NC could strike down Airbnb rental regulations in at least one city
A bill that passed the state House last week with little debate or attention could keep Wilmington and other cities from regulating short-term rentals like those on Airbnb and VRBO.
House Bill 829 would change a 2019 law that’s currently a central focus of an N.C. Court of Appeals case in which a homeowner is seeking to overturn Wilmington’s regulations.
But that’s not apparent from reading the one-page bill, which carries the boring title of “Chapter 160D Technical Correction” and deletes nine words from a 2019 land-use law that limits local governments from requiring permits for rental properties.
The title was a change from an earlier version of the bill that used the title “Private Residential Rentals.” Referring to the new title, bill sponsor Rep. Dean Arp, R-Union, initially gave only a two-sentence explanation when HB 829 came up for a vote after 9 p.m. during a marathon House session last week.
“This bill does exactly what the title says,” he said. “I ask for your vote.”
But the nine words that Arp’s bill seeks to delete are at the heart of Wilmington’s case for keeping its regulations.
The city’s April legal filing at the Court of Appeals — made days before Arp filed the bill — argues that “the nine words added to the inspection statute clarified what the General Assembly meant to convey: The inspection statute ‘does not expand, diminish or alter’ local government zoning authority.”
At issue in the lawsuit is whether Wilmington is within its rights to limit the number of Airbnb- or VRBO-style rentals allowed in a single neighborhood.
Lottery system in Wilmington
Concerned about an oversaturation of rental properties in neighborhoods near tourist destinations, Wilmington created a system in which each short-term rental property must be a certain distance from others, and a lottery was used to determine which one among close-together properties would get permission for rentals.
That prompted the lawsuit from a couple who lost the lottery, preventing them from offering the short-term rentals they’d planned when they bought the home.
They argue that state law prevents Wilmington from issuing permits for rental properties, but the city’s attorneys point to the nine-word caveat in the law: It says the rental permit prohibition relates to ordinances passed “under Article 11 or Article 12 of this Chapter” in state law. Those articles address building codes and housing conditions. Wilmington contends its rules don’t fit under those categories because they’re instead related to zoning.
While HB 829 would undercut Wilmington’s legal defense, it could also affect other cities and towns that have zoning regulations related to short-term rentals.
“It wouldn’t be just the city of Wilmington, the impacts would reach well beyond us,” said Tony McEwan, assistant to the city manager for legislative and intergovernmental affairs.
Scott Mooneyham of the N.C. League of Municipalities says HB 829 would “further muddy the water” for how cities and towns can pass ordinances to balance the demand for short-term rentals with the rights of other homeowners.
Restricting regulations for what he calls “de facto hotels” could also hurt hard-hit hotels. “Does the legislature feel like now is the time to damage that industry more?” Mooneyham said.
Goal of the bill
Arp did not respond to interview requests for this story.
But in last week’s House floor session, he answered questions from Rep. Deb Butler, D-New Hanover, about the bill’s intent. He said the bill was indeed intended to address the Wilmington lawsuit, but he argues that he’s simply restoring the law to what it was before the 2019 bill.
“This was done in the cover of night and changed the rules of the game to affect a certain lawsuit,” Arp said. “All we’re doing is putting it back to the way it was so it doesn’t help one side or the other.”
The legislation Arp was referencing, Senate Bill 355, actually passed the House in a near-unanimous vote at 2:53 p.m. on June 27, 2019, according to legislative records.
The bill was presented that day by Arp’s fellow Republican, Rep. Destin Hall, who didn’t mention the provision about permits for rental properties but said the overall bill was a compromise between homebuilders and the League of Municipalities.
Before HB 829 passed the House in a 66-45 vote, Butler repeatedly asked Arp to explain more about the goals of the bill.
“Can you please articulate in different words so I can understand what you’re trying to accomplish?” she said.
Arp again referred to the bill’s title: “I’m going to read the title, and that title explains what the bill does.”
The vote was mostly along party lines, but two Republicans who represent the Wilmington area joined Butler in voting no: Reps. Ted Davis, R-New Hanover, and Charles Miller, R-Brunswick.
The bill now goes to the Senate.
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