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Asheville looks to balance competing interests on Airbnb front

Posted April 24, 2020 5:00 a.m. EDT

This article was written for our sponsor, the North Carolina League of Municipalities.

The City of Asheville, located in the Blue Ridge Mountains of North Carolina, is known for its vibrant arts and culture community, the famed Biltmore Estate, and, of course, its natural beauty and outdoor adventures.

Its attractiveness and appeal caters to more than 92,000 residents and a robust tourism economy that welcomes an estimated 4 million visitors per year. As a result of its local and national popularity among tourists, it's no surprise the city is "one of the hottest Airbnb markets in the country" according to a study conducted by IPX1031, a Fidelity National Financial company.

Like other cities across the country with a strong tourism flavor, Asheville is now coming to grips with the relatively new phenomenon of Airbnb and other short-term rental, sharing-economy platforms and what that means for tourists, residents, business owners and the city's long-term housing stock.

Balancing those interests is not easy.

The city and local business community enjoy its status as a hip destination to check out on a long weekend or a week or two vacation stay, recognizing the need for accommodations for visitors. But local decision-makers also have had to weigh the interests of residents wanting to protect investments in homes and quality of life in traditional neighborhoods, as well as consider long-term needs for adequate, affordable housing stock.

Similar debates are taking place all across the country.

"Asheville has a long history of tourism that dates back over a hundred years, however, it went through some down times," said Brad Branham, the city attorney for the City of Asheville. "Through a lot of planning, there was a major uptake in our economy and development, and a lot of it is based on or in conjunction with tourism."

Asheville's tourism economy uptick resulted in new businesses, more people and more revenue. Infrastructure to house, feed and entertain residents and millions of visitors each year became a necessity.

As part of the tourism growth, some residents wanted to take advantage of the sharing economy and list their properties as short-term rentals.

"There's an initial positive impact to that because people who aren't hoteliers or maybe don't own tourist-centric businesses have the ability to benefit from the tourism boom with what they do have, which is maybe a property that they can rent," Branham explained. "Initially, Asheville wanted to give regular citizens the ability to benefit as much as they could from the tourist economy that is so strong here."

However, problems for the city started to arise when investors began buying up properties solely for the purpose of using them for short-term rentals. Displacement of residents, gentrification and increased housing costs were all negative side effects of some of these property investments.

"As an investor or developer, if you can make three times as much money renting your property for a short-term rental versus renting it to a resident, you're probably going to do the former," Branham admitted. "We have a major problem here with a housing shortage that has caused rents and home prices to go way up. It's a major problem throughout the country and the state, and it's particularly acute here — the lack of affordable housing."

Branham emphasized that when he speaks of "affordable housing," he means anyone being pushed out of the Asheville housing market, including those with average-to-median incomes.

In response to these competing interests and the changing landscape, Asheville, in 2018, banned new short-term rentals in most places, while allowing those already permitted by the city to continue – making exceptions only through conditional-use requests before the city council.

As the city began considering that approach, not everyone was happy.

Some residents wanted short-term rentals to continue in some areas without further restrictions. Others, though, were already experiencing the downsides.

Asheville resident Moira Goree told council members she already felt as if she was being pushed out of town by rising rental prices.

Sue Robbins of Downtown Asheville Residential Neighbors added, "the proliferation of short-term rentals in an area, which we consider to be our neighborhood, is detrimental to the sense of community that we are trying to build and maintain as residents of the CBD [Central Business District]," the Mountain Xpress newspaper reported.

Responding to those sentiments, the City Council approved the 2018 restrictions.

But residents looking to benefit from tourists' visits can still do so through Asheville's "homestay" category. The homestay permit allows residents currently living in their properties to rent out rooms or portions of their home to people for stays of 30 days and under.

Asheville may be North Carolina's ground zero when it comes to the struggle of balancing the competing needs and new challenges created by the home-sharing economy. But other cities and towns are feeling the strains.

More will in the future.

Because each of the state's cities is unique, Branham does not see statewide regulation or a "one-size-fits-all" approach working. He believes the challenges are better handled at the local level to "address the specific circumstances going on in your own backyard."

For Asheville, that has meant recognizing the positive impact that an established level of short-term rentals has had on the local tourism industry, but also seeing that their unchecked growth would undermine so much that has made the city the great destination that it has become.

This article was written for our sponsor, the North Carolina League of Municipalities.

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