Monday, June 17, 2024

Wilmington will appeal ruling that struck down its short-term rental ordinance

In September, a local judge struck down Wilmington's short-term rental ordinance, which banned whole-house rentals in the Historic District and required property owners to register rentals ahead of time prior to obtaining approval. (Port City Daily photo/File)
In September, a local judge struck down Wilmington’s short-term rental ordinance, which banned whole-house rentals in the Historic District and required property owners to register rentals ahead of time prior to obtaining approval. (Port City Daily photo/File)

WILMINGTON — The City of Wilmington filed a notice of appeal Tuesday, seeking to reverse a lower court’s order that struck down a portion of its short-term rental ordinance as “void and unenforceable.”

The city was granted a stay days after the mid-September order was issued, which effectively paused the effects of the ruling.

Related: City of Wilmington granted ‘stay’ on short-term rental ruling, appeal may be next

Judge Kent Harrell took specific issue with the city’s requirement that property owners must register their property before renting it.

In his ruling, Harrell wrote that state law is “clear and unambiguous” in prohibiting such a requirement.

According to S.L. 2019-111: “In no event may a local government do any of the following: (i) adopt or enforce any ordinance that would require any owner or manager of rental property to obtain any permit or permission under Article 11 or Article 12 of this Chapter from the local government to lease or rent residential real property or to register rental property with the local government…”

David and Peggy Schroeder filed a lawsuit against the city after their appeal was denied to obtain a short-term rental permit to the Board of Adjustment — the only body that can overturn council decisions. The city capped the number of short-term rentals that could be rented in a residential area, leaving neighbors to compete for the right to rent their homes through a lottery system.

In 2018, the couple purchased a home when short-term rentals were still unregulated. They spent $75,000 renovating the home for the purpose of renting it out but were denied a short-term rental permit.

At the time, the city’s position as to why the law didn’t apply was that it dealt with building inspections, whereas its ordinance requiring rental property registration involved zoning.

First reported by Port City Daily, the Schroder’s situation caught the attention of the national libertarian law firm, Institute for Justice, which picked up the couple’s case.

Harrell’s September order focused on the registration component of the city’s ordinance but also unilaterally struck down the entire ordinance as void. This includes the city’s prohibition of whole-house short-term rentals in the historic district.

In a statement Tuesday, the city explained that regulating short-term rentals is of utmost importance.

“The city maintains that regulating short-term lodging in residential areas is essential to protect the safety and integrity of residential neighborhoods and remains committed to fairly administering appropriate regulations in full compliance with the law as interpreted by the court,” according to the city’s statement. “The city believes there is strong legal basis for its position and looks forward to the appellate court’s review of the matter.”


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