For coastal communities, short-term rentals mix old and new challenges

The City of Wilmington established regulations on short-term rentals that seek to preserve the character of traditional residential neighborhoods by making sure that there are not entire stretches of non-owner occupied homes.

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Latisha Catchatoorian
, WRAL Digital Solutions
This article was written for our sponsor, the North Carolina League of Municipalities.

If there is one place in North Carolina where short-term rentals are nothing new, it is in our coastal communities.

Long before online platforms like Airbnb, Homeaway and VRBO, owners of beach cottages were renting out their homes to vacationers, either through their own efforts or through local real estate agencies. And in many of these coastal towns and cities, permanent residents came to their decisions to buy their homes with a full understanding they could be living next door to neighbors who, at least in the summer tourism months, might be changing on a weekly basis.

That being the case, it comes as no surprise that many beach communities do all that they can to protect the tourism economy, with many avoiding restrictions on short-term rentals. But even along our coast, each town or city comes with its own unique flavor, and their residents possess unique needs.

For some, the evolving home-sharing economy has created new challenges that require new approaches.

Consider Wilmington.

Tourism and the hospitality industry are big economic drivers. It's a popular destination for visitors. The city's charm and history make it attractive not only in the summer, but all year round. But in every way, Wilmington is diverse.

Besides those visitors, it has a more permanent population of working residents, retirees and students, and its larger economy covers the gamut from tourism to manufacturing to tech.

That mix creates a lot of competing interests on many policy and issue fronts. Short-term rentals have been no different, especially as online rental platforms have evolved to attract more absentee, investor-owned buyers.

As a result, Wilmington decided it needed to establish regulations.

"We've put a regulatory process in place that kind of mirrors what was done in the '90s, when we were regulating bed and breakfasts," explained Wilmington Mayor Bill Saffo. "During that time, there was a proliferation of bed and breakfasts that popped up in the downtown historic area of Wilmington. There were concerns from the neighborhoods, so we put regulations in place."

Once again, a big part of the goal was to preserve the character of Wilmington's historic districts, as well as discourage gentrification and keep neighborhoods resident-centric. But it's a balancing act. The city also recognized that renting on a short-term basis represents economic opportunity for some residents and provides options to visitors.

So, by 2019, city officials had arrived at a set of regulations that allowed entire homes to be rented out on a short-term basis in some zoning districts, but limited the numbers in residential districts by restricting how close each could be to one another.

In effect, the approach seeks to preserve the character of traditional residential neighborhoods by making sure that there are not entire stretches of non-owner occupied homes. Registrations for these types of whole-house lodgings are awarded on a first-come, first-registered basis. Meanwhile, the city continues to allow homestay lodging, where live-in owners rent rooms or portions of houses.

"We think it seems to be working — there seems to be a good balance," Saffo said. "We looked at the situation for about two years, evaluated it and took in information from all over the country. We looked at what Charleston was doing, what Asheville was doing, and how other municipalities were dealing with similar issues. We were looking for a compromise."

"The STR regulations that we've put in place here in Wilmington seem to be working — they're fair, they're equitable," Saffo continued. "I think we're going to revisit things in a year to determine how they're working, but so far, so good."

Head up the state's coastline, and you'll find a different approach being taken in Nags Head, a place where former state Senate leader Marc Basnight once proclaimed that beach homes "are our factories," making the comparison to emphasize their importance to the local economy and local property tax base.

There, the focus is on public safety, ensuring renters are protected and equitable treatment of all vacation rental property owners – with no restrictions on which homes can be used as short-term rentals. The town simply requires that those owners register with the town, provide a local contact person who can respond to any issues that arise and that they are aware of the obligations of the state's Vacation Rental Act, which spells out the rights of tenants and landlords.

"It's more of an awareness thing," said Michael Zehner, the Nags Head's director of planning and development. "Primarily it was to make sure the users of short-term rentals were protected similarly to those that were maybe renting property through a broker or rental company."

Two coastal communities. Two separate approaches. Both with a goal of addressing and balancing the needs of those who live, work, visit and play there – so that everyone can keep enjoying all that these communities have to offer, even as the Internet Age changes our world.

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


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