WilmingtonBiz Magazine

What To Do About Short-Term Rentals?

By Mike Harrington and Sylvia Kochler, posted Apr 6, 2018
AT ISSUE: With the rise in popularity of vacation housing rental websites, cities across the country are trying to figure out how to regulate the revenue generators and balance property rights arguments, including those from upset neighbors.

In Wilmington, where an estimated 400 homes or rooms are used for short-term rentals, city officials have been researching and debating policies for them since 2015.

Because the city’s existing code doesn’t directly address short-term rentals, Wilmington is relying on related regulations. So until something more specific on the topic is passed, a home (or room) is supposed to be rented out for at least seven days – though in the gray area of the current impasse, that’s not really happening.

The latest: In January, the Wilmington Planning Commission was unable to agree on certain proposals during the latest of a string of public hearings held on the issue. In March, the planning board and city council held a joint work session on a proposed draft of short-term rentals regulations. And the debate continues.

A Sensible Compromise Needed

Sylvia Kochler

Short-term rental businesses demand that Wilmington change residential zoning regulations to allow unlimited, unsupervised, nightly, “whole-house” rentals in all Wilmington neighborhoods. This change would hurt neighborhoods and housing and is not necessary to support tourism.

Short-term rental (STR) businesses buy homes, displace residents and rent whole houses for a night or weekend at inflated rates. Many operate multiple properties in multiple cities. STRs operate in most Wilmington neighborhoods in alarmingly growing numbers.

In three years, local Airbnb listings increased 543 percent (from 83 listings in November 2014 to 534 in October 2017 – most listings are whole-house, not room, rentals).

STR businesses have no “property right” to operate in neighborhoods; residential zoning regulations prohibit STRs.

STR businesses knew this, went into neighborhoods anyway, and now demand Wilmington legalize their violations and protect their profits at locals’ expense.

Whole-house STRs in neighborhoods
• reduce housing supply and affordability;
• create economic risk by tying residential property values to tourism’s ups and downs;
• hurt neighborhood character and quality of life by replacing neighbors with weekend visitors and nuisance behavior (parties, noise, overcrowding, parking problems);
• sit empty midweek, during off-seasons and recessions, increasing risk of crime (Wilmington Police Department says resident- occupied houses deter neighborhood crime); and hurt hotels and businesses that serve locals, costing jobs and investment.

Cities that liberally allowed STRs in neighborhoods suffered and now struggle to limit them (Vancouver, Seattle, New Orleans, Charleston). Cities that have long prohibited whole-house STRs in neighborhoods (Asheville, Myrtle Beach) have vibrant tourism, economies and tax bases.
Wilmington should adopt Asheville’s time-tested model:
1) In business and mixed-use districts, liberally allow all types of STRs (B&Bs, whole-house and room rentals).
2) In residential neighborhoods, prohibit whole-house STRs but allow “homestays,” where a resident lives in the house, is permitted to rent up to two bedrooms as guest lodging and must be present during the rental.
3) In all cases, require STRs to be licensed, be insured, pay taxes and comply with safety rules. With this compromise, locals and tourism benefit from STRs, without sacrificing neighborhoods and housing.

Sylvia Kochler is a downtown resident who serves on several nonprofit boards. Views expressed are her own and do not represent any groups.

Opportunity to Lead from the Front

Mike Harrington

It’s really hard to read article after article that gives credit to website platforms like Airbnb and HomeAway for “pioneering” the short-term rental (aka vacation rentals) movement.

Go to any tourist destination in the country, and you’ll run into someone who has “rented out” their beach/mountain house for years when not enjoying it. You’ll also run into local real estate businesses that have been stewards of these second homes for their friends and clients for 20, 30, even over 50 years.

Short-term and vacation rentals are not new. They have been a mainstay for family and friends seeking a more authentic experience, more space and better prices so they can enjoy time together on a more personal level.

It seems over the past few years, the arguments against short-term rentals starting to proliferate in more urban areas have been a cut-and-paste endeavor.

Party houses, hurting the “fabric of the neighborhood,” affordable housing have all been major campaign slogans used against property owners that have turned their home into an opportunity to earn a secondary income.

In my opinion, most of these arguments do not hold water.

Drive by any area and compare a home that is owned as a long-term rental and one that is offered as a short-term rental. More often than not, the level of care, involvement and investment back into the property is quite a bit different.

Are there bad apples? Sure. However, the fundamental nature of the short-term rental model is based on hospitality. Ultimately, short-term rentals are not going away.

For a progressive, growing city like Wilmington, this is a real opportunity to lead by example as a new economy advocate.

As many governments are playing catch-up with the increase in short-term rentals in their area, they would all be wise to look to their tourist area neighbors and the benefits they have enjoyed in their communities through occupancy tax collections over the years.

With Airbnb now automating and paying on behalf of the property owner in North Carolina, technology is catching up and leveling the playing field for those trying to cheat the system.

Additionally, enforcement of erroneous occupancy caps on nights booked, “zones” where one can rent their property and reclassifying properties between owner occupied and non-owner occupied will prove to be an unsustainable government oversight and further drive short-term rentals underground.

Regulations have their place, and I believe in Wilmington an acceptable balance can be struck but only if we have an objective viewpoint from both sides.

Mike Harrington, president of Topsail Realty Vacations, is president of the Vacation Rental Management Association.

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