Wilmington no longer requires short-term rental registration following court decision

WILMINGTON, N.C. (WECT) - Homeowners in Wilmington who want to rent their homes for short term rentals are no longer required to register their properties with the city or adhere to separation requirements previously put in place.

The move comes after an opinion from a three-judge panel from the North Carolina Court of Appeals ruling the City of Wilmington’s short-term rental ordinances violated state law.

On Tuesday, City Council will vote on returning more than $500,000 to those who paid the fees. According to the documents from the City of Wilmington, they’d also pay interest.

“Pursuant to North Carolina General Statute 160D-106, registration fees collected since the inception of the program amounting to $443,428 and related third-party processing fees amounting to $10,189 will be reimbursed to the respective homeowners. Accrued interest, calculated at a rate of 6% and estimated to total $57,867 will also be remitted to the homeowners. The City being mindful of the above statute, held the registration monies collected during the litigation of this matter,” according to an ordinance on which council will vote Tuesday.

That money might have been withheld by the city, but it is still coming out of the General Fund.

“This ordinance appropriates $511,484 of General Fund - fund balance for these reimbursements and accrued interest. Of this amount, $308,665 will come from fund balance assigned as of June 30, 2021 for short-term rental reimbursements and the balance of $202,819 will come from unassigned fund balance,” according to the ordinance.

The ordinance to return the money is not the only indication the city is walking back its stance on short-term rentals. There are changes to the city’s website where rental registration was previously listed.

It read, “All owners wishing to operate short-term lodging of any kind must register.”

Now, that statement is gone, replaced with an antithetical one in it’s place.

“The City of Wilmington will no longer require registration for short term rentals or enforce the cap and separation requirements in the City’s short term lodging ordinance due to a recent court decision. All other provisions of the ordinance remain in effect,” the page reads.

Wilmington still has the option to appeal the Court of Appeals ruling, however, if the proposed ordinance is approved, it could signal the city is no longer wanting to defend its policies. It’s a decision that could impact cities across the entire state since cities like Asheville also require permits and fees (although Asheville lists its fee as a ‘zoning application and technology fee’).

If Wilmington does not appeal to the Supreme Court it could encourage other homeowners in any city, to follow suit and launch appeals to their own city’s rules.

Two courts have already ruled against Wilmington, and since the Court of Appeals ruling was unanimous, the North Carolina Supreme Court does not have to hear an appeal, it is up to their discretion.

The City of Asheville has responded saying they would be reviewing their own ordinances.

“The City of Asheville is aware of the recent Court of Appeals decision, and is reviewing the pertinent local ordinances to determine if any adjustments need to be made. However, Asheville general prohibition against whole home short term rentals remains unaffected,” a City of Asheville spokeswoman Kim Miller said in an email to WECT.

Asheville’s short-term rental website still links to registration applications, however, the ordinance itself is not listed on the page, instead it reads: “Read the Ordinance (See Item 9 – Homestays) – Updates coming soon.”

From the Wilmington Board of Appeals to the State Appeals Court

For years, the City of Wilmington has charged those using their homes as short-term rentals registration fees despite state law explicitly forbidding cites from doing just that. Following the city’s decision, homeowners Dave and Peg Schroeder first filed an appeal with the city’s Board of Adjustment in August of 2019, when it was denied it sparked the lawsuit.

The the national law-firm Institute for Justice agreed to take up the court case which made it all the way to the Court of Appeals and was heard in late 2021, an opinion was issued on April 5, 2022.

Ari Bargil is the attorney for IJ representing the Schroeders, he said he is hopeful after seeing the city’s plan to return the fees to homeowners, but wants to reserve judgement until City Council votes on the ordinance on Tuesday.

Ultimately, the decision will rest with City Council, however, the changes of the website as well as the proposal offer an insight into what direction the city might go.

READ MORE:

National law firm takes over case against City of Wilmington’s short-term rental laws

UPDATE: Judge grants City’s motion for a stay, effective immediately

Appeals court rules Wilmington’s short-term rental ordinance partially invalid

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

Copyright 2022 WECT. All rights reserved.