October 31, 2020

Dear Chapel Hill Mayor and Town Council,

This letter documents a nearly two-year collaborative process to find a way to address the impacts of the Short Term Rental (STR) industry in our community that meets the needs of all stakeholders. At the conclusion of this letter, we make a formal request of the Town Council.

Local hoteliers, neighborhood advocates, and business leaders have consistently expressed concerns about the rapid growth of STRs. On June 10, 2019, now more than 16 months ago, a formal joint petition was submitted to the Town Council by The Chamber For a Greater Chapel Hill-Carrboro (Chamber), the Chapel Hill Alliance for a Livable Town (CHALT), and local hoteliers. 

This petition, which representatives of our coalition discussed at the June 12, 2019 council meeting, called for a fair and reasonable framework for STRs that would address issues related to regulatory consistency, health and safety, preservation of neighborhood character, housing availability and affordability, and economic development.

The following week, in a move of good faith, the petitioners agreed to support the town in not actively enforcing its existing STR zoning laws and permit requirements as the town agreed to work expeditiously in establishing new STR guidelines (see Image 1 and resolution on June 19, 2019). All coalition members expected the work to be complete by the end of 2019.

In a move of further good faith, all coalition members supported the September 11, 2019 Town-proposed timeline for the task force that would culminate in a new STR ordinance enacted in May 2020. Several members of the coalition gave extensive time to serve on the task force.

While a covid-related delay was understandable, Town Council and staff continued to conduct other business, yet little progress was made on STRs. Throughout this delay, local hotels continued to suffer dramatically as hotel occupancy, average daily rate (ADR), and revenue per available room (RevPAR) declined significantly while STRs operating in our community broke records with their highest ADR ($143 in September 2020) and highest occupancy percentage (69% in August 2020) to date (AirDNA Trend Analysis, 2020, Appendix A).

This STR growth was driven in large part by investor-owned properties, which are run like hotels but largely operate in residential rather than commercial zones. The expanded STR footprint is no surprise as it is more lucrative for investors to put the whole property on the short-term market rather than make it available for the traditional and more affordable, long-term use. Indeed, investors are maximizing profits at the expense of our neighborhoods, which are not built for this type of high-turnover commercial activity, and with negative impacts on the affordable housing supply.

Despite recent claims to the contrary, the town possesses the power to clarify rules of the road for STR operators through its land use and zoning authority. Yet Council response to the recent October 2, 2020 presentation to the Town Economic Sustainability Committee made it clear that the near-term adoption of a reasonable regulatory framework remains unlikely.

This lack of progress, the recent proposal to grandfather existing illegal STRs for permanent approval, and the proposal of a pathway to eventually allow all types of STRs to operate in any part of town is deeply troubling and has exhausted our good faith effort. Finally, it is evident from the staff recommendations at the conclusion of this effort, that it’s unlikely that Town Council will take action to address our initial concerns. Therefore, we formally request the Town enforce its existing zoning laws on STR business activity, especially investor-owned properties.

Sincerely,

Aaron Nelson and Katie Loovis, The Chamber For a Greater Chapel Hill-Carrboro

Julie McClintock, John Quinterno, and Linda Carol Davis, Chapel Hill Alliance for a Livable Town 

Anthony Carey, Managing Director, The Siena Hotel

Manish Atma, President & CEO, Atma Hotel Group

D. R. Bryan, President, Bryan Properties, Inc, and Co-owner, Hyatt Place Chapel Hill

Rosemary Waldorf, Former Mayor of Chapel Hill

Discussion about STRs can be complicated because there are three different types: the first two types involve a primary residence whereas the third type is an investment property. The Town of Chapel Hill has consistently defined these three types of STRs and their corresponding LUMO provisions provided as outlined in Image 1.

Image 1: Types of Short Term Rentals and Current LUMO Provisions

Town of Chapel Hill (2020, Oct 2). “Update on Short Term Rentals (STRs).” [Powerpoint Presentation]. 

To better understand the rapid growth of STRs, please refer to Appendix A, which is an STR trend analysis conducted by Jim Phalen of Hotel Vitale using AirDNA data and provides month-over-month and year-over-year data on STRs in Greater Chapel Hill.

CONTACT

For questions, contact Chamber Vice President for External Affairs, Katie Loovis, at KLoovis@carolinachamber.org or (919) 696-0781 (cell).