Town meets with planning board to review proposed amendments to UDO on short-term rentals

On Monday, Nov. 22, the Highlands Town Board of Commissioners held a workshop with the planning board to go over a proposed draft of changes to the unified development ordinance.

The draft, prepared by a working group of town attorney Jay Coward, attorney Craig Justice, commissioner Amy Patterson and commissioner Brian Stiehler contains changes to definitions in the UDO, adds the wording for a transient dwelling unit and whole house short term rental, amends use tables to classify overnight accommodations, and adds a subsection regarding commercial uses of whole house short term rentals that allows vesting or grandfathering of existing short-term rentals in R-1.

“This is just a rollout meeting tonight,” Mayor Patrick Taylor said. “There has nothing that has been decided. There is nothing set in stone. It is a draft presentation of policies and changes to our ordinances that our attorneys would like for us to consider.”

Coward said the working group has been meeting on a weekly basis for months.

“For the most part, every Wednesday, we would spend two hours hashing out the many problems that we think need to be fixed in the UDO,” Coward said. “We had two members of the board engaged with us, as well as the town manager. We would talk about various different points and talk about the problems that people have brought to us. We would then talk about how to fix those problems. One of the things that we were very focused about doing was trying to repair some of the damage that was done to the UDO when it was revised almost a decade ago. A time when issues such as STR’s were not a problem.”

Justice, an attorney who has a masters in city and regional planning, said he was thankful to be hired to assist the town in modernizing and updating the UDO.

He said the draft presented on Monday is full of concepts that the working group has endorsed.

“Again, these are concepts,” Justice said. “This is a starting point for discussion. Obviously, there is a process that your ordinance and state law require, but this is just a workshop to talk about where we ended up.”

Coward reiterated that the Highlands town board has not made a decision on the draft proposal.

“This is not something that the board has discussed, reviewed and voted on,” Coward said. “This is just something that the working group thought were the most important points. We presented it to the town board, in rough form, several days ago. This is not a proposed ordinance from the town board.”

Justice went on to explain the summary presented before the planning board, starting with the changes made to the definitions.

“Looking at the terms, there are several that you will see that are currently in the ordinance that we have updated and modernized to try and dove tail to this short-term rental phenomenon to make sure we clarify what one term mean from another,” Justice said. “We also added some definitions. All of them are somewhat different from the original code, for example, multi-family building is a term that is already in the ordinance, but when we were discussing the terms, we found that the term ‘multi-family building’ was used to define a multi-family dwelling unit, rather than the building itself. We added the term ‘duplex’ because the working group was worried that it hadn’t been defined in the code and people might have a difference of opinion of what a duplex is. We added, lodging, multi-family residential use, single-family residential use, as well as temporary guest occupancy.”

Two terms were added to address the short-term rental issue, transient dwelling lodging and whole house short term rental.

The key differential in determining what is transient dwelling lodging and a whole house short term rental, according to Justice, is the number of days a guest stays.

“A whole house short term rental is the use of a dwelling unit where the entire dwelling unit is rented for a period of less than 30 days. We defined it as that to differentiate from transient dwelling lodging, which is only rented for a period of less than seven consecutive days.”

Below is a list of all of the definitions either modernized or added:

Building, Multi-Family:  Any building, other than a motel, hotel, tourist home or whole house short term rental as defined in this Ordinance, containing more than one (1) dwelling unit.  This term includes single-family attached dwellings, duplexes, and apartments.

Duplex: A building containing two (2) dwelling units located on the same lot or parcel.

Dwelling, Multi-Family: A dwelling unit designed, intended or used by more than one (1) family for human habitation.

Lodging:  The use of a building, or any portion thereof, for someone to live or stay temporarily, often for periods of less than thirty (30) consecutive days in return for the payment of compensation.  Lodging includes a hotel, motel, tourist home and whole house short term rental.

Multi-Family Residential Use:  The use of a lot or parcel for human habitation by more than one (1) family for periods that are not temporary guest occupancy within a multi-family building or a multi-family dwelling unit. This term does not include lodging uses such as a hotel, motel, tourist home or whole house short term rental.

Single-Family Residential Use:  The use of a single-family dwelling unit by a single family for human habitation for periods that are not temporary guest occupancy.  This term does not include lodging uses such as a hotel, motel, tourist home, transient dwelling lodging or whole house short term rental.

Temporary Guest Occupancy:  The use of a dwelling unit in return for compensation where the occupancy of the structure by the paying guest or guests is for a period of less than thirty (30) consecutive days.

