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Council Fears Market, Bans Airbnb Proliferation


Levin has an Airbnb advertised as a Bunny’s Nest near UNCA and downtown. He lives with his family of four in a three-bedroom part of the house, and he wanted to rent two other rooms. One was a bedroom with a separate entrance that connected to the kitchen. The other had been separated from the rest of the house with a wall, separate metering, and a firewall so he could legally rent it as a duplex. Renovations for that cost about $1000.

But Levin’s experiences as a landlord had gone as well as those of others who shifted their sights to Airbnb’s. He said he had had tenants destroy the property. He would have to paint the walls after everybody moved out. He said the last renters left trash and filth waist-high, and he could tell “stories and stories” of other “nightmares.”

But to be compliant with the city’s ordinance for short-term rentals, his residence needed to have a minimum of 2500 sq. ft., so he broke down the wall he had installed and removed the stove. Then, he was told he was out of compliance because his home is only 4 ft from the property line instead of 6 ft. He was going to be charged $500/day until he stopped renting, negotiated a variance with the powers that be, or did something foolish to physically change the setback.

Speaking before council, Levin was good-natured about his predicament. Because citizens had been lobbying to table consideration of amending the ordinance, he asked what the chances were of waiving the $500/day charges. If he couldn’t comply, then he’d be on the hook for a $50 per-cancellation Airbnb fee, and he was “booked up through March.” He closed saying, “We’re trying hard to make it legal and be above water, but –“

After council’s decision Tuesday, it turned out he had wasted his money “blowing a hole” in the wall he had just built because the 2500 sq ft requirement was eliminated. What’s more, in light of the fact that about a third of properties in the city are grandfathered-in to the UDO, setback requirements for short-term rentals were waived as well. Now, he only had to sort out whether he needed one permit for each rental or a single permit, as he had gotten mixed signals from city staff on that.

So, when council was finally getting around to voting, Councilwoman Gwen Wisler thought the permitting process needed some kind of caveat. Gordon Smith had gotten council to agree to reviewing whatever would pass in four, eight, and twelve months; and Wisler didn’t want people buying new property or improving what they already had to be taken by surprise with the winds of change. “When someone’s spent $20,000 to be compliant with this, and then a year later we say, ‘Oh, we were only kidding,’” she argued, “we need to make it very clear to people that this might be changed.”

Public Comment –

Three citizens spoke against having Airbnb’s at all. They argued short-term rentals drove up housing costs by removing potential housing stock, and that the transient elements who rented short-term destroyed the fiber of neighborhoods. David Rogers, countering property rights arguments, asked, “What about my rights? All I want is to live adjacent to neighbors and not transient tourists.” Rogers intentionally purchased a small home on a lot surrounded by residential zoning. “Now, anyone and everyone with a credit card can have a front-row seat to watch my little girl and boy and their friends play in their back yards. This is not what I signed up for. It’s creepy! I guess the days of letting little kids run around naked are over, unless you want tourists watching them,” he lamented.

Lisa Shoemaker spoke of the sharing economy. Later in the meeting, Smith would refer to it as the “new economy,” since it wasn’t sharing, but commerce. Like many who would follow, Shoemaker contrasted the conventional tourist business where visitors stayed in sterile hotels for $200 a night and ate out for $50 a day; to what she was doing. She was opening her home to people who might need to travel for something like a yoga workshop or health treatments. The guests helped with her mortgage, and she freed up cash in visitors’ budgets so they could patronize local businesses. It was a means of connecting and forming friendships that was capable of self-regulation.

Kama Ward told of her friend Laura who was going to lose her house. Ward suggested she get a roommate. She found a single mother with two kids, but the arrangement sounded like it went disastrously. So, Ward suggested she try an Airbnb. Laura entered the short-term rental business late last year, and now she’s off food s tamps, has a nice yard, and is more confident about her relationships with her neighbors because she feels she’s adding to the community.

Rita Hayes was a musician who had invested in a house on the brink of condemnation in Montford thirty years ago, when the hood was riddled with “prostitution, crack houses, and constant break-ins.” She had always opened her home to friends and family, and it wasn’t the city’s place to tell her she couldn’t try to make some money off of it. Her permit to operate as a short-term rental was denied because a bed and breakfast was located within 500 feet of her home, albeit “on another street and a block and a half over.” By contrast, she said the city had, “no problem putting numerous hotels next to each other right down the street from my house.”

Patrick Lockett said he had just stayed in an Airbnb in New Orleans, and it was, “the nicest house on the block, and the best-kept house on the block.” He thought council was missing the point. “If the council thinks that having people in your private space is a capital venture to make a lot of money, that’s not true. It’s an invasion of privacy, and the only reason you would do it is to supplement your income.”

