City Council grapples with Homestays, raises fines on short-term rental violations

From real estate investors to neighborhood advocates to homeowners trying to make ends meet, just about everyone in Asheville has a dog in the ongoing fight over short-term vacation rentals. At the Tuesday, Aug. 25 Asheville City Council meeting, citizens representing a variety of viewpoints crowded City Hall. To accommodate the large number of attendees, city staff opened an overflow space with a live video feed of the action.

Over the course of the five-hour meeting, City Council heard 33 comments on proposed changes to the city’s Homestay ordinance and 12 comments on a proposed increase in fines for violations of the existing short-term rental ban. The fine would increase from $100 to $500 per day for each day the rental violation persists.

In the end, Council elected to defer a final decision on the Homestay ordinance changes to a future meeting, but voted to approve the fine increase, 5-2, with council members Cecil Bothwell and Chris Pelly opposed.

Preliminaries

Like most meetings, this one didn’t begin with the main event. First off, Councilman Jan Davis proclaimed Sept. 18, the day on which a new time capsule will be placed in the Vance Monument, Asheville-Buncombe Time Capsule Day. The time capsule will be opened in 2115. Mayor Esther Manheimer proclaimed Aug. 25 the 75th Anniversary of the Housing Authority of the City of Asheville.

Council proceeded to approve its consent agenda, as well as the naming of the “Jan Davis Lobby” at the U.S. Cellular Center in honor of Councilman Davis, who will not seek reelection at the end of his term this year.

Mayor Manheimer briefly outlined a proposed redistribution of state tax proceeds under consideration by the state legislature. Council passed a resolution opposing the sales tax redistribution plan on the grounds that the plan is inequitable in its treatment of urban areas and would negatively impact Asheville.

Council also heard a report on Memorial Day celebrations organized by the Mayor’s Committee on Veteran’s Affairs.

Zoning Change Requests

The first item on the public hearing agenda was a request to rezone two parcels of property, 960 and 966 Tunnel Road. The former had been zoned for residential use, while the latter was zoned for offices. The properties’ owners asked to change the designation of both properties to CZ-1 commercial zoning, a request which had previously received approval from both the Technical Review and Planning and Zoning Committees. A neighbor, Allen Queen of Bull Mountain Road, asked for information about the intended appearance and use of the residential structure at 960 Tunnel. Julie Hasty of Mindspring, Inc., the occupant of 966 Tunnel, said that the building would be used as a Pilates studio in the immediate future and that the current red-brick residential facade would be renovated but otherwise unchanged in character.

Council approved the zoning request unanimously.

Another zoning change request related to 39 Elm St. for the construction of a five-story hotel with parking received a continuance to Nov. 10 at the request of the applicant.

Homestay ordinance changes

Manheimer prefaced the public comment period on proposed changes to the city’s Homestay ordinance with clarifications about the scope of the issue under consideration. “Short-term rentals are currently illegal, and they are not on the agenda tonight,” she said. Manheimer also pointed out that the city cannot increase fees for registering Homestay properties beyond the level needed to administer the program — and that the city cannot collect room taxes.

With those caveats, Manheimer gave the floor to city planner Shannon Tuch, who detailed specific changes to the ordinance, saying it has been legal to rent out a portion of a primary residence on a short-term basis since 2006.

Tuch said that city staff had drafted the proposed changes to the Homestay ordinance at the direction of City Council to clarify the distinction between Homestays and prohibited short-term rentals and to allow city residents the option to participate in the Homestay marketplace.

The proposed definition of a Homestay is:

Homestay means a private, resident-occupied dwelling, with up to three guest
rooms, where overnight lodging accommodations are provided to transients for
compensation and where the use is subordinate and incidental to the main
residential use of the building. A homestay is considered a “Lodging” use under
this UDO.

A complete listing of the changes under consideration can be found here.

Tuch pointed out that the proposed changes are the result of a long process of public engagement and input which began in 2014.

Manheimer and Vice Mayor Marc Hunt requested clarification about the requirement that a Homestay be operated by an “on-site” resident manager. Tuch responded that the manager must be someone whose primary residence is the Homestay property, but that there is no specific direction in the proposed language about whether the manager must be present overnight when guests are staying in the home.

