New Mayor of Raleigh Trying to Shut Down Airbnb

By Brent Woodcox

As the new mayor of Raleigh, Russ Stephenson, tries to solidify his power over anything and everything under his rule, it looks like his eyes have found a new target: Airbnb hosts.

The saga over Airbnb and short term rentals in Raleigh has been a long one with multiple stalemates, a council-appointed task force, a failure to adopt a consensus plan put forward by those citizens, and now, it appears, a Russ Stephenson-led coup on city policy.

At the Hillsborough CAC meeting held on February 15, a special guest was in attendance. Ted Shear, most prominently known as the NIMBY who fought the modern Oakwood house years ago. He and Bob Mulder, both members of the city's Short Term Rental Task Force, have a new proposal for Airbnb in Raleigh. (Nevermind that proposal was already roundly rejected by the citizens who made up that task force.)

Do Ted Shear and Bob Mulder even live in the Hillsborough CAC? Public records indicate that Mr. Shear lives in West Raleigh and Mr. Mulder lives in Brentwood. So who appointed them to lead a committee of the Hillsborough CAC? Was it Russ Stephenson? Was it Kay Crowder? It's worth noting that Councilor Stephenson appointed Mulder to the city's previous Short Term Rental Task Force and Councilor Crowder appointed Shear to that group.

Below, in segments, is Hillsborough CAC chair Bob Geary's report from the meeting on the subject of Airbnb. I have split it into segments because I feel the need to fact check this report as it is littered with so many outright falsehoods and misrepresentations. For a former journalist, you would think that Mr. Geary would be a little more careful with the facts.

The Airbnb discussion was energetic and wide open. To refresh recollections, Raleigh’s zoning code prohibits using your house for short-term rentals, but the Raleigh Council several years ago directed city staff not to enforce the ban. Our guest, Ted Shear, pointed out that any insurance coverage you think you have under a homeowners policy for Airbnb guests isn’t valid, since the thing being insured isn’t legal.

This is the first falsehood contained in the report. There a number of insurance products available for short term rental hosts to cover their homes and their guests. This is a frequent scare tactic used by NIMBYs and the hotel industry in their misinformation campaigns against Airbnb. It was even told by Mr. Shear to the Short Term Rental Task Force but he was shut down by others in the room who actually had knowledge of the subject and those of us who can use Google.

Four years ago, a proposal to allow some short-term rentals came to a vote at Council. But it resulted in a 4-4 deadlock and, thus, failed. One side wanted tighter restrictions than were contained in the proposal. The other side wanted a much more wide-open policy.

Thereafter, a 15-member Task Force was appointed by Council to try to reach a compromise. It, too, split.

It is (embarassingly) true that the Raleigh City Council has been studying the issue of Airbnb for four years and has been utterly impotent in its attempts to come to a reasonable compromise on these issues. It is also true that the council had previously deadlocked on two previous proposals.

What is blatantly false was that the Short Term Rental Task Force "split." It was not split. The task force was made up of 16 citizens who were appointed by city council. Each city council member was able to make two appointments to the task force and it represented a cross section of the city. Yours truly was elected by my fellow members to be one of two co-chairs of the task force. The task force voted after 10 meetings held between January and May of 2017 and hours of dialogue and debate over the issue on a compromise proposal.

Of the 16 members of the task force, 2 were not able to vote on our final proposal and the other 14 voted 8-5 in favor of the proposal. Mr. Shear actually refused to vote stating that he would not support any proposal that the rest of the task force was willing to vote on. He was the most unreasonable person in the group and his primary purpose on the committee was to oppose any potential compromise or progress being made on the issue. Mr. Mulder was among the five who voted against the compromise proposal, instead preferring more restrictions on short term rental hosts.

On June 6, 2017, along with my co-chair, I presented the recommendation of the task force to the city council. 

There was no action taken by the council on the recommendation that day and it was referred to the Economic Development and Innovation Committee.

Ted was on the task force, and when it fell apart...


Nope. Hold on. That's not what happened at all.

The task force did not "fall apart." It voted 8-5 to make a recommendation for a compromise proposal. The council elected not to take a vote on the citizen-led proposal and sent it to a committee.