Tourist Home:  A building or part thereof, not including a motel, hotel or whole house short term rental, where sleeping accommodations or lodging of not more than four (4) rooms are provided to guests paying compensation, where the owner, operator or manager also stays on the same parcel during any period of guest occupancy.  This term includes bed and breakfast homes, inns, rooming or boarding houses or homestays.

Transient Dwelling Lodging:  The use of a dwelling unit for lodging for compensation whereby the entire dwelling unit is rented or occupied by a paying guest or guests for a period of less than seven (7) consecutive days.

Whole House Short Term Rental:  The use of a detached dwelling unit for lodging in return for compensation whereby the entire dwelling unit is rented or occupied by a paying guest or guests for a period of less than thirty (30) consecutive days but no less than a minimum duration of seven (7) days. It does not include transient dwelling lodging.

In Section 4.7.1 of the original UDO, Justice said there was not a zoning certificate trigger for an STR owner for change of use. In the proposed draft, the working group added that to the UDO.

Sec. 4.7.1 Applicability is hereby amended to read as follows:

No person shall commence or proceed with construction of any new building, fence or wall, as defined herein, or with the reconstruction, alteration, repair, moving, or demolition of any existing building, or change the use of property, in any Zoning District, or as otherwise expressly noted in this Ordinance, prior to the issuance of a Zoning Certificate in accordance with the following procedures.

The working group updated the Section 6.2 Use Table to replace the Use Category Section classifying Overnight Accommodations in its entirety. In the table, transient dwelling lodging and whole house short term rentals were added, allowing transient dwelling lodging in only B-1, B-2 and B-3 and allowing a whole house short term rental limited in R-2, permitted in R-3, B-1, B-2, B-3 and limited in B-4.

“The working group believed there should be a distinction in if you intend to use that property primarily versus someone who is not using it primarily,” Justice said. “That was viewed by the working group as a concept in time. Are you using it more than half a year? Or not using it more than half a year? So in the R-2 districts and B-4 districts, the recommendation is that short term whole house renting should only be an accessory use. So if anybody wanted to use it in that district, they would be limited to a certain number of weeks. The maximum number of weeks is 25, which is less than half of the year. That is one way to distinguish the limitation in R-2.”

With Section 6.5 Commercial Uses, a new subsection was added include whole house short term rental house. Some highlights to the new subsection are vested status, reporting requirement, occupancy limits, police issues regarding parking, trash and noise and a person of contact.

“You will see this with local governments all around the country,” Justice said. “There are limitations concerning occupancy. You can’t have someone sleeping on the kitchen floor. It is based on bedrooms. The working group was very interested in protecting 

the watershed and was worried about septic overuse. So, you’ll see that the number of bedrooms might be tied to your septic tank. For each bedroom you have, you can have up to two people per bedroom. This is a very typical standard. Another concept of typical restriction would be having a person of contact, someone that is there that can be reached if people have any complaints. Another concept the working group addressed was the police power of concerns. You are always going to have parking concerns to make sure you’re not parking in the street. There are standards in here for parking, to limit the numbers in a lot to four. We also pulled in the town’s ordinances on trash and noise. One other issue the group dealt with was vesting or grandfathering; the properties that are currently legally using their properties as STR’s. Whatever the use is, the North Carolina courts recognize vested rights. This ordinance acknowledges that some folks may have some vested rights. One of the features of this proposal is that everybody, if this ordinance is adopted, is that everybody has to come in and get a zoning certificate, whether you’re starting a new STR or if you already operate one. If you believe you are vested, the proposal here is tha you need to come in and get a zoning certificate. The ordinance proposes that you do that within 120 days and prove your grandfathered status. It would apply to all districts.”

Below is the entire new subsection regarding whole house short term rentals:

Sec. 6.5 Commercial Uses is hereby amended to add a new subsection 6.5.18 for Whole House Short Term Rental use to read as follows:

A. Whole House Short Term Rentals. Short term rentals of an entire dwelling unit known as Whole House Short Term Rentals (WHSTR) are hereby recognized as an authorized use within the planning jurisdiction of the Town of Highlands. Except as provided herein, on and after, it shall be a violation of these zoning regulations to operate a WHSTR without a development approval from the Town (i.e., Zoning Certificate).

B. Exceptions.  The following activities and / or uses shall be excepted from the application of this Section.

1. Incidental whole house short term rentals, defined to mean no more than two such rentals in any calendar year where the total annual rental period for both rentals does not exceed two weeks.

