Sunday, February 25, 2024

Why Wilmington believes state law forbidding short term rental registration does not apply

The City of Wilmington's short term rental laws seem to contradict state law, but according to a local a representative (and a blog post from UNC), for now, they seem to be permitted (Port City Daily/Michael Praats)
The City of Wilmington’s short term rental laws seem to contradict state law, but according to a local a representative (and a blog post from UNC), for now, they seem to be permitted. (Port City Daily/Michael Praats)

WILMINGTON — The discussion on short term rentals (STRs) has been one fraught with drama, not only in Wilmington but across the state as well. So, when state lawmakers passed Senate Bill 483 this summer, it appeared to offer some clarifications on what cities could (and could not) do regarding these rentals.

But as homeowners in Wilmington have already seen, nothing surrounding short term rentals is clear — and, at least for now, local leaders believe the laws written in the bill are not applicable to current rental regulations.

At the crux of the discussion is another state statute, State Statute Chapter 160A-424.

This piece of law states, “[In no event may a city] Levy a special fee or tax on residential rental property that is not also levied against other commercial and residential properties, unless expressly authorized by general law or applicable only to an individual rental unit or property described in subdivision (i) of this subsection and the fee does not exceed five hundred dollars ($500.00) in any 12-month period in which the unit or property is found to have verified violations …”

But according to Wilmington, along with a blog post from the UNC School of Government (SOG), these laws do not apply to zoning and land use regulations and therefore do not restrict what municipalities can or cannot do.

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

This means that Wilmington’s somewhat new short term rental regulations that were passed earlier this year are still valid — at least, they are in the city’s eyes.

The apparent conflict with the law comes from the fact it is found in state statute that sets guidelines for periodic inspections for hazards and unlawful conditions in buildings while Wilmington’s regulations fall under its zoning ordinances.

Inspections vs. land use

When asked about the apparent conflict between Wilmington’s short term rental requirements Wilmington Spokeswoman Malissa Talbert said, “The city’s position is that this law deals with building inspections whereas the city’s new ordinance deals with zoning.”

When pressed for further explanation Talbert responded with a PDF and the sentence, “The Attorney’s Office asked me to forward this to you.”

The PDF (which can be viewed at the bottom of this article) contained a blog post from the UNC SOG.

Rebecca Badgett, author of the blog wrote, “Because STRs are clearly subject to the Vacation Rental Act, we now know that STRs are also subject to the periodic inspection statutes. This change limits the ability of local governments to regulate STRs using their housing code enforcement authority. However, absent additional legislation on this issue, we believe that local governments retain their ability to regulate STRs using their zoning authority.”

But these periodic inspection statutes are, at least according to Badgett, aimed at housing code regulations — not land use.

“The limitations outlined above may appear to invalidate local government authority to regulate STRs. After all, the statutes prohibit periodic inspections without reasonable cause and make it unlawful to adopt an ordinance that requires STR owners or operators to register a property or obtain a permit. However, the periodic inspection statutes are aimed only at housing code regulation and enforcement, not land use law enforcement. This is evidenced by the fact that the provisions of the periodic inspection statutes have been recodified to the article on Minimum Housing Code authority in the upcoming re-organization and recodification of the planning and development regulation statutes (see G.S. Article 12 at 160D-12-7). This means that the periodic inspection statutes apply to residential rental properties in the context of housing code enforcement,” she wrote.

There are, of course, those who disagree with this opinion and the City of Wilmington has already faced several appeals due to its current restrictions, however, it will ultimately need to be decided upon by a judge. Only then will there be an official ruling on whether the laws do apply to the city’s STR laws.

“Until the law holds otherwise, we believe that local governments may use zoning to regulate short-term rentals. Thus, local governments may adopt reasonable development standards for this land use, just as they do for other types of lodging establishments,” Badgett concluded.

Local legislator Representative Deb Butler also weighed in on the question as to whether or not the city’s regulations were in conflict with state law — ultimately, she believed they were not but could not recall the explanation.

“I seem to recall asking legislative staff this question some months ago. I can’t recall precisely why, but it was their opinion that these provisions were not applicable. The issue is a complex one for sure, but I do believe that localities need to address their communities particular needs with ordinances as directed by local elected officials. What might be appropriate in one community probably wouldn’t be in another. Technology and new income models have made for new challenges in this arena and many municipalities are struggling with how to approach the issue,” Butler said.

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