Proposed Short-Term Rental Law Would Have No Teeth

REAL ESTATE

By Britney Nguyen

Under a proposed land-use management ordinance, hosts for short-term rentals in Chapel Hill would be required to get a permit and follow certain rules to operate their rentals.

STRs — the rental of residential dwelling units for periods less than 30 days — are the types of rentals usually listed on places like Airbnb and VRBO. 

According to Anya Grahn, a senior planner with the town who presented the proposed ordinance to the Chapel Hill Town Council on May 19 at a public hearing, under the current land-use management ordinance, STRs are permitted only if they fall under the definition of a home occupation (an in-home business) or a tourist home or, using a term exclusive to the Blue Hill district, overnight lodging. 

“As you all know, the LUMO predates the rise of the share economy, and it doesn’t specifically address this use, and that’s why we’re here before you with a short-term rental ordinance,” Grahn told council members.

The project to create an ordinance for STRs began in June 2019. Chapel Hill Alliance for a Livable Town teamed up with the Chamber for a Greater Chapel Hill-Carrboro and local hoteliers to request that the council develop a regulatory framework to address STRs.

In the fall of that year, council appointed a 13-member task force of different community stakeholders including hoteliers, STR advocates and operators, neighborhood residents and advisory board champions to study whole-house, non-owner-occupied rentals, which are known as dedicated STRs.

The group was charged with developing a final set of recommendations and, in February 2020, created a final set of findings that were reviewed by the council in March before the COVID-19 shutdown. The findings of the task force were accepted by the council in June 2020, and town staff have been meeting with council to receive input on possible ordinance provisions.

Grahn said town staff have heard that dedicated STRs do not belong in residential neighborhoods but might be appropriate in mixed-use and commercial areas. They’ve also heard an interest in having a cap on the number of dedicated STRs, as well as concerns for the impacts of STRs on residents and residential neighborhoods.

“We’ve all shared this interest in requiring permits in order to collect data and then clarify the number of STRs operating in the community and learn a little bit more about our short-term rental environment,” Grahn said.

Yet enforcing such an ordinance would be extremely challenging, similar to the difficulty of enforcing the town’s ordinance that prohibits no more than four unrelated people renting a house together. The town’s 2021-22 budget does not include any money to buy software that would track STR violations.

According to statistics kept by the Orange County Visitors Bureau, STRs have cut into the hotel business dramatically. In a year-on-year comparison, the average daily rate for an STR in April soared 51 percent from a year ago, rising to $194.52 per night from $128.91. During that same period, a hotel room inched up 12 percent to $96.65 from $85.98. Prior to the pandemic, the ADR for a hotel room in Orange County in December 2019 was $120.28. The ADR for an STR doubled between 2015 and 2020.

Among the many parts of the ordinance, Grahn said town staff wanted direction from the council on three parts of the proposed STR ordinance:

  • residents of primary residence STRs can rent out their property as long as they reside there a majority of the year — 60 percent or more of the time, equating to a minimum of 219 days a year 
  • residents of primary residence STRs can host simultaneous rentals if they are on site, but if the host is not on site, the ordinance will not allow renting to more than one party at the same time
  • STRs would have six months to come into compliance with the new standards and receive an STR permit or have to cease operations

During the public hearing, several residents and hosts of STRs spoke either in support or against STRs. 

B.J. Warshaw, an STR host, said having a three-strikes rule for noise complaints and other violations could be abused by neighbors who don’t want STRs in their neighborhood.

Warshaw also said STRs provide a lot of tangible benefits to the community. 

“We’ve hosted all types of guests that prefer using services like Airbnb over traditional accommodations,” Warshaw said. “We’ve had parents who want to cook meals for UNC students, or individuals with serious allergies who can’t stay in hotels due to the type of cleaning products they use.”

Another resident, Carrie Deal, said having STRs in the neighborhood is using livable space that could be used for housing for Chapel Hill residents.

“That’s affecting our availability for affordable long-term housing, ultimately, in turn, increasing our housing pricing,” Deal said. “With all the development plans that we’ve heard about, we’re working to build and develop new affordable housing, but allowing short-term rentals seems a little bit out of balance.”

On top of that, Deal said, STRs will have residents worrying about different people coming and going every few days, which can affect safety in the community.

“As a parent myself, I want to make sure that our neighborhood that I live in is safe, not only for our kids as they go out to play, knowing our neighbors and not have to worry about excessive cars coming in and out throughout a couple hours,” she said.

Pointing out the competition between STRs and the hotel industry, Manish Atma, president of Atma Hotel Group, said dedicated STRs should be prohibited in residential districts.

“Dedicated STRs bring a commercial use to the residential neighborhoods,” Atma said. “They harm small businesses by relocating visitors out of commercial districts, they decrease the housing supply for residents, they make residential property more expensive to purchase or rent due to lack of inventory, and they decrease the amount of money that will be invested in legitimate hotel properties that meet all health and safety requirements.”

Council continued the public hearing until June 16 and plan to vote on the ordinance on June 23.