What happened next in the Economic Development and Innovation committee was that the members of that committee reviewed the proposal. And on November 9, 2017, the committee recommended staff draft a text change to the ordinances governing short term rentals that reflected the work of the committee as well as some very minor changes to the original compromise proposal made by the task force.

On November 21, 2017, the city council took up the text change recommendation that came out of committee. You can see the video of that discussion here. The council then deadlocked as Russ Stephenson, Kay Crowder, Dickie Thompson and David Cox all voted to block citizen input and trash the proposal. (Corey Branch was absent from the meeting.)

Ted was on the task force, and when it fell apart, he and another member, Bob Mulder, proposed a simple compromise: Allow short-term rentals as a home-based business, akin to running your bookkeeping business in your spare room. For this, in Raleigh, you need a permit. And you need to be in residence. The upshot of the Shear-Mulder plan was to allow you to rent out some rooms (the exact number TBD), but continue the prohibition against so-called “whole house” rentals.

Do they really expect us to believe that every person who sells LuLaRoe or Rodan + Fields out of their house has a home-business permit? Give me a break. The reality is that American life and entrepreneurship have changed. Many people have a side business in place of a regular job or to supplement their income. The vast majority of these small businesses are run out of people's homes. Why should short term rental hosts be discriminated against because they choose to base their venture around renting their property?

Why ban them? For several reasons, Ted said. One is to protect the residential character of older neighborhoods in Raleigh. Absent such protection, entrepreneurs would be free to buy older homes, especially in moderate-priced neighborhoods, and convert them into what Ted termed “mini-hotels.” The mini-hotel business is a real thing in some major cities, and it involves not just one house at a time, but companies that buy many houses, even whole streets. We have no data on whether the mini-hotel industry is getting any toehold here, however, because … well, they’re illegal, so they don’t make their presence known in any way that we can count.

This is exactly the point. They have NO DATA! None. They don't have any resource or evidence that shows that short term rentals have had ANY negative effects on our community. They just want to ban them for the sake of banning them. This is the part where I remind you that there are currently 500 short term rentals operating in the city of Raleigh and there has been no threat to the "character of neighborhoods." With 500 short term rentals operating in the city over the course of the last 4 years (completely unregulated, BTW), there have been less than 20 complaints. This is a solution in search of a problem! 

And why don't we have any data? Because no one has bothered to gather it though it could be easily obtained since most short term rental hosts list their properties on the internet. Despite Shear's suggestion that these hosts don't "make their presence known," they actually do because they advertise ON AIRBNB!!! Are you kidding me? The NIMBY fearmongers want to portray these short term rentals hosts that welcome people to Raleigh as if they were running seedy, underground casinos. They're renting out rooms in their homes to tourists and travelers! This is a practice that has been going on for centuries in this country. Mini-hotels? There is no evidence that even one mini-hotel is operating in Raleigh. None. It's ridiculous to think that Raleigh will face the same challenges that Nashville has unless we become Music City, that New Orleans has unless we annex Bourbon Street, that New York has unless we become the new home of Broadway. This is disingenuous hyperbole and nothing more.

(By the way, many of the newer subdivisions in Raleigh have homeowners associations that ban whole-house rentals by covenant. They ban them regardless of what the city might allow.)

By the way, many HOAs don't enforce these covenants and since when is the city supposed to act like an HOA for all of Raleigh? Many of us don't have HOAs and we are quite happy with that arrangement, thank you.

A related reason to ban whole-house rentals is to protect the stock of affordable houses in Raleigh, which are the ones that are the most vulnerable to Airbnb or other short-term rental conversion — especially if they’re located near downtown or on a bus route. Converted houses rented by the night, weekend or week can be highly profitable, when compared to a standard monthly rental with a year-to-year lease.

This is without a doubt the most pernicious and evil lie that is spread about Airbnb. The reality is that even the studies that have been most critical of Airbnb have only been able to show a minuscule effect on housing prices in a city from an increase in short term rentals. And let's not forget that Raleigh is a city where 49.5% of all residential property is long term rental. We do not have any problem with access to long term rentals in this city. The idea that 500 short term rentals are going to disrupt a long term rental market with more than 88,000 units is laughable.

