Lawsuit against town halted with ‘stay’

Town Attorney suggests grandfather status for vested STRs

After being served with a lawsuit by Save Highlands regarding the town’s Aug. 24 decision to ban Short-term Rentals in R1 on Jan. 3, 2022, the commissioners agreed to enter into a “stay of proceedings” as suggested by Town Attorney Jay Coward.

A “stay of proceedings” is a ruling by a court to stop or suspend a proceeding or trial temporarily or indefinitely. A court may later lift the stay and continue the proceeding.

Coward suggests grandfather status for vested STRs missioners agreed to enter into a “stay of proceedings” as suggested by Town Attorney Jay Coward. A “stay of proceedings” is a ruling by a court to stop or suspend a proceeding or trial temporarily or indefinitely. A court may later lift the stay and continue the proceeding

At the October 21 Town Board meeting, Coward requested authorization to enter into the “stay” after he and Attorney Craig Justus with the Van Winkle law firm, talked to Attorney Derek Allen of Allen Stahl & Kilbourne which is representing the Save Highlands group.

“We talked about how a lawsuit would divert the good efforts the town is making to address the situation and cause us to spend an enormous amount of energy in litigation and very little in trying to address the problem itself,” said Coward. “Allen agreed there would be very little movement of any positive nature whatsoever if we had an ongoing lawsuit that would require us to be in court rather than a conference room to work this out.”

Allen agreed to a “stay” order that will be signed by a judge with the consent of the two parties – the Town of Highlands and the numerous other plaintiffs in the lawsuit. The town’s good efforts, which Coward referred to, is a working group that has been meeting to discuss STRs – particularly to reexamine the Unified Development Ordinance (UDO) to see what the UDO needs in the way of revisions to address STRs.

The working group is made up of Commissioners Brian Stiehler and Amy Patterson and attorneys Coward and Justus.

“We need to draft some language that addresses STRs because there is nothing in the UDO at all that addresses STRs,” said Coward. “So, we don’t have a good UDO that we can refer to while trying to decide how to move forward.”

Coward said he anticipates having a working document for the Town Board and the Planning Board in November to show what their final conclusions are, and he believes the process can be completed by Feb. 1.

“This group is very functional and we are working real hard trying to address the dilemma we have that has caused so much controversy,” said Coward.

During this stay, which would last until Feb. 1, there would be no requirement from the town to answer the complaint, for discovery, depositions, or requests for documents; there will be no hearings at court, no presentation of evidence or testimony, everything would be stayed until Feb. 1 – including the ban on STRs effective Jan. 3, 2022.

Coward said the town will not enforce anything against STRs until the group makes a decision about what the UDO actually says and that would be by vote of the full board to amend the UDO.

The Town Board voted unanimously to rescind the action it took Aug. 24 to enforce the order of Jan. 3 and authorized the group to work on the UDO until it reaches the point where it can be revised possibly before Feb. 1.

“This isn’t saying that we are conceding that we can’t enforce the R1 STRs, we are simply delaying the whole process until we have a chance to come up with a new response by Feb. 1,” said Mayor Pat Taylor.

Commissioner Marc Hehn reminded the board that the Russell v. Donaldson case in regards to Blowing Rock, N..C seems to indicate that STRs are residential in nature, and the town’s regulations are vague and even state law isn’t straight.

“Also, I don’t think you can put a deadline on this, there is a lot of work to do, a lot of input,” said Hehn. “I think July 1 is much more reasonable. I don’t think we can get all this work done.”

Coward said the Feb. 1 deadline is not written in stone.

“It may take longer; this is the first ‘stay’ date for right now,” said Coward. “If we need more time, if the plaintiffs see we are working in good faith toward a solution, they would likely extend it. But the judge who has to sign this is going to say ‘until when?’ So, we are going to say Feb. 1, but if we need to, we can request an extension on that order.”

Commissioner Donnie Calloway asked if there was a way to address the new “pop-up” STRs and the current rush of some people to buy houses for STRs.

Coward said that is a concern and that’s why the group is trying to finalize the UDO by Feb. 1, but he suggested those with a vested interest; those who have been using their homes as STRs over a period of time, would be grandfathered and protected.

“If they have done that, then they have a right to continue that use of the property,” he said. “But that requires a period of time, a certain amount of investment that shows that they rely on a law as they interpret it. That is a lot different than people who are rushing to get to a point to have their rights vested because their rights aren’t vested right now.”

Coward said it’s likely Highlands will end up having a permit/application process for STRs.

“We will talk about that further the next time we meet and have something to bring to the board about how that whole process will work,” said Coward. “If it turns out that Feb. 1 is too soon, and the town is working in good faith, the judge will likely listen and agree to an extension.”

By Kim Lewicki, Highlands Newspaper

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