they want the proposal to include. So far, efforts to complete the proposal have included working on a definition for “home stays” – situations like those often offered on websites like Airbnb in which renters are occupying rooms within a dwelling where there is a full-time resident.

Home stay definitions can involve a permanent resident that doesn’t have to be the property owner.

“We’re proposing that they [home stays] be treated like a B&B [bed and breakfast lodging],” said Christine Hughes, city planner, because in many ways B&Bs and home stays could be considered functionally the same.

The proposal does not so far include a 30-day minimum stay for short-term lodgings, a restriction some rental property owners feared was already part of the draft proposal.

“Everything is still up for debate,” Hughes said this month.

She said there will still be a lot of opportunities for public input on a draft before a potential proposal even makes it on the city planning commission’s agenda, a step before city council would consider it.

Councilman Earl Sheridan and other city officials say people on both sides of the issue – to regulate restrictively or not – are passionate on the topic. He said the sticking point, coming out of the retreat, may be what to do about whole-house rentals.

“I’m probably one of those that would probably compromise on that and might accept some whole house with some limitations,” Sheridan said in December.

Sylvia Kochler, president of Residents of Old Wilmington, said her group thinks Wilmington would do well to follow the example of Asheville’s rules, which prohibit whole-house rentals in residential districts.

“Our position is that we see a need to balance competing interests and reach a compromise, and we think that home stays might present the appropriate balancing act. But we do not believe that whole-house rentals, which are basically a commercial use, belong in a residential district even on a limited or regulated basis,” Kochler said this month.

The issue is not unique to Wilmington, as cities across the state and region look for ways to regulate short-term rentals where needed as the popularity of sites like Airbnb and VRBO.com (Vacation Rentals By Owner) has grown.

As the debate continues, property owners say they still have bills to pay, expenses that short-term rentals have helped them meet. Hissam’s house on Park Avenue has been on the market off and on for about five years.

Working with Gerity, Hissam decided to refurbish the dwelling with the idea that renting it out short-term would help with the cost and be preferable to long-term renting because the house can be shown to potential buyers between renters.

“All I’m trying to do is cover the mortgage until I sell the house,” Hissam said.
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