The short-term rental issue hits City Hall with a contentious debate, as Council tries to put the brakes on Airbnb and its ilk
Above: Mayor Esther Manheimer, who vociferously defended the city’s ban on short-term rentals in most neighborhoods and the need to be careful about any regulations allowing any version of them in Asheville. File photo by Max Cooper.
Sometimes controversies hit City Hall unexpectedly, with a resignation or people showing up in force against a proposal. Other times the political fights are intense, but limited to the fate of one neighborhood or area.
Then, every once in awhile, a controversy affects the whole city, and the story of how it got to Asheville City Council’s chambers is as key as what happened once the votes went down.
On Aug. 25, after over a year of debates, multiple public forums (including one specially held by local government), a lengthy Council discussion back in May, policy wrangling and a lobbying effort by tech giant Airbnb, two proposals intended to represent Asheville’s attempt to cut this particularly tangled knot emerged.
Asheville’s not alone in grappling with this, of course, it’s an issue in cities around the country and the world. But our city’s number of short-term rentals exceeds — possibly by hundreds — those of others in North Carolina, including large metropoli like Charlotte or Raleigh. As far back as 2008, Asheville was making national lists as one of the best places in the country to turn houses into vacation rentals. Given the size of the town and its already simmering issues with affordability and gentrification, the conditions were ripe for a political firestorm.
While there’s no shortage of controversy about the companies of the so-called “sharing economy” and who exactly they shove consequences onto, this debate had an extra tinge to it that other fights (over Uber, for example) lack. This is, at the end of the day, an issue that literally hits people where they live.
Prelude
The fight had built for more than a year. With few vacancies in the Asheville area and our city making top ten lists like it’s going out of style, Airbnb, VRBO and similar services were bound to find incredibly fertile territory here.
Whether it was people renting out a room of their own home to make ends meet or local gentry who, lacking a hotel chain, want to make more money off the mere five properties they own, the services attracted interest and cash for a number of people here.
It was also illegal.
Outside of downtown and a few other districts, short-term rentals are banned in Asheville under the city’s zoning code. But the city only enforced the rule when they received a complaint — later, multiple STR owners would claim staff told them the rule wasn’t enforced — and the $100 fines apparently didn’t serve as much of a deterrent if STR operators could rake in many times that from tourists.
At the same time, while all this was going on the housing situation became worse than ever, with a major report showing housing in Asheville out of reach for all but those making over $70,000. Residents of Asheville’s neighborhoods who weren’t cashing in on the STR flood feared that as more homes were turned over to tourists rather than renters or homeowners, their areas would become more resort torn than neighborhoods. That fueled a powerful backlash against the STR industry and their increasingly vocal proponents, one that hit during an election year for three Council seats.
Home, sweet homestay
In this case, back in May Council came to a rough consensus: a two-pronged approach aimed at leaving locals renting out a small part of their own home to do so (within some rules) but halting those renting out a whole home with fines and increased enforcement.
Key to this apparent solution was that the city’s code does allow “homestays” in residential neighborhoods. That means that by meeting certain criteria and receiving a permit someone could rent out part of their own homes, but not a second, third, fourth, etc. one they owned.
So the idea emerged to loosen the criteria on homestays to make them more accessible, especially to those that owned smaller homes, while putting real teeth behind the city’s existing ban for other STRs and dividing the issue into homestays that the city would allow and short-term rentals that it wouldn’t. That division would be key to the discussions in local government about how to proceed.
The consensus quickly fractured. Even at the May meeting Council member Cecil Bothwell had already expressed doubts about the usefulness of the STR ban. Shortly after, he publicly wrote that he thought a better solution would be to allow STRs, charge a fee and regulate them.
Then Airbnb itself waded in. The tech giant spends considerable resources on trying to persuade governments to take a lighter approach to regulating its business. In this case it sought to meet with government officials, sent in a Raleigh-based firm to help organize STR supporters and scrutinized the city’s rules. Going into the meeting, some Council members asserted that the company’s efforts so far had been relatively light, while others ascribed the flood of out-of-town emails from STR supporters to the lobbying push.
Meanwhile, the landscape is changing far faster than cities’ usual policy-making processes. Going into the meeting, most of Council now doubted there was a way to allow homestays without creating major loopholes other STRs could charge through as well and were leaning to sending that measure back for more scrutiny.
On Tuesday Council chambers were packed, with STR supporters sporting stickers (something that’s been seen in other cities wracked by this controversy) claiming their business fueled the local economy.
