People lined the walls at a Public Hearing on Aug. 25 to voice their opinion on the proposed short-term rental policy amendments.
Proposed Town amendments:
- Option 1: One proposal disallows STRs in R1 and R2 but allows Homestays in those residential districts where the owner stays on the property. All rentals are allowed in R3 and the business districts.
- Option 2: Allows everyone in town to rent their homes regardless of the zone for two years at which point the use is amortized – ceases for evermore, but just in R1 and R2.
Speakers were given three minutes to share their views with the Board with approximately 15 members of the community stepping up to the podium.
Attorneys for SAVE Highlands and Highlands Neighborhood Coalition were given an extended period to speak using time allotted by those they represent and were given up to 15 minutes.
First up was SAVE Highlands Attorney Derek Allen from the firm Allen Stahl + Kilbourne based in Asheville.
Allen said this was only the second time they have had the chance to discuss this matter since the STR issue began a year and one day. He said members of SAVE Highlands crave dialogue, want to be part of the process, and want to be able to negotiate terms of acceptable regulations to allow STRs.
“We’re disappointed we have not been able to do that, we’re disappointed in the Town, we’re disappointed in the process,” said Allen. “But we’re still trying, and we’re trying to come up with a compromise.”
At the worksession Tuesday night, Commissioner Hehn echoed Allen’s stance.
“As of today, STRs aren’t illegal. I want to find something we can all agree on. Both sides agree we need more regulations to preserve the residential nature of neighborhoods. I hope we take our time and involve all sides in the discussion,” he said.
Allen went on to say the Town has the ability to regulate STRs going forward, which it can do with some limitations, but the Town cannot eliminate existing uses that are currently valid.
“The stance Highlands as a town is taking is overly aggressive, it’s in really weak legal territory, and it doesn’t seem like the right thing to do,” he said.
For some time, the Town Board with a vote of 4-1 has been pushing for the amortization option and is willing to go to court with hopes of establishing a precedent for the state of North Carolina.
Counsel for the Neighborhood Coalition Attorney Mac McCarley, with Parker Poe out of Charlotte, suggested amortization is a lawful tool to regulate and voiced support for Option 2.
Neighborhood Coalition President Cathy Henson spoke against allowing STR’s in R1 and R2 zoned areas.
“Our position is simple, homeowners deserve to live in neighborhoods with other neighbors without commercial activity,” she said.
Highlands resident Pat Allen addressed the board and highlighted that Town Manager Josh Ward and Town’s Attorney Bill Coward “admitted” STRs were not commercial at a recent meeting.
“They are not hotels, so we just need to bury that fact,” said Pat.
However, at the worksession Tuesday night, Commissioner Amy Patterson said despite what Town Attorney Jay Coward and the courts have said, short-term rentals are a commercial use.
“The courts said STRs are not commercial, but the courts only interpret the law, they don’t make the law. It isn’t the state’s job or the courts’ job to decide. We are the legislative branch, and we make the law,” she said.
Patterson went on to say that it’s visitors who use overnight accommodations, not residents which makes the use de facto commercial.
“It’s the residents, whether full-time or seasonal, who have built this town. They are our community members. We aren’t and don’t want to be a tourist town,” she said.
In his opening statement at Tuesday’s worksession, Mayor Pat Taylor agreed and laid out his vision for Highlands.
“Highlands is not a tourist town. It’s a retreat community where since its inception people came for part of the year to get away from the heat and overcrowded cities and diseases such as malaria. With climate change I see that relief still being sought,” he said. “Though we have tourists, we have had a basic community core of permanent and seasonal residents who have supported our businesses, our churches our nonprofits and our art institutions. Those residents built the library, the historical society the biological station, the expansion of our churches and the building of the PAC, and the Bascom. They have been the foundation.”
At the public hearing, Pat Allen said the board has already made its position known by voting to ban STRs.
“We already know where you all stand,” she said. “My point is this should be an unbiased decision made by people who understand. A study has been done that shows Highlands will use $19M in revenue each year. That’s huge.”
But at the worksession, Mayor Taylor had an answer for that.
“We are in an island of zoning districts surrounded by a county that has no zoning. I won’t accept the notion that with the discontinuation of STRs in R1 and R2 businesses will collapse and that it is an all or nothing economic scenario. The surrounding STRs in the county will continue to use businesses in Highlands,” he said. “I also don’t believe zoning regulations are the de facto taking of property rights but rather they are the limitation of property use in a designated zone. The financial position of Highlands has been strong for many decades long before the recent wave of STRs. Our sales tax collection has been increasing at a predictable rate for many years as have our property taxes.”
