Committee suggests requiring registration of short-term rentals

It may not be what some people want to hear, but it looks like the only protection the town and residents have against the short-term rental industry is a registration requirement or possibly protection under a Home Owners Association. 

About 20 people turned out for the Land Use Committee meeting on Nov. 20 to hear what commissioners John Dotson and Donnie Calloway and Town Manger Josh Ward, Asst. Planning Director Michael Mathis and Town Clerk Gibby Shaheen would discuss concerning the issue.

Since there are state laws already on the books allowing short-term rentals, they can’t be prohibited, but if the town moves quickly, it can at least require owners of short-term rentals to annually register them at Town Hall.

Registering short-term rental properties would give the town the information it needs to contact the owner if the police are called regarding noise or activity taking place at the home.

There is a huge short-term rental lobby, and so far, it has gotten much of what it wants which is mainly protection against prohibition, requiring a business license and requiring registration with a building inspection department.

Town Manager Josh Ward said he and staff have researched the issue across the state and beyond and the issues are pretty much the same.

Owners of homes in residential neighborhoods resent the fact that strangers are moving in and out of houses thereby changing the nature of the neighborhoods and potentially decreasing property values.

Lila and Slocum Howland, who live on the Bowery, have been very vocal about short-term rentals which they say have invaded their neighborhood.

“Don’t citizens have any say? We bought into a residential area, we pay taxes and we have no say?” asked Lila.

However, owners of residential property who rent their homes out on a short-term basis also pay property taxes just like those who don’t rent out their homes and Ward said he hasn’t seen any proof of property values decreasing due to the practice.

Realtors in the area see the issue differently; in fact, they suggest short-term rental homes increase property values. 

They say in many cases, people are buying homes that have been sitting on the market for a long time – perhaps the home needs work or it has been sitting in a family trust. They say often these homes are being fixed up which means the owners are spending their money in the community and providing jobs, and, the home’s value increases because it has been updated. In addition, when they go to sell it, owners can often demand a higher price because the home has income-producing history.

For decades, the idea of being able to live in Highlands partially and earn income by renting a home has been a very attractive scenario. Short-term rentals also enable people to enjoy Highlands even if they can’t afford a home here.

There is also the argument that short-term renters shop and dine in Highlands which adds to its economic viability. 

During the legislative short session coming up in April, representatives are expected to amend the law on the books to make it even less strict; that is more in favor of the short-term rental industry.

Ward believes a registration requirement as a zoning matter won’t be prohibited and expects it to be grandfathered if in April the law is amended further in favor of short-term rentals.

To navigate the situation, the town solicited the help of AirBnB which Ward said wants “a level playing field.” 

“AirBnB representatives were very cooperative and put us in contact with the southeastern policy division of AirBnB who recommended that if we proceed with an ordinance requiring registration, we use the Nags Head model,” said Ward.

As said by Commissioner Donnie Calloway much of issues outlined in the Nags Head documentation are already covered by the town’s ordinances – with non-compliances being complaint-driven.

“A lot of stuff in here is covered in our ordinances, except for the short-term rental registration. So maybe we should require everyone to register at Town Hall,” he said. 

The committee tossed around requiring a registration fee of $25 annually and that homes be registered by April 1. Like in Nags Head, failure to register within 30 days, would result in a civil penalty $100 with a $50 penalty per day until the property is registered. 

The Howlands likened short-term rentals to Bed and Breakfasts and Tourist Homes and asked how they were different than short-term rentals.

Ward said in Highlands BnBs and Tourist Homes are regulated by zoning districts – they are only allowed in R2 – and they are controlled by the state. Short-term rentals are allowed in all Highlands residential and commercial districts.

“Tourist Homes and Bed and Breakfasts are totally separate according to our attorney,” said Ward. “Tourist Homes and BnBs are regulated like a motel. Plus, only up to four rooms can be rented, meals must be provided, and the owner/operator has to live on the premises.”

Realtor Pat Allen suggested a community’s HOA could add a layer of protection to homeowners who feel overrun by short-term renters in their neighborhoods but the Howlands and others in the room said the terms of their HOAs, which usually run for 30-40 years, had run out.

As in Nags Head, the committee agreed a short-term rental could be a partial home or whole home and as per Highlands ordinance, two parking spaces per whole dwelling unit is required or three if it’s a partial home rental.

Rosemary Stiefel suggested the town was allowing businesses in residential zones by allowing short-term rentals. 

“Is renting not a business?” she asked. “They collect taxes, money changes hands, so that means these enterprises in R1 districts are a business.”

Ward said that renting short-term in the R1 zone is specific and likened it to renting a home year-round. “Rentals are viewed differently than a retail office space and people who rent out their homes long-term don’t have to pay sales or room tax. Only short-term rentals under 30 days are required to pay the room tax.”

Ward warned that several people at the state level said in April rules will be adopted that will preclude any prohibiting of short-term rentals.

“Legally, if we tried to prohibit them at this point, we wouldn’t be grandfathered. Nor can we legally limit the number of short-term rentals allowed in an area. The only thing we can do is require registration because we wouldn’t be prohibiting it,” he said.

Ward and the commissioners said public comment will be solicited at the Town Board meeting prior to any decision or adoption of a registration ordinance, but legally, there isn’t much the town can do to prohibit short-term rentals.

The Land Use Committe will present the Town Board with its recommendations and if the Town Board agrees to the registration ordinance, it could go into effect Jan. 1, 2020.

By Kim Lewicki, Highlands Newspaper

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