Long lines on short terms
After about an hour of wrangling with less contentious business, the homestay issue came before Council. Mayor Esther Manheimer emphasized that any change in the ban on STRs in residential neighborhoods wasn’t up for debate this evening, and that with 61 people signed up to speak time was of the essence.
“We as a city Council have received hundreds of emails about this topic,” she said. “We are considering the ordinance governing homestays, which is renting our your home for a short period of time. That is the ordinance that is under consideration. Homestays have been legal in Asheville since 2006.”
As for allowing short-term rentals, “that item is not before the Council” and have been illegal in Asheville’s residential neighborhoods for many years. She urged those wanting to speak on the increased fines to hold off until the second public hearings.
Shannon Tuch, the city’s development director, presented the proposals, noting that staff had encountered “growing concern over the impacts and consequences of that activity, especially in our residential areas” over the last couple years. She noted that the homestay rules, constitutionally, couldn’t require that the operator also own the property, so they could be offered by both owners or long-term tenants living in their own homes.
Beyond that, the new rules dropped some old requirements (a minimum house size, requirement that the host serve a meal, parking requirements, specifications that prevented homestays clustered together on the same street, among others) but kept others in place (only a quarter of the home can be used for the homestay) or added new requirements (monthly inspections). Homestays couldn’t be accessory dwellings like garage apartments, and they couldn’t have their own kitchens. The rundown, intended to ease the burdens on people living in smaller homes using homestays, looked something like this.
The members of the public who packed the chambers were generally either short-term rental or homestay operators or homeowners opposed to the impact on their neighborhoods. Over the following hours both groups (and some on Council) would pick apart just about every aspect of the proposal.
Barber Melton, representing the Coalition of Asheville Neighborhoods, noted that while the organization was “vehemently opposed” to short-term rentals, “but with homestays we can at least get a middle ground here.”
But she added that there was plenty of skepticism if these rules were it, citing provisions she felt could be used as loopholes, and warned about the end of rules preventing homestays clustering in areas and parking requirements so visitors’ vehicles wouldn’t clog the streets in already congested neighborhoods like Five Points. At the very least, Melton wanted the rules revisited if passed.
Lisa Schumacher, representing the Asheville Shareable Short-term Rental Association, hoped the city would “get in line with this worldwide trend” and start by allowing more homestays, claiming it allowed locals to stay in their homes. The group, she claimed, would facilitate communication and encourage STR owners to apply under city rules once their businesses were legalized.
“I really encourage the approval of this amendment, I think it’s a really good one, very thoughtfully considered,” she said.
Brandee Boggs noted that she was “concerned about the worst case scenario with out of town folks coming in and buying up the houses” but “I don’t see that happening, as far as the STR community. I’m kind of concerned that we’re going after something that’s a small minority.”
She also warned that she didn’t believe the homestay rules would stand up in court and “I don’t believe these will stop folks from actually coming in. The wealthy folks will figure out the loopholes and the local folks who will stay and profit off these are the ones that are going to get hurt.”
She asserted that STRs allowed “more than living wage” part-time jobs and “these are locals that are doing that.” She also opposed the prohibition on using accessory units as homestays.
But Jane Mathews, a former member of the city’s Planning and Zoning Commission, said she was “in strong opposition” to the proposed homestay rule changes as currently written.
“We are already being actively pursued to sell our homes to investors looking to take advantage of these proposed changes and have seen firsthand how providing for tourist accommodations in a neighborhood can erode the stability and sense of community,” Mathews said. “Do not cater or give into the demands of the corporate and vacation rental trade.”
She wanted the city to keep rules preventing homestays from clustering in a single neighborhood and requiring parking as well a limit on the number of guests both at one time and annually. Instead, Mathews proposed the city should provide incentives for small-scale landlords to encourage affordable housing and let bed and breakfasts fill the need for tourists looking to stay in a more residential area.
Opponents of STRs repeatedly emphasized that they wanted to set up rules for homestays as an alternative to them, not as a “stepping stone,” as resident Alice Helms put it.
But Laurie Fisher, an Airbnb host, wanted to “suggest a paradigm-shifting thing: that Asheville City Council should be totally hands-off this whole thing.” That remark got applause from the STR supporters, and Fisher continue that she could only see rules like the ones for homestays as an “intermediate step” to leaving the matter “in the hands of the markets and those using it. If you are annoyed by your neighbors, visitors or homestayers, you can speak to them instead of leaving it in the hands of government.”
“The sharing economy,” represented by Airbnb, she claimed, was the new paradigm, and that meant a laissez-faire this particular market. “I value the neighborhoods, I value the residents, but I also value property rights.”
Sue Schweihart, president of the Five Points Neighborhood Association, said that the group had become divided over the issue of where to stand on STRs.