Also, Tuch said, state law does not allow the city to discriminate against tenants as operators of Homestays. As long as a long-term tenant complies with all regulations concerning registration and insurance coverage, the city is not allowed to treat them any differently than a resident owner of a property. City Attorney Robin Currin agreed with these rights.

Although Homestay guest quarters can be comprised of a separate suite or basement area, Tuch explained, these areas cannot contain a full kitchen. The presence of a kitchen within a separate area of a home is one of several features which reclassify the area as a separate living unit which would be ineligible for Homestay use.

Bothwell asked what would happen if a separate guest area contained a stove. Tuch responded that the stove would have to be removed to comply with the ordinance and to pass the required inspection. Currin added, “Having a kitchen makes the unit an independent living situation. The Homestay is a different use in which you rent part of your own home.”

Bothwell followed up with a question about costs: “What is the Homestay inspection program going to cost? Will it support itself?” Tuch said that the city is only allowed to charge fees to cover its costs in administering the program. The projected cost of administration and enforcement is the salary of one new full-time staff member to run the program.

Manheimer began calling the names of citizens who had requested an opportunity to comment. Some of the viewpoints expressed are summarized below.

Barber Melton, chairwoman of the Coalition of Asheville Neighborhoods, said that her organization is opposed to short-term rentals but gives its qualified support to Homestays. Melton believes an owner-occupant is crucial, and she also disagrees with the removal of off-street parking and spacing requirements in the proposed ordinance. She concluded by saying that “neighbors shouldn’t have to be the police for these issues,” referring to the city’s current complaint-based approach to enforcement.

Dave Nutter, a Montford resident and Historic Resources Committee member, said he supports the proposed changes to both the Homestay ordinance and the fee increase for short-term rental violations.

Architect and Albemarle Park resident Jane Mathews said she is opposed to the Homestay changes. Even before the ordinance has passed, she said, her neighbors are being pursued by investors who want to purchase homes to use as Homestays. “Let the legal B&Bs provide the historic home experience,” urged Mathews. “Build Asheville first for the people who live here.”

Hillside Street resident Alice Helms thinks the Homestay ordinance is a good compromise, but she agrees with Melton that off-street parking and spacing requirements should be put back in the rules. Helms also favors reducing the maximum number of guest bedrooms from three to two. She concluded by saying she hopes Council will stand firm in the face of pressure exerted by big companies like AirBnB to allow short-term rentals.

Montford AirBnB Homestay operator Jeff Johnson said the income from renting to guests allows him to maintain his historic property. Johnson, who is no longer able to work as a classical musician because he has Parkinson’s Disease, said he depends on paying guests to stay in his home.

Sue Sweikart, president of the Five Points Neighborhood Association, commented that there is a lack of consensus in her neighborhood on this issue. She is concerned about parking, saying that increasing the number of cars on the congested streets of Five Points could obstruct access for emergency vehicles.

Patricia Lord said renting out a detached apartment had allowed her partner to be a stay-at-home parent. Without that income, she is worried she might lose her house. She is in favor of the Homestay rules, but thinks accessory structures should be allowed in the Homestay category.

This issue has pitted neighbors against one another, said Greg Meade. He believes that affordable housing starts with pay, and hotels don’t pay a living wage. Homestay operators will make more money and, in his opinion, parking will not be a problem.

After a short break while Council met in closed session about another matter, the comment period began again. A North Asheville property owner and short-term rental operator urged Council to think of visitors with special needs, such as mental illness or allergies, that make staying in hotels difficult or impossible. Detached units are the best and possibly only option for these individuals.

Haw Creek resident Bob Pearse said he is generally opposed to rentals in residential areas. He fears investors will “descend on this area like locusts” if rules are relaxed. He asked Council to hold off on making a decision.

David Rogers said Asheville shouldn’t use its limited supply of housing on tourists. “If you bought a house in a residential area, you shouldn’t have to see your neighborhood fill up with mini-hotels,” he concluded.

“AirBnB Homestays put a new roof on my house,” said Pamela O’Connor of West Asheville. She would be in favor of including mother-in-law or similar units in Homestay rules.

Ron Carlson, owner of the 1900 Inn on Montford, was in favor of Homestays until the requirement for the homeowner to be present overnight was removed. “If you are going to rent a Homestay,” he said, “you must stay home.”