The issue of investment by homeowners was brought up both at the public hearing and at the worksession.
Commissioner Hehn said he was concerned about the people who spent money upgrading their homes for the purpose of renting them out until they can retire full-time in Highlands.
Carol Gable, of the Highlands Neighborhood Coalition who has lived in R1 for 26 years and said all she has heard from STR supporters is about their investment, their future, their property rights, and what Highlands owes them.
“The fact is, this town owes no one a particular return on any investment,” she said. “Allowing short-term rentals in residential neighborhoods decays those neighborhoods from the inside out. It’s a situation that once you lose it, you cannot get it back. My question is, what about our investment, our rights, our property values, and our future ion this town.”
At the worksession Commissioner Patterson agreed saying it’s not the board’s job to care about or protect people’s investments.
“We are not here to guarantee someone’s investment. We must decide what is best for the whole and do what we can to achieve what is best for the whole,” she said.
At the same meeting, Commissioner John Dotson agreed, as did the majority of the board, that if someone “invested” prior to August 2021 that’s one thing. But if they “invested” after August 2021, after it was clear that the STR issue was in flux, that’s another.
“Anyone who has proceeded with investing for that purpose while this discussion is going on did so in the face of uncertainty,” he said.
The worksession included a “straw pole” regarding nine questions, answers of to which would only apply if the board was considering an ordinance other than amortization – which it isn’t — so as Commissioner Eric Pierson noted, many of the questions and their answers were moot.
Question 1 was: Should we stop the spread of STRs in R1 and R2?
All said yes except for Commissioner Hehn who suggested a period of time they be allowed.
Question 2 was: Should the issuance of an STR permit should be required?
Commissioner Patterson said permits aren’t allowed and technology enables the tracking so permits aren’t necessary.
Question 3 was: Should existing STRs in R1 and R2 be allowed in perpetuity?
All said no accept Hehn. Also, a moot point with amortization the goal.
Question 4 was: Should we issue nonconforming use permits for STRs?
Again, a moot point if not allowing to continue.
Question 5 was: Should we change the definition of non-conforming use?
This was tabled because the term isn’t just about STRs, but also lots and buildings.
Question 6 was: Should we allow the intensification of STRs?
A moot point with amortization the goal.
Question 7 was: Should we keep amortization an option?
All said yes accept Hehn.
Everyone accept Commissioner Hehn said “yes” but whether couldn’t decide if the allowance period should be two or three years.
Attorney Essick said the courts upheld amortization in the 1970s regarding billboards and junkyards but not STRs and nothing less than two years was upheld in those cases.
“This will be challenged in court and a judge will have to review it as it applies to STRs,” he said. “But the longer the allowance period would mean the less legal scrutiny.”
He also said it would likely take three years to get through the court system.
Commissioner Patterson asked how long the case could be challenged and how long could a “stay” be extended?
Essick said one year for statutory and two years for substantive.
Mayor Taylor said Highlands could be a state-wide test case.
To date, the town has spent $117,010.58 on STR legal expenses.
According to Town Manager Josh Ward legal services are a line item for Professional Services – Legal within the Administration Budget, which is budgeted at $20,000. As needed, additional funds will be allocated for attorney fees from the general fund balance. The allocations are approved by the Town Board. No tax increase or utility increase will be required to cover the costs of legal services.
Question 9 was: Should we allow Homestays in R1 and R2?
Even though this was in the town original proposal, all said no accept Hehn.
Commissioner Patterson said that was simply a loophole to allow the continuance of STRs in R1 and R2.
She also noted that a case in New Orleans said municipalities couldn’t require the owner to be on the premises; it could be a caretaker or a representative which wasn’t acceptable.
Commissioner Dotson said Homestays are just Tourist Homes that don’t fall under state guidelines “and we don’t want that.”
Mayor Taylor said he realized the worksession deliberation may not appear to be seen as the spirit of compromise, but the board shouldn’t be driven solely by seeking compromise but rather by addressing directly the big questions related to STRs.
“If our core residential community is lost with more STR development the impact and change will be felt throughout our community,” he said. “I see a new model emerging not dependent on tourism. The virtual work-from-home model has the potential to change our community by having young and middle-career professionals working from home and also being part of this community. I don’t want to see our neighborhoods to become STRhoods.”
Attorney Essick is making revisions to the board’s amortization ordinance – doing away with the Homestay option and assigning a number of years to amortization — and it will be presented at tonight’s Special Meeting set for Sept. 8 at 7 p.m. in the Community Building.
Pictured at the top of the article is Highlands resident Pat Allen addressing the Town Board at the Public Hearing on Aug. 25.
By Kim Lewicki and Brian O’Shea