Kure Beach Planning Board Tables New Vacation Rental Ordinance

Kure Beach Planning Board Tables New Vacation Rental Ordinance Featured

By / Local News / Wednesday, 11 March 2015 04:00

By WILLARD KILLOUGH III
Managing Editor

KURE BEACH - The Kure Beach Planning and Zoning Commission delayed taking action on a proposed vacation rental ordinance during their Wednesday March 4th meeting. The commission held a special hearing prior to the meeting where many in the property management and vacation rental business spoke out against the ordinance.
Planning and Zoning Commission Chairman Craig Galbraith spoke to the Town Council at their June 20th, meeting regarding managing the impacts of privately owned rental properties through a certification process. The council indicated they would like the Planning Commission to continue to look into the details of having a rental home certification requirement.
Galbraith spoke to the Council about the a rental certification process at their April 15th, meeting where he explained the item was brought up in discussions regarding parking at rental homes. He explained, "We had a general discussion about what sort of things could be done to assist to try and manage the problem where you have a house that might be rented on a weekly basis. You end up with eight or ten cars parked out front. That migrated into a discussion of safety issues."
Galbraith said he owns rental properties in several cities in different states including Indiana and in Kure Beach. He explained in an area of Indiana the City has a rental home certificate. He said, "This is a certificate where the building inspector goes in, they actually inspect for rental properties. They inspect it to make sure it satisfies safety requirements. You have to pay a fee for it. It's a $500 fee actually in West Lafayette, Indiana. It's pretty stiff. I've written a few checks."
During the Council's June 20th meeting Galbraith said the Council directed him to study if there are existing ordinances in other localities and, "It turns out that this is a very common thing" and, "Probably every single beach community on the west coast has a short-term rental certificate process."
He said there are fewer in North and South Carolina, but ordinances vary in their complexity and all serve to address similar issues.
Galbraith said parking is a major concern where large groups of 20 or 30 people show up at a beach house rented for a week and there's no adequate parking which leads to negative impacts on neighboring properties as well as safety concerns.
Galbraith cited a collapse of a deck in nearby Oak Island. He said, "Obviously the inspection process where some body from the city goes in and makes sure they have everything in place. Obviously when a house is originally built there are certain requirements but these sort of certificates require a once a year inspection by the building inspector to make sure they have fire extinguishers, that type of thing."
Galbraith said many local governments have a limitation and don't try to stop people from renting properties but, "What they are concerned about is when you get 20 or 30 people in a single house."
He said it's typical for four families to rent a four or five bedroom house and that some cities have limited the number of persons per bedroom and "posting of proper behavior" covering when the trash is picked up, noise ordinances and other rules.
Galbraith said another concern is the collection of Room Occupancy Taxes. He said, "Almost every city does have some sort of room tax process. Generally if the property is under contract with a rental agency that will get paid with the process but there are a lot of properties that are not under contract that are individually rented out and they probably don't pay some sort of room tax."
In New Hanover County short term vacation accommodations must charge a Room Occupancy Tax that is used to fund beach nourishment, tourism promotion and tourism related events that help to draw more people to the area.
Galbraith provided numerous examples showing how certificate programs are operated in other areas of the country.
He asked the Council if they wanted the Planning Commission to further investigate the issue. He said inspection fees typically range from $50 to $150 to cover the cost of the inspection.
He said the number of short-term rentals is not known, but in other communities they used surveying methods to arrive at a figure.
Mayor Pro Tem Craig Bloszinsky said he sees the merit in researching the issue in more detail adding that, "I would like to keep Town staff involvement to a minimum. By that I mean, if we put the requirement out there for people to get a certificate I would almost like to see something that says to you as a homeowner getting a thousand a week on the beach front, that you provide to us a certification of occupancy. You provide to us a certification from somebody that your fire extinguishers work, and then you bring it in, you pay the $100 and you get a certificate that says great we are happy with you. As opposed to our single inspector" that already has duties having to add more to their daily workload.
