Monday, June 24, 2024

Wilmington City Council discusses all-out prohibition of short term rentals in residential districts

It's been the debate that never seems to end in Wilmington, short-term rentals have taken a considerable amount of time from staff, elected leaders, and residents.

The City of Wilmington's Planning Commission failed to reach an agreement on short-term rentals Monday night (Port City Daily photo/FILE)
The City of Wilmington is once again trying to find regulations to appease both sides of the short-term rental debate (Port City Daily photo/FILE)

WILMINGTON — The short-term rental debate in Wilmington shows no signs of stopping as City Council once again is discussing what to do when it comes to regulating private property.

The discussion surrounding short-term rentals has continued for years now and in June of last year the City Council finally made some progress and passed regulations for a portion of the industry.

Related: After three years, Wilmington approves partial short-term rental plan

But these regulations only outline the plans for homestays, that is, rentals where a single room or two is rented while the primary property owner resides on the premises.

Whole-house rentals, however, have caused more headaches for city leaders and employees.

Advocates have routinely pointed to the increase in Room Occupancy Tax, a boost to the tourist industry, and the rights of homeowners to earn revenue from their residents. Detractors have pointed to the potential for crime, on-street parking issues, and other disruptions of neighborhoods – largely in Wilmington’s historic downtown district, according to the previous reporting from Port City Daily.

On Monday, during the City Council’s agenda briefing, City Staff gave a presentation with several options for moving forward with whole-house rentals.

The options

City of Wilmington Senior Planner Christine Hughes offered said that of all the options, the easiest one to implement would be an outright ban on whole-house rentals in residential districts.

But if City Council wanted to go a different route there were several options to limit the number of rentals and where they could be located.

“The first option is a simple ban on whole-house lodging in residential districts. The other options, described below, allow whole-house lodging in residential districts with a “cap and/or spread” technique – limiting the total number of registrations coupled with a separation requirement to prevent clustering of lodging establishments in any given area. Staff also presents options on using only a cap or only a separation requirement,” according to city notes.

Currently, the city estimates there are approximately 700 short-term rentals are operating within municipal limits and acknowledges the need and desire for these rentals.

“To accommodate the expected need, the cap is based on the current estimate of roughly 700 existing short-term lodging units within the city, which suggests that the current demand on the market. Seven hundred is roughly 2-percent of the current total number of residentially-zoned parcels in the city limits; therefore, all of the cap scenarios utilize a 2-percent cap. Staff notes this does not account for dwelling units within commercial zoning districts. Four options are considered under these various approaches,” according to documents from the city.

Editors noted: Below is the exact language used by the city in the different proposed options for limiting rentals. It has only been edited for formatting purposes. 

Citywide cap of 2%, no districts, no spread (separation) requirement

This method would simply allow for 2% of the total number of residentially-zoned and used units in the city to register as whole-house short-term lodging uses. The advantage of this method is in its simplicity. Each unit is given equal priority, regardless of unit type, zoning district, or parcel size without regard to their distribution across the city. Citizens would be able to view an online map to locate existing uses and always know how many additional registrations are available.

The disadvantage to this method is the potential for STLs to cluster together. While the overall cap would limit the total number of STLs across the city, it would not prevent two from locating on the same block.

Spread (separation) requirement, no cap

This method would limit the density of STLs across the city by requiring a minimum separation requirement between uses. This is also a relatively simple method, with only one factor at play. This is the option that has been outlined in the draft ordinance considered by the planning commission (400 feet separation within the 1945 Corporate Limits, 650 feet outside the 1945 Corporate Limits).

The attached draft language shows an alternate version of this method, with a 250-foot separation requirement within the 1945 Corporate Limits and a 400-foot separation outside the 1945 Corporate Limits.

While there is no specified cap on the total number of registrations with this method, the spacing requirement would, ultimately, limit the total number of registrations for residentially-zoned whole-house lodging; however, the total number of uses could to be more than 2% of all the residentially-zoned and used parcels based on a 250-foot and 400-foot separation requirement. 

Cap and spread – cap of 2% of all parcels within the R, H, and MF districts, with a separation requirement across the city

This option employs two techniques to limit the number and density of STLs across the city. A citywide application of the 2% cap, coupled with a separation requirement, means that both factorsneed to be considered to determine where and if a registration is allowed.