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3 Comments on "Proposed Short-Term Rental Law Would Have No Teeth"

  1. Unfortunately the author of this article is falling prey to the numerous false allegations that the special interest groups are pushing forward (and we all know who they are). I have been doing STR’s for 20 years and have never had a problem. Chapel Hill is not a tourist town like New York City or San Francisco, and does not have enough STR demand to cause investors to swoop in and buy up properties all over town.
    The statistics quoted in the article are questionable. How were these figures arrived at? On the other hand, I researched all 911 disturbance calls over a 1-year period and I can provide a list of each and every call upon request – there are too many to put in this article. Of over 1,500 such calls, only 3 were attributed to STR’s. One was a dog barking, another one was a trash can not taken back after pickup. Why not deal with the other 1,497 disturbance calls? Should student apartment rentals should be banned since they cause the majority of problems? Airbnb and VRBO have a review process by which guests and hosts get to review each other after a rental, and these reviews are posted online for future reservations. This ensures that problematic STR’s and/or guests are quickly blacklisted. And in the RARE event of a problem, the police can be called to issue a citation just like with any other disturbance. Furthermore, having done both short and long term rentals for many years, STR guests are gone quickly, but it takes weeks or months to evict a long-term problematic tenant.
    STR hosts provide housing for many families for whom a cramped motel room is not a good fit. These families visit their children at UNC, support a family member undergoing treatment at UNC hospitals, attend family events such as funerals and reunions, those looking to re-locate to Chapel Hill, and researchers at UNC. I am currently renting to a contract worker who has been doing Covid testing at UNC Hospitals. Such guests provide much needed revenue for local businesses which would be lost if they have to go to Carrboro or Durham.
    The whole controversy over STR’s is trying to find a solution looking for a problem to solve. Several town council members stated that they needed more concrete and FACTUAL information about the effect of STR’s on the community. Please don’t fall for the false allegations and the “what-if’s” that have no evidence backing them up. This country is founded on free enterprise, and if you’ve ever taken an Uber instead of a taxi, remember that taxis tried to ban Ubers when they first appeared on the scene. They now have learned to peacefully co-exist.
    The correct solution to this controversy is to do a 12 to 18 month pilot study to determine concrete facts on how STRs affect the community before passing an ordinance to deal with “what ifs”. If this is done, I predict that it will be found that STRs are a benefit to Chapel Hill.

  2. Scott Jennings | June 14, 2021 at 10:17 am | Reply

    1) STR housing currently is less than 1%
    of total housing in Chapel Hill.
    By comparison at any time there is approximately 9% of homes vacant or 1954 homes available.

    2) Chapel Hill is not a vacation destination. We will never see a flood of STR.

    3) The vast majority of STR have a owner who lives on site or in town.

    4) The STR community cares about the community and wants to provide the best experience for everyone involved.
    This includes the local residents.
    3) Airbnb is by far the largest booking platform for our region. AIRBNB has been doing background checks for a while now. No felons allowed.

    4) in a recent report of disturbance calls to the CHP… out of 1500 calls 3 were to str. They were for minor things like a dog barking or trash.

    5) Chapel Hill is growing like a weed. If there is an affordable housing fight it is with the Multifamily investors and upper crust housing being built. Not the less than 1% STR community.

    6) We are the community that takes care of the family who has a loved one at UNC medical. We provide 3 month housing to the student finishing the last semester. We provide a safe place and home for the out of state parent wanting to visit with their student.

    The list goes own as to what a benefit we are to the community.

    The list is extremely short as to how we hurt it.

    I hope as a community we can see that with healthy regulation that is forward thinking, we can provide the the services that a hotel cannot (PS.. They haven’t bothered to share their prepandemic occupancy rate. Why? Because it is so high)
    WE ALL HAVE A PLACE IN THIS COMMUNITY.
    Selling fear of something that is not real is what the detractors are doing. To remove or greatly diminish the STR community will only hurt this community not help it.

  3. David Hartman | June 15, 2021 at 1:05 am | Reply

    Scott Jennings and Eric Plow have already written quite compelling rebuttals to the writer’s obvious biases displayed in the article, but one point that wasn’t touched upon was the extremely inaccurate assertion that the *average* daily rate of hotels in Chapel Hill had dropped to 85.98. Anyone who’s ever shopped for a hotel in town knows that this is laughable. Upon reading this statistic I immediately picked up my phone and searched Hotels.com for all available hotels in Chapel Hill for the upcoming weekend. There are no major sports events nor concerts this weekend and I believe school is out. However, of the 11 hotels in Chapel Hill, only TWO are below $156 and they are still more than the writer’s figure of $85.98. The two (of eleven) most expensive are $302 and $509 and both report only three rooms remaining. In fact, the writer’s figures are so inaccurate that I have to guess at the writer’s intent. In short, while the hotelier’s claim that they are suffering financial hardship due to STRs, nothing could be further from the truth. Neither their rates nor their occupancy have suffered.

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