Bloszinsky said he wouldn't want the inspector rushing through the inspections and generating a liability for the Town if a deck collapses or some other incident occurs.
Galbraith said enforcement would be complaint driven because no one would expect a Town official to go door to door on a regular basis.
A portion of the ordinance states, "Any person intending to engage in a vacation rental shall, prior to engaging in any such rentals, file an application and obtain a permit from the Town Clerk".
The section concerning "Permit Conditions" states:
All permits issued under this chapter are expressly subject to the following conditions:
(a) Vacation home owners and their agents shall expressly provide in their rental agreements that the maximum number of overnight occupants in a vacation home shall be limited to the maximum number of overnight occupants set forth in the permit, said number not to exceed two (2) adult persons per bedroom plus four (4) additional adult persons per residence; provided that, however, a studio rental shall be limited to a maximum of four (4) adults. For purposes of this section, minors under eighteen (18) years of age shall not be counted as adults.
(b) Vacation home owners and their agents shall expressly provide in their rental agreements that a vacation home shall not be used by tenants to engage in commercial activities including, without limitation, weddings, receptions, and large parties.
(c) Vacation home owners and their agents shall expressly provide in their rental agreements that tenants shall not violate federal, state, or local laws, ordinances, rules, or regulations; engage in disorderly or illegal conduct; engage in activities or conduct creating or resulting in unreasonable noise, disturbances, and public nuisances; allow an unreasonable amount of garbage, refuse, and rubbish to accumulate on the property; illegally park vehicles in conjunction with their use of the vacation home; and overcrowd the vacation home premises.
(d) Vacation home owners and their agents shall expressly provide in the rental agreements that a material breach of the express provisions required under sub-sections (a)-(c) above shall result in a termination of the rental agreement.
(e) Vacation homeowners and their agents shall take reasonable steps to ensure the tenants’ compliance with the express provisions required under subsections (a)-(c) above. As used herein, the term “reasonable steps” shall be construed to include, without limitation, the following: 1) posting a copy of the vacation home rental permit and these permit conditions in a conspicuous place within the vacation home; 2) promptly contacting tenants when notified of violations of the permit conditions and requesting the tenants to cease and desist from such violations; 3) contacting law enforcement when a reasonable person would deem the assistance of law enforcement to be necessary under conditions then prevailing on the premises; and 4) when applicable and reasonable, commencing expedited eviction procedures against the tenants as provided for in Article 4 of Chapter 42A, Vacation Rental Act, of the North Carolina General Statutes.
During the March 4th, hearing representatives of local property management companies filled the meeting room to standing-room-only.
Ea Ruth, an owner at Palm Air Realty in Kure Beach and also Local Political Coordinator for the Wilmington Regional Association of Realtors, said she was there representing 128 members located in Carolina Beach and Kure Beach and was there to speak in opposition to the ordinance.
She provided the commission with a copy of an analysis of the proposed ordinance by prepared by the Association.
The analysis questioned, "The Town's authority to impose a permit requirement upon vacation rental owners in light of Section 160A-424(c) of the North Carolina General Statutes, which appears to prohibit North Carolina cities and towns from requiring rental property owners to obtain a permit or permission except under limited circumstances. It then argues that the Town has not provided a compelling factual justification for the Vacation Rental Ordinance."
North Carolina General Statute 160A-424(c) states, "In no event may a city 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 from the city to lease or rent residential real property, except for those properties that have more than three verified violations in a 12-month period or upon the property being identified within the top 10% of properties with crime or disorder problems as set forth in a local ordinance; (ii) require that an owner or manager of residential rental property enroll or participate in any governmental program as a condition of obtaining a certificate of occupancy; or (iii) except as provided in subsection (d) of this section, levy a special fee or tax on residential rental property that is not also levied against other commercial and residential properties."
The analysis states, "It also argues that to the extent the Town is concerned with preventing excessive noise and disorderly conduct, and addressing trash and parking issues in residential neighborhoods, it should first attempt to address those problems through enhanced code enforcement efforts rather than by means of the Vacation Rental Ordinance."