C. Zoning Permits; Vested Status; Reporting Requirement. Every WHSTR not excepted above shall require a Zoning Certificate issued pursuant to the regulations contained herein.  Anyone that can establish via Tourism and Development Authority tax records, written leases or other suitable proof that they were engaged in WHSTR activity at their home prior to the effective date of Ordinance    would have vested status, subject to continuing compliance with Article 7, Nonconformities and N.C.G.S. 160D-108 and except as provided below. This status is transferable; provided, however, a new Owner will be required to apply for an addendum to the Zoning Certificate with updated information including new Operator information.  All parties seeking vested status must report such contention and submit to the Town an application for a Zoning Certificate along with proof of legal prior existence of WHSTR within one hundred twenty (120) days of adoption of Ordinance.

1. Application. In order to obtain a Zoning Certificate, the owner or the operator shall submit an application which complies with the requirements of the Town’s zoning regulations and the additional requirements as found in this Section and shall pay all applicable fees in accordance with the Town’s adopted fee schedule.

2. Contents of Application. The application for a WHSTR Zoning Certificate shall contain the following information.

a. The address of the property.

b. Name and contact information for the owner of the property.

c. Name and contact information for the operator or manager if other than the owner.

d. A site plan showing the off-street parking area(s) for the property. Each car shall be parked in a designated approved parking space; no more than four (4) cars per lot are allowed. Parking areas shall not encroach into any road right-of-ways or neighboring private properties.

e. The number of bedrooms on the property intended to be used for occupancy.

f. A copy of the Macon County Revenue Department “Property Information Card” for the subject property.

g. A certificate from a qualified licensed sanitarian professional that the septic system serving the property is safe and adequate for the occupancy density limits in subsection 5 and if public, that the connection to the Town’s system is operational and free of detectable leaks.

h. A copy of the standard rental agreement used for the WHSTR which contains information required by this section.

i. An acknowledgment that the applicant is aware of the occupancy restrictions on the use of the property as a WHSTR and the applicant’s agreement to abide thereby.

j. A statement by the operator, under oath, that the information in the application is correct.

D. Inspections. In conjunction with an application for a Zoning Certificate, the Town shall conduct an initial inspection to confirm compliance with the requirements of this Section.

E. Use Conditions. The following requirements shall apply to any WHSTR.

1. Occupancy Limits. On those occasions when the property is being utilized for WHSTR activity, the overnight occupancy shall not exceed two persons per bedroom plus two additional persons. Provided, however, the number of bedrooms permitted for a WHSTR shall not exceed the number of bedrooms approved for the dwelling on the sewage permit issued for each property.  For unpermitted properties, occupancy shall be the lesser of the total determined by the foregoing formula or twelve persons. Bedrooms used in calculating occupancy limits shall be taken from the application as affirmed by the owner/operator/manager and shall be the same as the number of bedrooms as listed on the Macon County Revenue Department’s Property Information Card to also assure the sufficiency of the wastewater system on site.

2. Maximum number of weeks.  In the R-2 and B-4 zoning districts, the maximum number of weeks that are allowed for WHSTR use on a lot is 25 weeks per calendar year.  The intent of this provision is to only allow WHSTR as an accessory use within properties zoned R-2 or B-4.

3. Display of Contact Information. Operators of WHSTR shall prominently display on the exterior of the property the name and 24-hour per day, 365 days-per-year telephone number for the WHSTR operator who will take and resolve complaints regarding operation of the WHSTR and its occupants and guests. The Town will prescribe the form of this display which shall also include a telephone number to report violations of this section to the Zoning Administrator.

4. Parking. Occupants or guests of any WHSTR shall not park vehicles on the property other than within parking area(s) designated on the application for the WHSTR Zoning Certificate and in compliance with Article IV of the General Code of Ordinances, Stopping, Standing and Parking and Article 9 of this Ordinance.  Vehicles parked in undesignated areas, or in the street so as to violate the Town’s street or parking ordinances, shall be subject to towing at the vehicle owner’s expense.  No more than four (4) cars shall be allowed to be parked on a lot being used as a WHSTR.

5. Trash Disposal. Household trash must be bagged and disposed of in trash receptacles. Trash receptacles shall be the size and number authorized by existing refuse contracts and shall be animal resistant.  The WHSTR use must comply with Chapter 12 of the General Code of Ordinances, Solid Waste Management.

6. Noise Ordinance.  The WHSTR use must comply with the Town’s Noise Ordinance, Article II of the General Code of Ordinances.

7. Nonconforming WHSTR Compliance with Restrictions.  Notwithstanding anything to the contrary in the Town’s ordinances, a vested or legal nonconforming use of property as a WHSTR must at all times comply with Section C and Section E, subsections 4, 5, and 6.

