Wednesday, July 24, 2024

Three-year court battle against Wilmington over rental property ends, courts overturn city ruling

The owner of 415 S. Front Street recently won a court battle with the City of Wilmington allowing him to rent his property for short-term rentals (Port City Daily/Mark Darrough)
The owner of 415 S. Front Street recently won a court battle with the City of Wilmington allowing him to rent his property for short-term rentals. (Port City Daily/Mark Darrough)

In 2016 a property owner was told he could not rent his property for less than 30 days; in May, courts said the City of Wilmington was wrong in its ruling and reversed the decision.

WILMINGTON — Who says you can’t fight City Hall? One Wilmington resident has been doing just that for several years and was recently vindicated by the courts after appealing the decision of the City of Wilmington’s Board of Adjustment.

The issue of property rights and the ability to rent homes on a short-term basis has been an ongoing debate within the city but far before elected leaders agreed on a new short-term rental ordinance, David Billitto was fighting for his right to rent out his properties on Front Street.

In 2016 the City of Wilmington decided that several properties located at 415 S. Front Street could only be rented for 30 days or more — Billitto was not happy with this decision and filed an appeal. This kicked off a legal process that would take three years to reach a conclusion.

According to meeting minutes from the Board of Adjustment, Billitto got his first Wilmington property in 2003 and went the traditional route of long-term rentals — much to his dismay the property was “destroyed” by renters.

“Mr. Billitto spoke about their first property that was on Front Street that in 2003 they rented to a couple for a year long term rental unfurnished before Air B&B. He said these renters destroyed the home and they had little recourse so we tried something different renting out their home in a furnished manner and it worked,” according to the minutes.

The notice

According to city documents, “On May 16, 2016, the City Clerk accepted an application from David Billitto for an appeal of a letter of determination by the Zoning Administrator that dwelling units within multiple-family structures must be rented for a period of not less than one (1) month.”

The property consists of 10,890-square-feet and is zoned HD-R, or historic district residential. The multi-family structure was constructed around 1903 and was previously located within the Historic District Zone (HD-R), as determined by the 1972 City Council.

The zoning ordinance at that time allowed the use of multi-family dwellings in historic districts by right. After 1989 though, a special use permit would be required to construct multi-family housing in the HD-R, so the property was grandfathered in.

But according to the city’s Land Development Code, “Section 18-812 allows single-family, duplex, triplex and quadraplex housing units to be rented for periods of one week or more. Multi-family housing, defined as a structure containing five or more housing units, requires a minimum rental period of at least one month.”

Since the property in question consisted of five units, on April 18, 2016, the Zoning Administrator issued a zoning letter to Billitto saying that the units could be rented for one month or more.

Billitto filed his appeal which was continued multiple times — during which time Billitto actually applied for and obtained approval to operate a bed and breakfast for a maximum of three rooms at the property.

In January of 2017, the Board of Adjustment upheld the zoning administrator’s decision that these units could only be rented for periods of 30 days or more.

From short-term rentals to a B&B, resistance all around

The City of Wilmington's Planning Commission failed to reach an agreement on short-term rentals Monday night (Port City Daily photo/FILE)
Short term rentals have been a hot topic in Wilmington for several years.  (Port City Daily photo/FILE)

In anticipation of an unfavorable outcome, Billitto applied for a permit to operate a bed and breakfast (B&B) for three of the units at the location and was approved for it; it was not what he wanted, but in order to protect his investment in the property it was necessary.

City code at the time allowed for the use of three rooms or less to operate as a B&B and permitted one per block.

But not everyone was excited about Billitto getting permission to operate as a B&B.

The C.W. Worth House Bed and Breakfast owners Margi and Doug Erickson filed an appeal to the Board of Adjustment opposing the issuance of the permit to Billitto for a bed and breakfast — Billitto claimed they had no standing in the matter.

Shortly after losing his appeal with the BOA in February of 2017, the Erickson’s filed their appeal over the granting of the B&B permit but it would take until October of that year for the city to reach a conclusion.

City ordinance requires one city block separation for B&Bs but according to meeting minutes, a nonconforming use B&B was located at 410 South Front Street.

But in August of 2016, the owners of the property were sent a letter explaining they were nonconforming and if they did not operate as a B&B for 6 months, they would no longer be permitted to operate at all.


City of Wilmington’s short-term rental ordinance will put at least 20 units out of business

“Owners of such properties were given 180 days to signify that their nonconforming bed and breakfast use was currently operating or intended to operate within that time period. and Mrs. Bragg did not appeal that determination to the Board of Adjustment or submit evidence of operation within that 180-day timeframe. Without a functioning bed and breakfast at 410 South Front Street, the bed and breakfast at 415 South Front Street meets the separation requirements set forth in LDC Section 18-279,” according to BOA documents.

In an effort to prove the applicants did have standing in the matter Attorney Sylvia Kochler spoke at the BOA hearing on behalf of her clients. She claimed the fact that Billitto’s B&B had separate cooking facilities gave him an unfair advantage in gaining clients.

“Attorney Kochler testified that the ability for Mr. Billitto to advertise his property with separate cooking facilities gives him an unfair marketing advantage over other bed and breakfasts. She continued that the Erickson’s and Mr. Billitto are marketing to the same clientele, evidenced by their use of the same websites for advertising. Speaking to the question of proximity, Attorney Kochler testified that, due to separation requirements between bed and breakfast uses, the Erickson’s bed and breakfast is as close to Mr. Billitto’s bed and breakfast as City Code will allow,” according to minutes.

Ultimately the board decided the Erickson’s did not have the standing to appeal the permit’s issuance to Billitto.

Superior Court

After losing his initial appeal to the BOA regarding the length of time he could rent his homes Billitto petitioned the courts for a writ of certiorari essentially asking a judge to review the decision of the BOA.

This was in March of 2017 — a decision was finally reached in May of this year.

According to the Superior Court’s ruling, the BOA did err when interpreting the Land Development Code.

“Section 18-812’s purported regulation of residential rental use regulates occupancy and not property usage and is beyond the zoning power delegated to Respondent by the North Carolina General Assembly,” according to the order issued by Judge Paul Quinn in New Hanover County Superior Court.

The judgment ordered the reversal of the BOA’s decision and remanded the issue back to the board for the “entry of an order with appropriate findings of fact and conclusions of law …”

It further concluded, “Section 12-812 of the LDC did not regulate residential rental use and Petitioner’s residential rental use of the Property is grandfathered, legal use.”

The settlement agreement

The agreement between Billittto and the City of Wilmington (Port City Daily/Courtesy City of Wilmington)
The agreement between Billittto and the City of Wilmington (Port City Daily/Courtesy City of Wilmington)

At the beginning of the month the two parties, Billitto and the City of Wilmington entered into a settlement agreement.

The agreement lays out the terms for Billitto allowing him to rent all of the parcels on his property.

According to the agreement, Billitto can operate his property as a short-term rental provided he registers it with the city and pays a registration fee.

This order, however, once again seems to oppose state law that prohibits the registration and payment of fees to rent a property.

Related: City of Wilmington’s short-term rental ordinance appears to contradict state law

The agreement goes on to state that as long as the property is being operated as a rental Billitto will carry insurance as well as comply with all state, federal, and local laws.

If Billitto fails to operate the property as a rental for a period of 180 days or more it will no longer be grandfathered in.

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