Another concerned spelled out in the analysis is that a section of the ordinance requires owners to consent and authorize code and law enforcement officers "to enter upon and investigate vacation rental properties" and says that is unreasonable and might raise concerns under the Fourth Amendment of the U.S. Constitution covering unreasonable searches and seizures.
The analysis states, "The Vacation Rental Ordinance could negatively impact tourism in Kure Beach, which could potentially affect the local economy and the real estate market. Several provisions of the Vacation Rental Ordinance are vague, which is likely to make property owners uncertain of what is required, and make it difficult for the Town to provide guidance and apply the provisions consistently."
The analysis states, "It is unclear what effect the revocation of a vacation rental permit... would have on renters. The analysis also argues that the Vacation Rental Ordinance should be revised to include provision that establishes a process whereby a vacation rental owner whose permit has been revoked can apply for reinstatement. In addition, Section 11 should be revised to provide a reasonable period of time for a vacation rental owner to file an appeal of a permit revocation. If the appeal period is less than one week, then Section 11 should explicitly state that the appeal period does not include weekends and holidays."
Following the hour-long public hearing, Galbraith asked Planning Commission attorney James Eldridge to talk about what was discussed during a closed session held following the hearing.
Eldridge said, "160A-424. That's an inspections program related statute, doesn't have anything to do with vacation home rentals but there's broad language in there that prohibited the application of, the levy of a tax, which the application fee could be construed as, as well as the requirement of a permit unless certain violations in the context of building inspections, unless there was a history of those things, that's too detailed to go into those requirements. It's sufficient to say that if you had a history of inspection violations you could under certain circumstances require a permit and require a fee."
Eldridge explained 160A-424  prohibitions were enacted in 2011 and, "Vice Chairman Joseph Whitely provided a session law from 2014 that had very board language in there that was very affirming for our purposes in that it specifically allowed zoning ordinances for vacation home rentals because of the same problems that the draft ordinance articulates as findings and specifically allowed for permitting."
He said, "The wrinkle to that 2014 session law is at the bottom. It ended up being a local bill that was specific to Cornelius, NC, only. Presented with those issues I researched the matter and there was nothing definitive."
Eldridge said he spoke with a professor with the UNC School of Government who wrote a bulletin on the topic of 160A-424, and while it did not cover the session law that was specifically for Cornelius, NC,
"I was able to confer with him on the phone and we both agreed that you could not rule out judicial application of 424's prohibitions in a lawsuit invalidating the permit requirement if the Town went forward with the same. However, he felt very strongly, and I agreed, when you are interpreting a statute, sometimes you have to read that statute in conjunction with another statute and he felt that even though it was a local act, that the 2014 enactment clearly revealed the intent of the General Assembly to allow permitting vacation home rentals and he felt that was a strong argument in case we ever ended up in court defending a permit requirement that the Town may have put into the ordinance."
Eldridge said, "With that background in place and based on the comments from the public, the options on how to proceed are as follows. Keep the draft as it is which requires a permit and an application fee. Keep the draft as it is and drop the application fee because there was nothing in the Cornelius act that talked about fees and our understanding of the fee all along was that it was minimal simply to cover the overhead of the Town in reviewing the application. If it's minimal and there isn't a black and white way to distinguish it, what do we lose by deleting it? It's good risk management, take the application fee out. The third option is, delete the permit requirement for the same risk management reasons. Delete the fee requirement and go with a registration program."
He explained, "The issue there is, can you take a registration program and treat it, as the rest of the proposed ordinance does, as an ordinance setting forth rules and regulations and providing penalties for violating the same."
The commission heard further legal opinion from Eldridge and after discussion decided to allow more time for research and consideration of options among the commission members. The Town could ask their state representative to introduced a local bill giving the Town permission similar to Cornelius, NC.
The commission will revisit the issue at their April meeting before making a recommendation to the Town Council.

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