Many spoke about particulars of the ordinance that posed personal problems. Others complained that it was too vague, subjecting homeowners to the whims of inspectors. Some asked that the matter be tabled until the new council was seated. Charlie Soderquist described the ordinance as, “measuring it with a micrometer, marking it with a crayon, and cutting it with an axe.”

Tom Gallo explained why council’s fears of proliferation were unfounded. It had been argued at the August meeting that the ordinance was necessary because some outside investor might buy up ten homes and convert them to short-term rentals that would wreck a neighborhood with transiency. Gallo said an owner/operator could rent a house at an 80-percent profit, so why would he buy up a lot of houses, set up an LLC for each, and run those at a 20-percent profit. He said anybody interested in making money would invest in a Fidelity Contrafund, double their investment in five years, and not have to work nearly so hard.

Gallo further lodged council was chasing a problem that did not exist. He said he had searched publicly and privately to uncover complaints about short-term rentals. Short-term rental complaints, presumably, had averaged about one a month. Gallo said the Drum Circle generates way more conversations with police officers each Friday night. He asked if the complaints pertained to a nuisance like noise, parking, or trash. It turned out the majority were along the lines of operating without a permit.

Laurie Fisher got to bat cleanup. She said short-term rental operators were not the cause of the city’s problems, and they were not a problem in and of themselves. Hosts were “using their own real estate, their own passive income, their own resources, without adding another footprint or anything.” She asked council to, “Leave all the entanglement behind, worrying about people with their kitchens and their stoves, their 5 ft here or 2 ft there. Drop this whole homestay regulation. Let the market and the people and the good citizens of Asheville and the good guests who stay with us handle this on our own without interference. It feels very draconian for the city to come measure all these things.”

The Changes –

Cecil Bothwell was the only member of council who spoke as if Airbnb’s didn’t need regulation. He told how one had peacefully coexisted a couple years in his neighborhood unbeknownst to him. He asked repeatedly what the problem was. “How much do we want to regulate something that hasn’t been causing a problem?” he asked, and concluded the city was trying to make it easier for hosts, “to do what they didn’t have to permit before.”

He had several clever comebacks. For example, staff did not want a single home to serve as a home business and an Airbnb. To that, he quipped, “If somebody’s running an Ebay business and UPS shows up once a day, is that more interruptive than the neighbor who just buys a lot of stuff on Ebay and has UPS show up once a day?” As for proliferation, he argued, “If someone comes in and buys ten homes and makes ten four-bedrooms and puts a person for almost no rent in as a resident manager, you’ve just created ten affordable housing units.”

Smith was of a different mind. “Property rights vs. residential zoning. Individual needs vs. community needs. We are doing a balancing act up here, and it’s important that we strike a balance and that we not fall in either extreme. We are saying that we are going to permit tourist businesses in our neighborhoods. That’s happening tonight. That is not a small thing. That’s a very, very big thing. Let’s not pretend it’s not.”

He continued, “As people were talking, I was checking out these cities they were naming. Portland has called their housing in a state of emergency this last week. Their housing crisis is now in a state of emergency. Austin has a crisis. New Orleans just had an article out saying legal short-term rentals caused our housing crisis. This is in New Orleans. Katrina just happened eleven years ago. Bloomberg Business writes, ‘The Rise of Airbnb Fulltime Landlords.’ Slate just wrote, ‘How Airbnb Forces up Housing Prices.’ This is basic supply and demand economics, folks. If there’s less supply and there’s high demand, prices go up. This is not arguable,” said he.

Marc Hunt didn’t like the stories of moratoriums coming from other cities. He feared “creative investors” would work around the ordinance no matter what. “The economic opportunity of return on investment always prevails,” he rued. He said he would not support an ordinance that did not impose a 500-ft separation, a two-bedroom maximum, and a 100 nights per year rental maximum; so he cast the only dissenting vote in a batch that would follow.

Manheimer spoke against tabling the issue to get hosts like Levin out of their current predicament. She and Smith led the discussion to decide which changes would be accepted. Manheimer didn’t want homeowners to have to make site plans, so she nixed the requirement that Airbnb rentals constitute no more than 25 percent of a home’s square footage. Instead, she wanted to limit the number of rooms rented to three, but Smith talked that down to two. The minimum home size was lifted as well.

To try to contain proliferation, the city would allow only one Airbnb per parcel and one Airbnb per owner. The rentals would have to have a full-time tenant, whose residency was verified with two forms of ID. Council dissed staff’s recommendation to forbid Airbnb hosts from also operating a home business. No off-street parking would be required, and homeowners would not be denied applications for nonconforming properties grandfathered-in.

Jan Davis said the ordinance needed a clawback to address the “bad actors,” but was told that would have to be covered in a future review. Modifying the ordinance to allow the short-term rental of detached accessory dwelling units will also be covered at a later date.

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