Chapel Hill Settles Lawsuit Over Short-Term Rentals

GOVERNMENT

By Fraser Sherman
Correspondent

For the second time, Chapel Hill has settled a lawsuit over short-term rentals (STRs) and preserved the town’s authority to regulate them.

Back in 2021, the town passed an ordinance regulating rentals of 30 days or less. Joe and Irene Valentine, former Chapel Hill residents, sued the town after Chapel Hill ruled that under the ordinance, the Valentines couldn’t use their house here for STRs.

At the Jan. 21 meeting, the Town Council voted unanimously to settle Joe and Irene Valentine v. Town of Chapel Hill. The Valentines will be able to use their house for short-term rentals; in return, they will drop their lawsuit.

Short-Term Rentals

Chapel Hill’s regulations divide STRs into two classes. Primary residence STRS include garage apartments or spare bedrooms in the owner’s main home. Dedicated STRs are those where the owner lives on the property for less than 183 days a year. The second category is only permitted in commercial and mixed-use zoning. Other STR rules cover the number of parking spaces, maximum occupancy, and permitting.

The court files say the Valentines purchased their single-family home in 2004 and lived there until 2016. That year, they moved to Florida and began renting their Chapel Hill home through Airbnb and VRBO. At the time, there were no regulations barring this.

That changed in June 2021, when the town council passed the STR ordinance. The town notified the Valentines that, as their former home lay in a residential zoning district and was no longer their primary residence, STR was no longer permitted there. The Valentines sued in 2022, arguing the lack of rental income would be a financial blow, and that there was no history of short-term rentals causing problems in Chapel Hill.

Under the terms of the settlement, the town will issue the Valentines a primary-residence STR permit. As primary-residence rentals are legal in a residential district, there’s no longer an issue and no need for a court to decide on the merits of the STR regulations.

The town settled a previous lawsuit, Eric P. Plow of the Eric P. Plow Reversible Trust v. Chapel Hill, in 2023. Plow had been using a seven-unit on Hillsborough Street for short-term rentals and said the ordinance’s terms would make that too difficult. The settlement classified the building as a boarding house, which exempted it from the STR ordinance.

In other business

The council voted to reallocate $253,000 in Community Development Block Grant funds, for example, reallocating $173,000 from Affordable Housing, Public Service, and Economic Development activities to Neighborhood Revitalization funding.

The council also voted to donate the lockers the Chapel Hill Public Library uses for book holds to the Chatham Public Library. The lockers were located on University Place property, and University Place recently told the library they’d need to be moved before renovations began on the site.

As the lockers were nearing the end of their life and suffering from flood damage — and cost a total of $6,000 to operate a year — the town opted to get rid of them. Because they were purchased with a grant from the North Carolina State Library, the town was able to transfer the lockers to another library willing to accept them “as is.”

You can watch the entire meeting streaming here.

Fraser Sherman has worked for newspapers, including the Destin Log, the Pensacola News-Journal and the Raleigh Public Record. Born in England, he’d still live in Florida if he hadn’t met the perfect woman and moved to Durham to marry her. He’s the author of several film reference books and has published one novel and several short story collections. This reporter can be reached at: Information@TheLocalReporter.press