After years of debate, short-term rental rules go into effect Friday

WILMINGTON, NC (WECT) - It was a debate that drew hundreds out to public meetings and ended with a split decision from elected officials.

On Friday, March 1, new regulations for short-term rentals will go into effect whether Wilmington is ready or not.

Three years ago, when companies such as Airbnb, HomeAway, VRBO and others were popping up around town, city staff members realized short-term rentals were not covered by the city’s land development code.

Under the law, the minimum rental period was seven days, and no more than three unrelated individuals could reside under the same roof. In 2015, the city investigated 12 violations as the result of complaints but staff noted the code did not address the growing trend of people renting out rooms or homes to vacationers one or two nights at a time.

Nearly two dozen public meetings included discussion of short-term rentals. Those opposed to the practice posted signs in their yards and showed up to city council meetings in brightly-colored T-shirts.

Those in favor said short-term rentals provided an easy source of additional income for homeowners, and provided tourists additional lodging options, thus improving the economy. Opponents argued allowing the practice in residential areas would destroy the integrity of single-family neighborhoods or the character of the historic district.

Wilmington City Council voted 4-3 in July 2018 to approve homestays in all residential districts and some commercial and mixed use districts as well as whole-house rentals in commercial and mixed use districts. On Jan. 22, the council once more voted 4-3 to approve whole-house rentals in residential districts but with limitations on the total number and how close together each unit could be.

The new regulations were scheduled to take effect on March 1, giving city staff a little more than a month to prepare for the required registrations, and ultimately enforcement of the new ordinances.

In what some council members considered to be a “compromise,” the idea of a homestay was presented to address the practice of homeowners renting out a bedroom or two.

Official definition: “The business engaged in the rental of individual bedrooms within a dwelling unit that serves as a host’s principle residence, including any single-family or accessory apartment, that provides lodging for pay, for a maximum continuous period of twenty-nine (29) days, that does not include serving food, and to which the definition of family does not apply.”

Homestays are allowed in all residential districts. While there is no limit to the number or proximity of homestays, each must be registered with the city.

Restrictions:

The maximum number of rentable rooms is one less than the number of bedrooms the home has but no more than three.
Homestays cannot be used as a bed and breakfast.
No parties, weddings or other large gatherings are allowed as part of the homestay’s operation.
No food preparation for guests allowed, and no kitchens or food preparation inside individual rooms.
No more than three vehicles belonging to guests can be parked on the property at one time.
If the home is built after March 1, 2019, all parking for guests must be behind the plane of the front facade of the home.

Requirements:

Homestays must have a host, which can be the homeowner or someone who is living in the home full time.
Homestays must be registered with the city annually.
Owners of homestays must maintain a $500,000 or greater liability insurance policy.
Owners must have records showing the host uses the home as his or her primary residence as well as records of each rental for that year.
Each unit must have a flyer listing the host’s contact information, the non-emergency police number, trash collection information and the maximum number of guests.
The homestay’s registration number must be displayed on the flyer and any advertisements

Registration:

Cost: $200
Any room rental of less than 29 days that is not a bed and breakfast must be registered as a homestay.
Only the legal owner of a home can register a homestay.
If registration is not renewed annually, the city will consider the registration has been terminated.
A homestay registration is not transferable, and is not tied to the property if it is sold.

For property owners looking to offer a whole home to short-term renters, the council ultimately approved the practice in commercial, mixed-use and residential districts but with some fine print.

In residential districts, the city adopted a cap and spread regulation that limits the total number of rentals as well as how close together they can be.

Initial registration for whole-house rentals like homestays will take place starting March 15. Once initial registration is complete, if more than one property within the 250-foot or 400-foot spread requirement apply, there will be a lottery to determine which property gets to operate the rental.

For properties legally operating prior to March 1 — namely by paying the room occupancy tax — there will be a one-year amortization or grace period.

Official definition: “A business engaged in the rental of an entire dwelling unit that provides lodging for pay for a maximum continuous period of twenty-nine (29) days and does not include the serving of food. Whole-house lodging uses are exempt from the definition of ‘family.'”

Restrictions:

Inside the 1945 corporate limits: Rentals must be at least 250 feet apart with the total number making up no more than 2 percent of the total number of housing units.
Outside the 1945 corporate limits: Rentals must be at least 400 feet apart with the total number making up no more than 2 percent of the total number of housing units.
Whole-house rentals cannot be used as a bed and breakfast.
No parties, weddings or other large gatherings are allowed as part of the rental’s operation.
No food preparation for guests allowed.
In the historic district, only curb cuts or driveways existing as of March 1 are allowed.
If the home is built after March 1, 2019, all parking for guests must be behind the plane of the front facade of the home.

Requirements:

Whole-house rentals don’t have to have a house on site but the owner or an operator must be available 24 hours a day and be within 25 miles of the property.
Rentals must be registered with the city annually.
Owners of whole-house rentals must maintain a $500,000 or greater liability insurance policy.
Owners must have records of each rental for that year, as well as a parking agreement, if applicable.
Each unit must have a flyer listing the host’s contact information, the non-emergency police number, trash collection information and the maximum number of guests.
The rental’s registration number must be displayed on the flyer and any advertisements

Registration:

Cost: $300
All whole-house rentals must be registered, and that registration renewed annually.
A home can be registered as a whole-house rental or a bed and breakfast, but not both.
Only a natural person with proof of home ownership can register a whole-house rental.
A person can only own one whole-house rental per residential district
If registration is not renewed annually, the city will consider the registration has been terminated.
A whole-house rental registration is not transferable, and is not tied to the property if it is sold.
If a whole-house rental registration is canceled or terminated, it cannot be renewed for at least three years.

In addition to these regulations, owners of both homestays and whole-house rentals are required to make sure all local, state and federal laws are followed.

The city has published a frequently asked questions page, which will also house the link to the software used to register and monitor short-term rentals.

City spokesperson Dylan Lee said instructions for inquiring or filing a complaint will be listed on that page when the time comes.

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