Proposed Airbnb Ban Could Put World of Bluegrass Festival at Risk

Is This the Future We Want for Raleigh?

By Brent Woodcox

It was announced this morning that the city of Raleigh and the International Bluegrass Music Association had reached an agreement to keep IBMA's World of Bluegrass Festival in Raleigh for another three years through 2021.

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This is great news for Raleigh as well as the small business owners, restaurants and shops that benefit from the influx of tourists and the money they spend while they are here attending the festival. One other group that stands to benefit from the continued presence of the festival in Raleigh: short term rental hosts.

The World of Bluegrass Festival has proved to bring just the type of tourists from around the world that want to experience Raleigh as the locals do. Many of these out of town visitors turn to Airbnb, VRBO and other short term rental platforms to secure a place to stay while they are in Raleigh.

It was also at the World of Bluegrass Festival in 2016 that the #DontBeStupidRaleigh campaign was launched by Gregg Stebben and others after Stebben was the fight short term rental host in the city of Raleigh for violating the city's ban on Airbnb.

That effort led to a petition that has been signed by more than 1,400 people, including former Raleigh Mayor Charles Meeker. Former Councilor Mary-Ann Baldwin has also cited the World of Bluegrass Festival as one of the premiere events showing off the city of Raleigh to visitors and cited short term rental hosts as key partners with city for welcoming people to town.

Keep in mind that Raleigh is still experiencing a shortage of hotel rooms. And though more rooms are currently being added to inventory and additional hotels will go up between now and 2021, the simple fact is that hotels alone are not enough to support an event of the size and scope of the World of Bluegrass Festival, which is only experiencing a surge in popularity year after year.

So who is standing in the way of making short term rentals legal in Raleigh? Well, the usual suspects in city government. Namely, Raleigh City Councilors Stef Mendell, Russ Stephenson, Kay Crowder and David Cox.

Recently, they are talking about passing an ordinance that would ban short term rentals but allow for "homestays" with a new law modeled after Asheville's rules. One problem though. Those rules have been a complete failure.

In this top-destination tourist town, there’s a lot of money to be made renting a house or apartment to weekend visitors.

Except it’s illegal in almost all cases. And doing it can mean big fines, according to stringent city rules passed three years ago in response to concerns over neighborhood disruption and exacerbation of Asheville’s housing shortage.

Most of the time, property owners caught running a short-term vacation rental, known in common parlance as an “Airbnb,” stop before the $500 a day fine is imposed, city officials say.

Reid Thompson isn’t one of those.

As of May 10, Thompson had racked up $850,000 in fines. That’s according to a March 22, 2017 legal complaint from the city plus daily accruals calculated by the Citizen Times for his three rentals in the Five Points neighborhood just north of downtown.

While most people might be panicked at the daily click of a negative $1,500 odometer, Thompson actually isn’t counting. The longtime Maxwell Street resident said he ignored letters from the city, which he said disrupted his neighborhood and pushed him into the short-term rental business by allowing a grocery store to turn his street into a commercial truck corridor.

”I guess my thinking is, ‘Yeah, that’s a huge risk. But I don’t think their fines are collectible because I think they are outrageous and capricious,’” he said.

The city, meanwhile, is suing Thompson to collect the money and make him stop the rentals, which Asheville’s rules make illegal in nearly every part of the city.

The primary goal with enforcement isn’t to collect fines, but to make property owners stop breaking the short-term rental rule, city attorney Robin Currin said. North Carolina law requires that the fines, like all such civil penalties, go to the local school board.

”Even when fines have been assessed, the city works with the property owners to resolve those fines once they have brought the property into compliance,” Currin said.

Thompson, who owns the property through the limited liability company Parkway Court, is still in violation and has never come into compliance or offered to do so, she said. ...

In the days before Asheville was a modern tourist mecca, few people cared if a neighboring house or apartment accommodated renters for a weekend or two.

It wasn’t allowed in areas zoned for residential use, but before 2015 the fines weren’t enormous — $100 a day. Enforcement was infrequent and only happened when someone complained.

Then three major things happened: Asheville blew up as a must-see travel destination, the city faced a housing crunch and Airbnb and other online short-term rental platforms became big business.

The result was a clash between would-be short-term rental owners, including some who said it was one of the few ways for them to make a decent income in Asheville, and those who said the trend was turning neighborhoods into de facto hotel districts and making it hard for residents to afford housing.

The City Council has fallen on the side of tighter regulations with a ban on new short-term rentals in nearly all of Asheville, $500-a-day fines and aggressive enforcement.

In one exception, property owners can appeal to the council for special zoning to allow the rentals

In another exception, people can do something called a homestay, renting out a couple of rooms provided the long-term resident is present.

Rental proponents pushed back with two lawsuits, according a Citizen Times public records request for all legal actions from 2015 through February of this year. Both were dismissed.

The city, meanwhile, brought two lawsuits against owners it said failed to pay fines. One owner, Anne Marie Doherty, said she was facing nearly $300,000 in fines on two properties. She insists she didn’t receive a violation notice the city sent and only learned after two years that the penalties had been piling up.

”I would not have let fines accrue like that. I’m not the kind of person that could live with that stress,” said Doherty, who lives in one of the properties in the Grove Park neighborhood.

She settled with the city for $5,000 plus another $5,000 paid out over two years, but said she’s considering whether to restart her own legal action against the city because of trouble she’s had getting municipal staff to sign off on a homestay permit.

At the time of the city’s March 22, 2017, complaint against Thompson, his fines were $232,500 and continued to climb.
— Joel Burgess - Asheville Citizen-Times

So the city of Asheville is suing its own citizens, violators are racking up hundreds of thousands of dollars in fines and the city is utterly powerless to collect them. 

Why would Raleigh want to follow Asheville into this quagmire?

Well, one councilor who does is Russ Stephenson. He recently told a constituent that he was a supporter of Airbnb but that he would still vote to ban short term rentals in the city. 

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Councilor Stephenson says, "I have always supported short term rentals in Raleigh..." But is that really true? Because he was also the councilor who helped to block a previous compromise offered by a citizen-led task force regarding short term rentals even while admitting that he "used them all the time in other cities."

So how can you be a supporter of short term rentals, have voted to block making them legal in the past and have a plan to permanently ban them in Raleigh? That doesn't make sense to me but maybe Councilor Stephenson can explain it to us.

Raleigh is on the verge of adopting a disastrous policy on short term rentals that will not only cost Raleigh short term rental hosts the income they make from renting their properties. It will cost restaurants and businesses that benefit from the tourism that visitors bring to the city when they stay in Airbnbs. And it will put events like the World of Bluegrass Festival and others that draw tourists to our city at risk.

Because what is the plan when, like Asheville, we ban short term rentals, impose fines and fail to stop them from operating anyway? Are we going to create a special police force to knock down the doors of Airbnbs and investigate? Are we going to yank tourists out of their beds and kick them out onto the street? Are we going to throw homeowners in jail who run afoul of Raleigh's new strict legal restrictions on how they use their property? How do Councilors Mendell, Stephenson, Crowder and Cox plan to succeed where Asheville has failed? If they have a plan, they should tell us about it.

We don't have to follow another city's lead into an unenforceable, impossible set of heavy handed rules that turn the government against families trying to make a little extra income to help make ends meet.

We can adopt a Raleigh plan that is best suited for the needs and aspirations of our city. A plan that serves both our neighborhoods and our local businesses well. A plan that represents our unofficial motto that says, "Welcome to Raleigh, y'all!"

We just need leaders with vision who are willing to do it.

Brent Woodcox