Council considers comments

Once all the voices had been heard, Council tried to make sense of the wide range of viewpoints expressed. Vice Mayor Hunt stated the obvious but important conclusion that the testimony inspired: There are compelling arguments on all sides of this issue. Hunt said that even decisions about large, controversial development projects were “nothing” compared to this question.

Nonetheless, continued Hunt, he totally disagrees with those who think the city should back off and not enforce rules governing this activity. “It’s important to step cautiously,” said Hunt, going on to suggest that Council defer its decision until further study had been done.

Davis quipped that Council should delay its decision until January, when Davis’ role on Council expires.

Manheimer said there’s a great need to balance concerns of property owners’ rights with the overall goals of zoning. She is concerned about the impact of all kinds of short-term rental activity on neighborhoods. Asheville, Manheimer told Council and the audience, has hundreds more online listings for vacation rentals than any other place in North Carolina. “We have got to get it right,” she said, because the consequences of making the wrong decision could mean a very different Asheville 10 years down the road.

Councilwoman Gwen Wisler agreed, saying she favors a “go-slow” approach.

And Councilman Gordon Smith said it was clear from the public’s comments that “reasonable, well-intentioned people can disagree on this.” The renter’s voice, he continued, was one not heard at the meeting. “It is incumbent on Council to consider those who rent,” he said.

Council agreed that the outstanding questions were too numerous to settle the issue, and unanimously voted to defer the final decision until a future date.

Short-term rental violation fee increase

Planner Tuch returned to the podium to explain the reasoning behind the proposed fee increase for violations of the prohibition on short-term rentals. Tuch said the existing fee of $100 per day has proven ineffective as a deterrent, since rentals can go for $500 per night or more.

Albemarle Park resident Arwyn Hawes, who rents a garage apartment to short-term guests, asked Council to consider the economic impact of this “cottage industry,” saying she paid a cleaning person $7,500 last year for services to support the rental.

Brandee Boggs said that increasing the fine for violations would stoke tensions between neighbors, and urged Council to delay a decision on the proposal.

Paul Heathman opposed the $500 fine, saying the problem was one of enforcement rather than dollars.

Jane Mathews supported the fine increase. “Ignorance of the law is no reason to allow violations,” she said.

The Council asked Tuch to clarify the way fines are currently imposed. Tuch reported that violators receive notice and a 30-day period in which to correct the problem. It is only after 30 days have passed without a satisfactory resolution that the daily fine is imposed.

Hunt said the purpose of the increased fines is to serve as a deterrent, not to raise revenue.

After expressing his confidence that Council can take on big issues and make effective decisions, Smith moved to approve the proposal to increase the fine for short-term rental violations to $500 per day. Council passed the motion 5-2, with Bothwell and Pelly opposed.

Reflecting on the night’s work

Xpress reached out to Hunt and Bothwell on Thursday, Aug. 27 to hear their thoughts on the still-undecided issues. Manheimer, Pelly and Smith could not be reached in time to include their comments.

Hunt says he was struck by how passionate people were on both sides of the issue, and that he agrees with Smith’s comments during the meeting: It is Council’s job to consider the full cross-section of city residents, including those who may not have had an immediate and compelling reason to speak on Tuesday night.

Hunt says his direction to city staff to take another look at seven specific components of the Homestay ordinance was in response to concerns articulated not only at the meeting, but also by email and over the phone. Over the next two to three months, he says, “We need to be more analytical. We need to do some disciplined research to look at what other cities are doing and to learn from their experiences.”

Bothwell interprets Hunt’s desire to delay a vote differently. “Marc Hunt does not want this to come to a vote before the primaries or the election. It’s a hot potato,” Bothwell says.

Political maneuvering aside, Bothwell agrees with Hunt that this is a very difficult issue: “People are evenly divided.”  Though he didn’t hear much that was new at Tuesday’s meeting, hearing personal stories of those who depend on Homestays for their income was “much more touching.”

“These issues are part of a new form of the economy. They are changing the way we do commerce. The only way to limit the impact is to create effective rules,” Bothwell says. “Prohibition has never worked when there is money to be made on something people want.”

The next meeting of City Council will be Tuesday, Sept. 8 at 5 p.m.