After studying the growing short-term rental (STR) industry with a diverse study group for two years, we believe that a fair regulation can be written to apply to all short-term rentals in Chapel Hill which would allow owner operated STRs to function within a reasonable set of rules. Many college towns such as Berkeley, Boulder, Charlottesville, Madison, and Lawrence have developed straightforward standards that have prohibited or strictly limited investor-owned STRs.
Why do our ordinances need updating? Chapel Hill has a number of hotels that can accommodate visitors, and the growing number of STRs has cut into the hotel business, which affects Chapel Hill’s restaurant businesses as well. When visitors stay in STRs they have the option to cook. Hotels meet a number of safety requirements and pay full occupancy taxes that support the Orange County Visitors Center and also collect sales and property taxes that support general county and town functions, including our public schools. The unregulated growth of STRs also has affected affordable housing by encouraging owners to shift housing units from the long-term to short-term rental markets. It thereby decreasing the number of affordable long-term rentals. Also, concentrations of STRs in residential neighborhoods has raised serious quality-of-life issues.
- This rapidly growing business STR activity is occurring in a regulatory grey area in Chapel Hill. Current town ordinances don’t reflect the realities of this type of business activity. Unlike other business activities that involve the provision of lodging on a short-term basis (e.g., hotels), units rented via platforms like Airbnb currently don’t have to comply with any real health and safety regulations and are free to ignore zoning restrictions due to a lack of Town knowledge about where the STRs are and an unwillingness to enforce the few existing rules.
- Dedicated STRs may mean the owner is unavailable to address problems. The available data also suggest that, contrary to popular perception, many of the units rented on a short-term basis in Chapel Hill are owned by absentee owners/investors who essentially are running them as unlicensed, unregulated hotels. People who live in their homes and rent an extra room while present with a guest account for a minority of the market.
- There is no one to verify if individuals renting properties on a short-term basis are collecting and remitting all applicable local occupancy, sales, and business property taxes.
- Evidence from around the country shows that growth in short-term rentals can have negative impacts on local housing markets, as units that would be available to the normal rental market get converted to the more profitable short-term rental market. (It is more profitable due to the ability to avoid many of the costs that hotels and the like must follow, as noted above.)
- Additionally, the growth in short-term rentals, especially during COVID when people are hesitant to stay in hotels, causes neighborhood impacts on neighborhood character (e.g., littering, noise, parking) while also serving as a means of circumventing restrictions on overnight lodging.
What do we advocate? The STR Study Group strongly opposes the Council’s current direction to legalize all STRs in everywhere in town and has sent a letter to the Council explaining why. CHALT’s recommendation is that owner-hosted STRs need simple fair regulations as well.
We encourage neighbors to write mayorandcouncil@townofchapelhill.org if you are concerned about this issue.
Postscript: the Town Council approved a short term rental ordinance on June 16th, 2021.
How and Why Did CHALT Engage on This Issue?
- In 2018, the Chamber of Commerce formed a study group growing from some of the harmful consequences of the STR phenomenon and concluded there are downsides for our community if the trend continues without regulation. The Chamber first conducted talks with affected hoteliers, the Mayor, and experts at the UNC School of Government.
- This study group broadened its membership and invited CHALT to enter into conversations in the summer to 2019 about the impacts of short-term rentals on neighborhoods and housing affordability. Based on meeting discussions, we came to know people on all sides of this issue – hosts, affordable rental advocates, hoteliers concerned about unfair competition, and residents concerned about adverse neighborhood effects.
- We discovered that CHALT shared many common concerns about the consequences of short-term rentals with the Chamber and local hoteliers, the three groups prepared a petition to the Town Council asking that the Town Council study the problem and come up with solutions.
- The participants in the Study Group representing CHALT were John Quinterno, Julie McClintock and Linda Davis. We looked forward to working with the town to develop regulations through a representative and fair process where all interests would be represented.
The Council appointed Short Term Rental (STR) Task Force wrapped up their work in mid 2019 with a report to the Town Council. Among its responsibilities, the Task Force was charged to develop a set of final recommendations related to the future regulation of dedicated STRs, defined as housing units that have no permanent occupants and that are rented entirely via STR platforms.
The Task Force report contains useful recommendations that could be applied to an ordinance but did not address two fundamental questions:
- Should dedicated STRs be allowed to operate in Chapel Hill at all?
- If so, in which zoning districts should they be allowed?
CHALT conducted an evaluation of the Task Force here.