“This issue is quite divisive,” she said. But they shared concerns about the end of the parking requirement and the amount of resources of going towards enforcement. While not expressing an opinion on STRs, she warned about the need for a “thoughtful approach” to deal with the strain on infrastructure.
And so the debate continued, between opponents like resident Mike Lewis who warned of Asheville becoming “the Gatlinburg of the Blue Ridge” if STRs were given a free hand, or Airbnb operator William Stanhope asserting the property owners were actually “the little guy” in this situation. Council took an intermission to go into closed session and discuss legal matters unrelated to the STR fracas.
After their return, David Rogers encouraged Council to “focus on just the facts.”
“We have a very limited supply of housing, using residnetial housing to shelter tourists takes a room, an apartment or an entire house out of our housing supply,” he said. “How does this make sense?”
“We’d have a huge housing crisis if everyone was using this strategy,” Rogers continued. “We have a real housing crisis here and this only contributes to higher rates for people that work here.” He asserted that the homestay rules could lead in landlords paying a single tenant to “run it as a mini-hotel” and take away valuable rooms needed for people living in town.
But operators like Julie Nelson claimed that Rogers and other opponents points were “just fears” that wouldn’t come to pass, while Andrew Lawler asserted that “the genie is already out of the bottle” with regard to short-term rentals, and Council’s best bet would be to accept that. Both said the funds provided by their STRs made their lives more affordable by allowing them to get some of the tourism trade cash instead of hotels.
Ron Carlson, co-owner of a bed and breakfast in Montford, said he was generally happy with the homestay changes, but believed the criteria requiring that the resident live onsite, as otherwise “it really didn’t solve the problem.” Instead, he asserted, similar rules to the ones he had to operate under needed to be applied to homestay operators. “It needs to be very clear that if you’re going to rent a homestay, you must be home.”
Michael Greene, one of the owners of Wick and Greene jewelers and a former Civic Center commission chair, noted that he owned several properties in both the city and county, including vacation rentals that he claimed delighted neighbors. He touted the “sharing economy” as a way for owners to make more money by eliminating the cost of paying employees.
“The largest transportation company in the world has no vehicles; it’s Uber,” he said. “The largest supplier of news and information employs no writers. Wouldn’t that be good if you owned the Mountain Xpress, you wouldn’t have to pay anybody, right? That is actually Facebook. The largest supplier of lodging today is Airbnb.”
Then it was Council’s turn to try to grapple with this particular genie.
Vice Mayor Marc Hunt noted he wanted to delay the matter, given some of the concerns raised about the specific homestay rules.
“I don’t think there’s a member of Council up here that thinks this is an easy slam-dunk decision,” he said. He added that at one point he’d owned a vacation rental in Swain County and when the issue first came up, had wanted to find some way to allow and regulate short-term rentals.
But over the last six months, he’d changed his mind due to “the threat lodging operations in neighborhoods pose” and “the impact of land values, rent rates and the availability of units to rent.”
“Organized money is coming to bear on buying properties to make money off of,” he continued. “Enforcement is a bear, no matter what the regulation is.”
Given all that, he concluded that the city needed to get it right rather than backing off and not enforcing its rules. The homestay rules should be delayed to avid the difficult option of having to scale back rules later if they proved too loose. He wanted such room rentals to be reserved for residents supplementing their income occasionally, not a big business in their own right, so he wanted the definition of a homestay host far tighter, as well as reviews on guest limits and parking.
For their own reasons, all the Council members agreed. While Bothwell supports allowing STRs, he wanted the rules delayed because he felt they should be less restrictive, especially when it came to using accessory dwellings to host tourists.
Earlier in the meeting, Bothwell had concerns about the specifics of the ban on a homestay area having its own separate kitchen, concerned that it was unenforceable and could place burdens on homestay guests who had specific dietary requirements or allergies. But City Attorney Robin Currin specified that under city rules places with their own kitchen were a separate living space and would meet the requirement for a short-term rental, not a homestay, because they could be used as independent long-term rentals.
“I don’t think there’s anything magic about being under the same roof,” Bothwell said. As for enforcement, “it looks like we’re going to track them down on the internet and then go station someone in the bushes to see if they show up and then knock on the door there to see if they’re staying three or four days or thirty days.”
“The enforcement piece there just seems whacky,” he added.
But Manheimer said that while she heard the people saying “I should be able to do what I want, it’s my house,” a city required rules to function. “If you buy a house there’s not going to be an asphalt plant next door.”
In her case, she said, as “a data-driven person,” she found the numbers of units used for STRs daunting.