This argument is pure poppycock and it is really rich coming from a brood of NIMBYs who do everything in their power to limit density, promote stricter zoning and land use regulations and thereby exacerbate Raleigh's affordable housing crisis.

Our new CAC housing committee had heard the Shear-Mulder plan in January and voted unanimously to support it.

At the meeting Thursday, City Councilors Kay Crowder and Russ Stephenson heard Ted’s presentation (they were already quite familiar with it), and both predicted that the new Council elected in October will act this year to break the Airbnb deadlock. Neither endorsed Ted’s plan directly, however.

It's not clear who made up this "committee," how it was appointed or what directions they were given. Considering this in light of the transparent and fair process that was undertaken to appoint the city's Short Term Rental Task Force, I am skeptical that this committee was allowed to consider anything that Russ Stephenson or Kay Crowder disapproved of or that it wasn't just stacked with their minions and cronies.

We’ll be paying attention as Council addresses this issue. One takeaway from Ted that I think is worth remembering: Whatever Council does pass, whether the Shear-Mulder plan or some version of the proposal from four years ago, it should be seen as a starting point.

Notice here how the only options are the previous plans rejected by council already for being too restrictive or the Shear-Mulder plan. The compromise proposal offered by citizens who made up the Short Term Rental Task Force is conspicuously absent. Erased from our brains like it never happened. In its place, we have this surreptitious "committee" that apparently reflects the will of only one CAC out of 19 across the city. And, of course, it is also one of the most privileged and firmly NIMBY-controlled CACs in the city. Now they want to appoint two members of the citizen task force who lost the vote in that citizen-led process to replace the will of the majority with the preferences of the minority. They have literally taken this decision out of the hands of the people's representatives and given it to the 1%.

We’ll be paying attention as Council addresses this issue. One takeaway from Ted that I think is worth remembering: Whatever Council does pass, whether the Shear-Mulder plan or some version of the proposal from four years ago, it should be seen as a starting point. A policy that allows SOME short-term rentals can be amended in the future to allow MORE short-term rentals, and perhaps even some whole-house rentals in apartment buildings where the apartment owner doesn’t prohibit them.

Right now, all short-term rentals are illegal, so if you’re a STR fan, it seems like you’d want to get a toe in the water and not hold out for owning the lake or nothing.

I've already covered this above but this is a trash argument. 500 short term rentals are operating in Raleigh as we speak with no problems to speak of at all much less the disruption that is being alleged will happen. The starting point is the current reality which is no regulations at all. What is the plan for enforcement of the Shear-Mulder plan anyway? Kick down the doors of short term rental properties? Subject tourists and travelers in our city to police questioning? Sting operations against homeowners who violate short term rental policy, followed by swift prosecution and jail time? 

Asheville has already tried banning short term rentals and that effort has been an abysmal failure. The reality is that the city is not going to commit the resources to going after short term rental hosts either in terms of city staff enforcement or police involvement, nor should they. Live and let live. No one is being harmed by the presence of short term rentals and no one has made any serious case that they present an actual danger to our city. The arguments of short term rental haters are ludicrous.

And that's not to mention the fact that Raleigh has collected more than $400,000 in taxes from the occupancy tax paid by Airbnb. That is revenue that can go to affordable housing, to fixing roads and to city projects that benefit citizens. What is Raleigh's plan to replace that revenue? The Airbnb detractors don't have one.

One thing is for sure. We're seeing a disturbing pattern of city councilors rejecting the word of citizens to empower small cabals of people they hand pick or to make the decisions themselves without citizen input. That's not right. Raleigh citizens deserve better. And councilors like Russ Stephenson and Kay Crowder should be ashamed of themselves for ignoring the will of the people. After all, this is the same Russ Stephenson who has hypocritically maintained that he uses Airbnb "all the time in other cities" but is doing his best to ban them in Raleigh. 

You may be the new mayor of Raleigh, Russ. But you're not the king.

Brent Woodcox