Short-term rentals (STRs) like Airbnb are a relatively new and rapidly growing phenomenon. On any given night in Greater Chapel Hill, there are roughly 300 STRs available, they are on-track to pull-in $8 million this year, and are on-fire with 40% year-over-year growth (Source: Orange County/Chapel Hill Visitors Bureau). 

The town's land use management ordinance and code predates the new STR phenomenon. As such, the old code is not fit for this new purpose. Town staff members are doing their best to shoe-horn STRs into one of three permitted use categories, and it’s a bit awkward. For example, the current code permits “home-based businesses” (think – a CPA running a small daytime accounting practice out of her house), which is a very different use than overnight lodging.

Bottom line: Most local STRs are operating illegally (without a permit) in a largely unregulated environment that’s resembling the wild, wild west.  A fair and reasonable new code for this new phenomenon is needed so all investors, including both hoteliers and STR operators, can determine if/how they will invest in our community in the future.

Greater Chapel Hill is not alone. Cities and towns across the country are grappling with this new reality, revisiting their codes, and debating what an appropriate framework will look like for their specific community. Of course, a fair and reasonable framework in Chapel Hill (a university town) will look different from a framework in a tourist community (like Wilmington) or a small town lacking a hotel and eager for visitors (like Hillsborough). There is no single state-wide solution to this new phenomenon that is fit for purpose and can meet the variety of needs and interests of the diverse communities across our state. 

In Chapel Hill, constructive conversations are underway and good progress is being made. Our Chamber joined local hoteliers and a local neighborhood association called CHALT to better understand the current STR state of play. After 150+ hours of research and discussion, we agreed that we are less concerned with someone renting a room out of their house or even renting their entire house while out of town for a certain number of nights per year. Our primary concern is with the investor-owned properties that are run like hotels, yet not held to the same standards as hotels (unlevel playing field). These pseudo-hotels make up about 80% of the local STR market, and yet it’s unclear whether they pay the appropriate taxes or comply with safety and health expectations. 

Together, we petitioned Town Council (on June 12th) with a thoughtful path forward. We asked Council to: 1) direct staff to craft a fair and reasonable STR regulatory framework and 2) establish an advisory committee to ensure all diverse voices are heard in the process. This petition was well-received and STRs were immediately added to the agenda for the following Council meeting (on June 19th). At that meeting, staff discussed four decision points with Council. Our position, which was shared during the meeting and widely accepted, is outlined below:

1) Should the town develop updated standards for STRs with input from community stakeholders?  Yes. The town should establish new standards for this new phenomenon that are fair and reasonable, but time is of the essence. The process for developing a new framework should be open to the public and time-bound (i.e. no more than six months) for the new framework to be presented to council. 

2) Should the Town focus short-term enforcement efforts on education and complaint notification until new code amendments are adopted, or more aggressively implement existing standards?  No. After much reflection, our joint recommendation is that Council and staff hold off on any proactive education and/or enforcement of the current standards (as interpreted by staff), as it could prove incredible confusing for STR operators as new and better standards will soon be implemented. We think it best to let the thoughtful process unfold and, once approved, begin educating and fully enforcing the new standards. 

3) If the town adopts updated standards, should the Town conduct an education campaign on the new standards prior to implementation? Yes. We believe that an education campaign to phase-in the new standards is fair and reasonable, but time is of the essence. We request that this take no more than six months. 
 

4) Should the Town explore possible assistance from third party vendors who can help with local STR identification and enforcement, and evaluate potential cost recovery through a new STR annual permitting fee from operators?  Yes. We understand staff capacity for enforcement is very limited. Hiring a trusted and competent third party seems reasonable and the costs could be subsidized through a new permitting application process and annual fee structure. 

The Chamber continues to track this issue and will keep you posted in the coming weeks and months. Feel free to comment below if you have any questions, concerns, or points you want to "air." 

Katie

Katie Loovis
Vice President for External Affairs
The Chamber For a Greater Chapel Hill-Carrboro