“Asheville has more short-term rentals online, and that’s an umbrella term than any city in North Carolina by hundreds,” she said. “It’s enormous. To me, this isn’t something to mess up. It’s a major issue for our community.”
The genie, she contended, wasn’t totally out of the bottle, and to let it run wild might prove ruinous. So, like Hunt, she believed the city had to be very careful about the new rules. In Duluth, Minn., she noted, the city was considering a moratorium on STRs after initially allowing them.
“You know how many short-term rentals they had? Thirty. You know how many they had online? Fifty. They worried that 20 were advertising online and weren’t permitted. We have 900. Nine hundred. This we can not wrong.”
If the city screwed it up, she concluded, Asheville could easily become like a resort community where “everybody’s making a mint, but what is it? It’s a resort community, it’s not a community, it’s not a place where people raise children. It’s not a place where you know your neighbor.”
Council member Gwen Wisler also favored a “go-slow approach,” feeling that “we went a little too far” in the proposal to loosen some of the homestay rules.
“We have to work on enforcement, I think it is very regrettable the city hasn’t enforced it and these people just thought it was ok,” Wisler said. “But just because something’s not enforced doesn’t mean it should become legal.”
While Council member Gordon Smith noted that he believed there were well-intentioned people on both sides, he condemned the STR industry in harsh terms as helping to fuel the city’s affordable housing crisis.
“I want locals who need housing to be able to find it, I want locals here to also be able to have direct access to some of these tourist dollars that are coming into our town,” he said. “What I don’t want is predatory investors to come in and gobble up our neighborhoods and our housing stock and that is exactly what is happening in other cities around the world. Let’s not pretend it won’t happen here.”
As for the “sharing economy. I get what it means, but let’s not mistake it for some sort of barter system. This is commerce where money changes hands. The sharing economy is another form of that. It’s a great marketing term, but the substance is another commercial method.
“Those investors who will seek to buy up houses here? They’re already prepared to kick out renters who are living there right now. Your neighbors, your renting neighbors. I didn’t hear any renters speak tonight, heard a lot of owners.
“The renters voice is not here tonight, and it’s incumbent upon us to also consider them,” Smith concluded. “Airbnb, VRBO, these other groups, these are multibillion dollar corporations, they don’t particularly care about Asheville. They don’t care about us, they’re trying to feed the investors.”
He was open to changes to the homestay rules, “but it has to protect us from the predators and offer some opportunities for locals.”
Council member Jan Davis said he felt “pretty strongly” that Council should find some way to allow and regulate STRs, but also felt Council should take time to craft those rules.
Bothwell then interjected that even if there were over 900 STRs within the city limits, “it’s 1.6 percent of the houses in the city, so that’s not an enormous problem at present.”
“That’s hundreds and hundreds of units,” Smith shot back.
“Anyway, I don’t think it’s gotten anywhere out of control at present, it doesn’t seem to me,” Bothwell said.
Pelly said he was moved by arguments that local property owners couldn’t afford to stay in their homes, “but I’ve heard loud and clear from representatives of many neighborhoods about what would happen if it happened across the street.” He also backed the “go slow” approach.
With Council in agreement, despite their different views on the topic, the matter was unanimously deferred, and Hunt told staff that he wanted the new rules ready before the next tourism season.
Then it was time for round two.
A harder line
Then it was on to the question of fines. While STRs are illegal in many parts of Asheville, the ban was only enforced if a neighbor complained. Even then, Tuch told Council, the $100 fines didn’t serve as much deterrent given the profits operators make off visiting tourists.
So, when it passed the last budget, Council devoted $60,000 to stepped-up enforcement. Now, staff will actively seek out STR operators, warn them to stop and, if they don’t, fine them (“proactive enforcement” was how City manager Gary Jackson put it). Council was voting on hiking the fines for every day an STR was operated in violation of the city’s rules $500.
In the last six to nine months, Tuch noted, staff had issued 28 violations and issued fines in the case of two. In case of a violation, they generally give 30-60 days for an owner to correct the issue before levying fines.
“We have found that this $100 a day citation isn’t a particularly effective deterrent,” Tuch said. “Looking at what some other cities charge for these citations we’re recommending increasing that fine.”
While the $100 a day fine is the usual amount for a zoning violation, Tuch added that in cases where the damage is particularly severe or the issue particularly crucial they do levy higher fees.
At the start, Bothwell asserted that “wouldn’t it make sense to defer this if we’re deferring the other,” but the majority of Council was in favor of proceeding on.
During the hearing, STR operator Arwen Haas told Council that the industry provided jobs by, for example, hiring cleaning and lawn services.
