Want to visit Chapel Hill? New rules coming for short-term rentals like Airbnb, VRBO
The Chapel Hill Town Council talked Wednesday about how to let homeowners keep renting rooms or backyard cottages, but limit where business investors can operate full-time short-term rentals like Airbnb and VRBO.
Meanwhile, town staff reported a 60% drop in the number of primary residences and dedicated homes being used in the last year for short-term rentals.
Council members don’t want more full-time, or dedicated, short-term rentals in residential areas. They talked about allowing dedicated short-term rentals in commercial and mixed-use districts, and capping the number allowed in apartment and condo buildings.
Dedicated rentals in neighborhoods are “not an appropriate use,” especially for a college town with other housing needs to consider, council member Jessica Anderson said.
“I think using your home to generate additional income, or having people stay with you and being an ambassador for Chapel Hill and (letting) people stay in your garage apartment — I think all that is wonderful,” she said.
A vote could come in June, but staff could bring more information back March 24 and a public information meeting could be held soon, Mayor Pam Hemminger said.
If the council approves changes, they could roll out over the summer and take effect in September.
STR numbers down during COVID-19
Short-term rentals give property owners income and visitors a way to travel more affordably or rent a house instead of a hotel room.
Town staff reported that six years of data showed roughly 3.4% of the town’s residential units were short-term rentals, and roughly 83% of them were in residential neighborhoods.
In March 2020, before the coronavirus shutdown, staff estimated the town had 445 active short-term rentals. That fell to 235 in January and to 218 by March 1, staff said, referring to AirDNA data. Hemminger noted the town doesn’t actually know how many short-term rentals it has or where they are located.
This week, there were about 182 active short-term rentals, or about 0.7% of the 25,814 residential addresses, town planner Anya Grahn said. Roughly 71% of those were renting out an entire house, she said.
The Chapel Hill-Carrboro Chamber of Commerce, a citizens group and local hoteliers asked the town in 2019 for short-term-rental rules. They were concerned about neighborhood standards and safety, from vetting guests to no-party policies, as well as public health and safety, and the loss of limited affordable housing to rental investors.
Local hoteliers also worried about the competition that siphons potential customers without having to meet the same safety health and safety standards or, in some cases, pay the 3% local occupancy tax on room rentals.
Airbnb has collected occupancy taxes from North Carolina hosts since 2015, but other companies leave tax collection to their hosts.
The county’s occupancy tax brought in $1.2 million from July 2019 to June 2020. That was down from $1.7 million reported in 2018-19.
Types of short-term rentals
There are three main types of short-term rentals — offering stays of up to 29 days — and a fourth already listed in town rules:
▪ Homestays, in which the owner lives on the lot and rents out a bedroom or accessory dwelling. Allowed as a home occupation in most town zoning districts.
▪ Unhosted rentals, dwellings that can be rented for up to 95 days a year. The property owner’s primary residence is somewhere else. Allowed as a tourist home in non-residential districts and overnight lodging in the town’s northeastern Blue Hill District.
▪ Dedicated rentals: Investor-owned short-term rental with no one living on the lot. Allowed as a tourist home in non-residential districts and Blue Hill District overnight lodging.
▪ While the town’s rules do not address short-term rentals in general, they do already let homeowners rent out their primary residence for up to 14 days. However, property owners cannot lease out their primary residence and their accessory dwelling to different parties at the same time.
Chapel Hill’s draft rules
Council members are considering a ban on dedicated short-term rentals in residential areas, although they might be open to grandfathering in some existing, dedicated rentals. Future dedicated rentals would be allowed only in commercial districts and in mixed-use districts, such as the Blue Hill District northeast of downtown.
The town could require a zoning compliance permit, as well as a health and safety check to require fire extinguishers, smoke and carbon monoxide detectors, deadbolt locks, emergency exits, contact information, and visible property addresses.
The town could use the data to consider potential rule changes, and track short-term rentals that violate any new rules using software, Grahn said. Enforcement would be similar to any zoning violation, she said.
The council briefly discussed a registration program before UNC School of Government attorney Rebecca Badgett, who has been working on the draft rules, said state law prohibits rental registries. The town could use an annual zoning compliance permit similar to what it uses for food trucks, she said.
In 2018, Wilmington passed new short-term rental rules setting a 2% cap on the number of STRs allowed in residential areas. A lawsuit was filed, and a judge ruled the city’s STR rules were “void and unenforceable” under state law. The city appealed, but also is looking at revising its rules and removing the 2% cap.
Council member Michael Parker said he’s “perfectly comfortable” banning dedicated short-term rentals in Chapel Hill’s residential areas. If the council decided instead to cap the number allowed, that number should be low enough to discourage others, he said.
“I don’t want to send a signal that we would like more dedicated STRs than we currently have in our residential districts,” Parker said.
What Raleigh, Durham allow
▪ Raleigh: Short-term rentals have proliferated although technically prohibited in Raleigh for years. In 2019, the Raleigh City Council established rules that ban most people from renting out their whole house and require property owners to be on site during the rental period.
The council voted earlier this month to consider new rules that lower the short-term rentals permitting fee, allow a second dwelling on a lot to be used as a rental, and no longer require property owners to tell their neighbors if they are applying for a permit.
▪ Durham: The city does not specifically regulate short-term rentals, although the number of homes dedicated to the business has raised concerns in some residential neighborhoods.
This story was originally published March 18, 2021 at 8:11 AM.
