Wednesday, June 19, 2024

New software will redefine how New Hanover County tracks Short Term Rentals

With some rental properties paying taxes, and some not, New Hanover County says the short-term-rental playing field is not equal.

Local governments have struggled to deal with several short term rental issues, including collecting room occupancy tax, nuisance complaints, and potential regulations. (Port City Daily photo | VRBO.COM)
Local governments have struggled to deal with several short term rental issues, including collecting room occupancy tax, nuisance complaints, and potential regulations. (Port City Daily photo/VRBO.COM)

NEW HANOVER COUNTY — Earlier this month, New Hanover County’s Board of Commissioners approved a new online system that will change how the county deals with short-term rentals.

The county, along with local cities and towns like Wilmington and Carolina Beach, have been working to deal with the growing prevalence of short-term rentals (STRs). Without concrete regulations in place, local government has struggled to deal with a host of issues ranging from collecting room occupancy tax to nuisance complaints and parking issues.

One aggravating factor to these issues is a lack of empirical data: how many rentals are out there? How often are they renting?

Related story: No recommendation – Planning Commission fails to agree on short-term rentals before City Council vote

The county’s new approach – known as Short Term Rental Helper – is produced by Bear Cloud Software, and was developed out of a similar, albeit slightly more extreme, set of circumstances.

‘Short-term rentals were going crazy’

The company was founded by John Spuhler and Bob Peterson, the former mayor and city manager of Garden City, Utah, respectively, along with software developer Kenny Jacobson. As mayor, Spuhler faced the rapid increase in short-term rentals and the difficulties in managing them.

Garden City is located on Bear Lake, a popular summertime destination, that gave Spuhler’s city the nicknamed “the Caribbean of the Rockies” – and increased its peak-season population by 25 times.

“We were a city – a little town, really – that had a population of less than 800. Then summer came and we’d need 20,000, 25,000 on a weekend,” Spuhler said.

“as Mayor I didn’t know the facts – I just heard a lot of hyperbole. I heard city councilmen pound their fists on the table and say, ‘this is how it is,’ but there was no evidence,” — Former Mayor and STR Helper Creator John Spuhler

Short term rentals – lucrative during the summer months – were becoming popular, with thousands of room or house rentals in peak season. As mayor, Spuhler was caught between passionate arguments on both sides.

“STRs were growing like crazy, and as mayor I didn’t know the facts – I just heard a lot of hyperbole. I heard city councilmen pound their fists on the table and say, ‘this is how it is,’ but there was no evidence,” Spuhler said.

Those who wanted STRs in Garden City regulated – or even banned – pointed to safety concerns, noise complaints, water use, and parking issues. Those in favor pointed to the increase in tax revenue and the fact that STRs were helping to put Garden City on the map.

“We wanted to enact reasonable regulation, but we needed data. There were sensible arguments on both sides, but I didn’t believe those who said, ‘oh, STRs are perfect.’ I knew there were also going to be some cases of 10 college kids in a walk-in closet, and that being called a bedroom, and that’s obviously an issue.”

The software Spuhler and his company developed allowed Garden City to “mine as much information as legally possible” from online transactions from AirBnB, VRBO and other rental websites and watch and match that data against tax records. When someone rented a room or a house, Garden City was notified.

The system allowed Garden City to collect much more tax revenue from rentals than it previously possible. It also included a module that allowed the city to track complaints, both allowing the city to create a record of problem rentals and to provide hard data in the debate over regulations.

STR helper in New Hanover County

New Hanover County’s use of STR Helper focuses largely on its tax revenue aspect. For Lisa Wurtzbacher, the county’s chief financial officer, the two important pieces are an online portal that allow rental owners to make monthly room occupancy tax payments online. It also allows the county to know when people who aren’t paying ROT book a room or building online.

“Our first goal is to educate people, the first letter will let people know, ‘hey, it looks like you’ve rented a room,’” Wurtzbacher said.

Related story: Room occupancy tax: how tourism helps with more than just local business

Wurtzbacher said municipalities like Wilmington and the beach towns could opt into this complaint module, but the county has chosen not to.

“Our concern here is room occupancy tax – things like noise complaints, parking, trash, the city deals with those complaints,” Wurtzbacher said. “For the county, the primary concern is room occupancy tax.”

Right now, it’s not known how many short-term rentals are operating in New Hanover County. According to Wurtzbacher, the county spoke with several different vendors for programs similar to STR Helper; on average, these vendors suggested the county had about 2,000 rentals.

That’s more than are currently paying ROT, and Wurtzbacher said the county was curious to see how many STRs were “actually out there” when the system is up and running.

Wurtzbacher added that, while some people might see the compliance side of STR Helper as punitive, the goal is fairness and ease of use for those renting their properties, and streamlining things on the county’s side.

“Some people might think that there’s a punitive aspect to the compliance side, but that’s not really it – we’re just asking people to pay for what they’re using. If you have one property paying (ROT) and then another one not, that’s not a level playing field,” Wurtzbacher said. ‘We think most people will find this system much easier to use (than the current mail-in system). We want it to a win-win.”

The county plans to finalize its deal with STR Helper in April and roll out the program by July 1, the start of the county’s fiscal year.


Send comments and tips to Benjamin Schachtman at ben@localvoicemedia.com, @pcdben on Twitter, and (910) 538-2001.

Related Articles