Raleigh Report

Raleigh City Council poised to vote on Airbnb regulations

After more than a year of hand-wringing, city leaders are poised to vote on a set of regulations that would legitimize short-term residential rental practices found online through Airbnb but prohibit many of those found on Vacation Rental By Owner, known as VRBO.

Some people say the proposal scheduled to go before the Raleigh City Council at 7 p.m. Tuesday is overly restrictive and could harm the city’s image.

Raleigh currently has no regulations governing those who seek to rent their properties for less than 30 days, meaning such activity is technically banned. However, city leaders in late 2014 opted to pause enforcement until they adopted short-term rental rules.

Proposed rules would allow property owners to rent out up to two rooms but would prohibit owners from renting their entire house or dwelling – striking a big blow to VRBO, whose hosts only rent out their entire homes. VRBO currently has 45 hosts in Raleigh, according to Ashley Hodgini, a spokeswoman for its parent company.

“Whole home rentals offer an overwhelmingly more positive experience than home sharing in the eyes of the family traveler—there is complete privacy; no one else’s dirty laundry or dishes, or any concern that your experience is not entirely your own,” Hodgini said.

Raleigh’s proposal in that sense is stricter than other comparable mid-size cities like Austin, Texas; Nashville, Tenn.; and Durham.

Nashville and Durham allow property owners to rent out their entire homes. Austin allowed whole-house rentals until February, when the city placed a moratorium on such rentals after receiving noise complaints, said Candice Wade Cooper, a spokeswoman for Austin’s code department. The 355 Austin property owners who obtained whole-house rental permits prior to the moratorium are still allowed to rent them out.

Todd Olson, co-founder of Pendo software development, is one of many Raleigh-based tech leaders who think such strict rules could hurt his company’s ability to recruit talented workers.

“We’ve grown from 12 to 45 employees in the past seven months and several of these new people moved from our other cities,” Olson said.

“Restrictions like these are just another example of legislation that highlights how disconnected our elected officials are with the modern economy,” he said. “We already have difficulties positioning our state in light of legislation like HB2, but this means we’ll now need to position our city as well.”

By Monday afternoon, more than two dozen residents had signed an online petition on change.org to lobby the city for whole-house rentals.

Despite the concerns, some on the City Council – Mayor Nancy McFarlane and Mayor Pro Tem Kay Crowder – think the proposal appropriately balances the needs of potential renters and their neighbors, who may want to maintain consistent noise and traffic levels.

McFarlane said she also worried that allowing whole-house rentals would jeopardize the city’s low stock of affordable housing.

“I’ve spoken to some mayors of other cities and one of the problems they’ve seen is that it hurts their affordable housing market,” McFarlane said. “They buy affordable homes but then turn around and rent them because they can make more money.”

McFarlane and Crowder said they’d be willing to reconsider allowing whole-house rentals after a yearlong trial period. Some, like Gregg Stebben, the first Raleigh resident cited for renting space out of his home through Airbnb, argue that the city has already had a trial period.

Enforcement

Neighborhoods with covenants and homeowners associations can prohibit short-term rentals regardless of what the city does. Raleigh’s proposed regulations offer protections, too.

Under the proposal, Raleigh would revoke permits from those cited for more than two violations within a 365-day period. The city would prohibit more than one short-term rental house within 400 feet – a restriction similar to those in other cities. Permits would be issued on a first-come, first-served basis.

It’s possible that Raleigh will adopt the proposed rules – including the whole-house ban – but struggle to enforce them.

Nashville allows whole-house rentals but has trouble cracking down on renters doing business without a permit or not complying with regulations, said Bill Herbert, zoning administrator for Metro Nashville, the city government.

Herbert said inspectors are usually unavailable on weekends – when complaints are most likely – and police are often preoccupied.

“And we don’t have the staff or personnel to consistently test the internet to see who’s advertising online,” he said.

Further complicating matters: Airbnb, short for Air Bed and Breakfast, and VRBO hosts don’t necessarily have to post online how many rooms are available. Hosts can give a generic description of their rental homes, then offer details about how many rooms are available through direct messaging or over the phone.

“How are we legally going to prove whether they did it or not?” Herbert asked.

With that in mind, Councilwoman Mary-Ann Baldwin said a whole-house short-term rental ban isn’t worth the trouble. She thinks the proposal tries to fix a problem that doesn’t exist.

“Banning whole-house rentals won’t make them go away. Instead, we’ll miss out on tax revenue and tourism opportunities,” Baldwin said. “We’re basically curbing entrepreneurship and creativity, and that’s not what I want Raleigh to be known for.”

Paul A. Specht: 919-829-4870, @AndySpecht

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