Cap and spread – cap of 2% of all parcels within the R, H, and MF districts, with a separation requirement by defined districts:

  1. Inside/outside the 1945 Corporate Limits
  2. By census tract
  3. By zoning district

1945 Corporate Limits

The 1945 Corporate Limits is generally the part of the city between Burnt Mill Creek and the river, and from Smith Creek to Greenfield Lake. The development pattern of the city changes significantly from inside the 1945 Corporate Limits to outside, most notably in terms of density and street patterns.

The 1945 Corporate Limits boundary is used within the Land Development to differentiate development and building requirements in many circumstances.

Using the 1945 Corporate Limits as a delineator has the following advantages:

  • This is a common delineator frequently used in the LDC.
  • The cap would be allocated by density (a greater number of registrations would be accepted inside, where is there is a greater density of homes and people, than outside, where there is a lesser density of homes and people).
  • The 1945 Corporate Limits is a fixed boundary, not subject to change.

There are approximately 6,181 residentially-zoned parcels within the 1945 Corporate Limits and

29,331 residentially-zoned parcels outside the 1945 Corporate Limits. In the scenarios proposed in the attached draft ordinance language, the separation requirement inside the 1945 Corporate Limits is proposed to be 250 feet, as this is where the R-3, R-5, and H districts are concentrated.

Outside the 1945 Corporate Limits, the proposed separation requirement is 400 feet, as this is where the R-15 and R-20 districts are concentrated.

In the attached draft language, the 1945 Corporate Limits methodology employs a cap based on the percentage of the total number of dwelling units within the city, rather than limiting the cap to a percentage of residentially-zoned dwelling units, thereby capturing all of the dwelling units within the city in calculating the cap, rather than only those zoned residential

Census Tracts

Census Tracts are small, relatively permanent statistical subdivisions of a county or equivalent entity that are updated by local participants prior to each decennial census. The primary purpose of census tracts is to provide a stable set of geographic units for the presentation of statistical data.

Census tracts generally have a population size between 1,200 and 8,000 people, with an optimum size of 4,000 people. A census tract usually covers a contiguous area; however, the spatial size of census tracts varies widely depending on the density of settlement. Census tract boundaries are delineated with the intention of being maintained over a long time so that statistical comparisons can be made from census to census. Census tracts occasionally are split due to population growth or merged as a result of substantial population decline.

The advantages of using census tracts as the basis for the “cap and spread” zones are as follows:

  • Long-term stability of the tract – even if tracts are split or merged, there is at least 10 years between any changes
  • Proportional distribution of whole-house lodging establishments by population density. Because the tracts are based on population size, each tract will have roughly equivalent population sizes; therefore, the areas of the city with the densest populations will have a higher share of whole-house lodging establishments than areas with less dense populations.

The disadvantages of using census tracts as the basis for the “cap and spread” zones are:

  • While the city contributes to the drawing of the boundaries, the census has the final say in determining the boundary lines.
  • A significant change in population may yield a change in the boundaries of one or more census tracts.
  • Census tracts will contain multiple development patterns and zoning classifications.
  • Some tracts exceed the city limits and extend into the unincorporated portions of the county.

There are 33 census tracts fully or partially within the city limits. In the attached draft language, the Census tract methodology employs a cap on the total number of dwelling units within a census tract, rather than limiting the cap to a percentage of residentially-zoned dwelling units, thereby capturing all of the dwelling units within the city as part of the residential zoning cap calculation, rather than only those zoned residential.

Zoning Districts

There are 13 residential zoning districts in the city within which whole-house lodging is being considered. Zoning Districts regulate height and size of buildings, the intensity of land usage, open space, the location of land uses, and other environmental factors. Each month, the city’s zoning map changes if parcels are rezoned from one district to another. In FY 17-18, 33 rezoning requests were processed, up from 25 in FY 16-17 and 24 in FY 15-16. This consistent change of the zoning maps will make using zoning districts as the basis for separation requirements challenging, potentially creating a number of non-conforming, grandfathered uses. It will also create challenges with ongoing registration.

The primary advantage of using zoning districts as the basis for the “cap and spread” zones is that separation requirements can readily be tied to the minimum lot areas required in each district.

The disadvantages of using zoning districts as the basis for the “cap and spread” zones are:

  • The zoning map can change every month, making it difficult to keep up with what the base number of units is for the cap by district
  • As the zoning district boundaries change, some properly registered STLs could become nonconforming, adding to the enforcement challenge.
  • There are discontinuous pockets of various zoning districts apart from larger areas of that district. This could lead to disparate allocation of registrations.

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