“I’m just one of 900 listings, and let’s say half of them do that, think of the cottage economy that they’ve lost,” Haas said, adding that the city should levy fines only if someone complained about the rental. “I would feel sick if I knew my money, my tax money, was going to someone doing that all day. That’s just a ridiculous idea.”
Melissa Crouch, who manages short-term rental condos downtown (where they’re legal) and another STR on South French Broad that the city had tagged for a violation, also felt the fine was too high.
“I think a $500 fine is kind of ridiculous,” she said, asserting that she had made every effort to comply with the city’s rules.
Boggs asserted that if Council was going to delay the new homestay rules, it should delay the increased fines as well, as “I truly believe if you postpone this today but vote for the fines, you’re looking at a lot of finger-pointing. Fights between neighbors are really going to increase. The heat’s turning on” and warned that the city was looking “at lawsuits and lawsuits.”
Patricia Lord encouraged Council members, if they chose to raise the fine, to send out notices before levying them.
But Rogers encouraged Council to stay focused on the damage done by STRs, saying he knew of homes where tenants were kicked out to make way for vacation rentals.
“If you are serious about having housing for people who live and work here, you need to enforce the rules,” he said. “People are buying houses with the expectation that they can do this and it’s causing problems. There were five people that lived in this house.”
Mathews agreed.
“I do want encourage you to set a high fine. Ignorance of the law is no reason to keep going,” she said. “I think we get hard on people. We have a neighbor who was renting a house for $10,000 a month, and they scoff at the $100 fine, it’s part of doing business. The city has been very lax in enforcement even when there have been penalties.”
When it came time for Council to discuss, Hunt asserted that the elected officials had made up their mind to keep and enforce the ban on short-term rentals. Even while it discussed how exactly to allow homestays, “that’s a fairly narrow band” of homes and he believed the increased fines should proceed.
“I agree with what Mathews just said, we need to move in a serious way,” he asserted. “I understand there are people who hoped this moment wouldn’t come where we stepped up enforcement. But whether a year or two months from now, we need to move. If you’re in the short-term rental business, you need to plan on much more significant enforcement.”
Tuch noted that she couldn’t think of any current homestay violations: almost all of the cases the city deals with were whole homes or dwellings.
“I got an email from a guy from Johns Island who was taunting me for hating freedom,” Smith noted, asking how such an STR owner would be notified. Tuch replied that all property owners had addresses on file where the city could notify them.
Davis asked how Tuch was measuring the current fine’s ineffectiveness if there were so few cases. “I’m not sure we have as big a problem as it feels like.” Bothwell noted that the violations would seem to be only the nights they had guests.
But Tuch said that wasn’t necessarily the case, as if STRs had websites continuing to advertise that they were running an STR, the city would continue to fine them. Bothwell noted that simply advertising for something seemed like it was clearly free speech.
“Yeah, well, in most instances these sites have calendars showing they’re totally booked out,” Tuch said, giving clear evidence the place was actually being used for an STR.
She added that “we’re not having a problem with people not paying the fine, we’re having a problem with the fine not being an effective disincentive.”
But Hunt and Tuch noted that STR operators had directly told staff that the current fine isn’t a deterrent.
“To make it clear that Council is not united on this, in the research I’ve done the genie is out of the bottle, the horse is out of the barn,” Bothwell said. “It seems to me that if you really want to get a handle on it we’ll be far better off to legalize, license, inspect and regulate than to go out gunning.”
“I think we’re aiming for an enforcement policy that’s ineffective and will really hurt a few people who get caught,” he continued. “I don’t think we’re in any position to make a realistic law.”
While acknowledging “we’ve still got along way to go,” Smith said he wasn’t ready to “let the genie run rampant,” believing that the city had tackled big problems (like flood management and defending the water system) before. He then moved to approve the harsher fines.
“I can get behind this,” Davis noted. “As long as there’s a notice that goes out and an opportunity to correct it.”
“I may become supportive of this, but I will not be tonight,” Pelly said. He added that without Council setting new rules on homestays, he felt it was moving too quickly on the new fines. “My feeling is that we’re going to be reconsidering this.”
At the end of the four hour political fight, the harsher fines passed 5-2, with Bothwell and Pelly against.
Of course this likely won’t be the last time we see STR supporters, opponents, Airbnb lobbyists and general members of the public pack City Hall on this matter. As evidenced by the debate over the exact nature of the homestay rules, division run deep on this issue and will likely to continue to for years to come. Fights over where people live — and what kind of city they live in — aren’t the easy ones, and they tend to have long lives until one view decisively wins. For all the talk of genies in bottles, what follows this showdown is just a lull in the storm.
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