F. Contract Addendum. Every contract for a WHSTR shall contain an addendum, in a form prepared by the Town, setting forth the requirements of this Section and other applicable provisions of law. The operator shall obtain a signed acknowledgment from the renter(s) that they have received such addendum prior to delivering possession of the dwelling unit. This requirement shall be deemed satisfied if the provisions of the addendum are included as part of the rental contract.

G. Duties of the Operator to Respond to Complaints. To assure prompt response to complaints and issues concerning a WHSTR, the operator shall comply with the following:

1. Maintain a call center that is staffed by a live person and fully responsive at any time that the property is used as a WHSTR.

2. Continuously maintain on file with the Town the operator’s current address, telephone number, and facsimile number and/or email address.

H. Non-Compliance with WHSTR Zoning Permit and Regulations.

1. Failure to comply with the standards and regulations as found in this Section shall be enforced by the remedies and penalties as provided in Chapter of the Code of Ordinances of the Town of Highlands.

Planning board member Nic McCall asked Justice if requiring a zoning certificate would go against HB 829, which says “In no event may a local government 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 local government to lease or rent residential real property or to register rental property with the local government, except for those individual properties that have more than four verified violations in a rolling 12-month period or two or more verified violations in a rolling 30-day period, or upon the property being identified within the top 10 percent 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, (iii) levy a special fee or tax on residential rental property that is not also levied against other commercial and residential properties, unless expressly authorized by general law or applicable only to an individual rental unit or property described in clause (i) of this subsection and the fee does not exceed five hundred dollars in any 12-month period in which the unit or property is found to have verified violations, (iv) provide that any violation of a rental registration ordinance is punishable as a criminal offense, or (v) require any owner or manager of rental property to submit to an inspection before receiving any utility service provided by the local government.”

“We spent two months looking at a lot of different local government codes,” Justice said. “This issue is one that Wilmington has been dealing with and I am very familiar with that case. This ordinance is not that. There is a clear distinction between having a development approval and registration. I can sit here and lecture for 30 minutes, but we looked at that and this proposal is not the city of Wilmington. There was an effort to write in a complete prohibition of local governments ability to regulate short term rental and in fact, they tried to attach it to the budget, and they did not sign that. I can just say the city of Wilmington issue was looked at and we did everything we could to avoid the problems they are having.”

Planning board chairman Brad Armstrong asked Justice if existing STR’s would be vested and continue to go about their business as they have.

“As a general rule of thumb, that is correct,” Justice said. “The devil is going to be in the details. It is all about the historical use of property.”

Commissioner Patterson said that whatever they do, they have to have an eye on the law.

“There are things in there that we put in that have to do with more enforcement like parking, because a lot of it has to do with more enforcement,” Patterson said. “You say that the parking and septic stuff has already been there, but we have not done anything about it. Those are things that will actually be done in the future. There are two separate things to think about here. One of them is thinking about going forward, and another thing is who, how and are they vested? That’s a separate question.”

Coward said vested owners are going to be asked to come forward in a certificate application process.

“That certificate application will capture them in the fold of vested uses,” Coward said. “When they are in that category, then they will be able to continue using. If they don’t continue to become part of that category, they could still go to court. We want to try and get everybody involved in this as much as we can.”

Moving forward, the planning board will look over the proposed draft, bring back any changes, or bring it to the board of commissioners for a vote.

“How long that will take? That remains to be seen,” Taylor said. “But we have started the process.”

Jennifer Huff, with Save Highlands issued this statement after the meeting:

““We will evaluate the language that has finally been provided. Our group has been asking from the outset to be part of the community conversation and process. We are hopeful that we can take to heart last night’s statements to this effect.”

Bill Long, president of the Dog Mountain Property Owner’s Association issued the following response:

“We certainly have no issue with the Town clarifying the UDO as it relates to short-term rentals, and we greatly appreciate their hard work on this matter.

We think that the discussion last night making clear that short term rentals as overnight accommodations are a Commercial Use that have always been prohibited in Highlands’ R-1 and R-3 zones (and only allowed as a special use in R-2) will be helpful in protecting Highlands neighbors and neighborhoods.

We also strongly believe that since overnight accommodations have always been prohibited, there is no legal requirement that these activities be grandfathered. Doing so tremendously rewards those who have been using our neighborhoods for commercial activity by granting them a monopoly, and it further penalizes our residents who simply wish to live in peace and quiet.

Additionally, any discussion of vested property rights should include our neighbors who have the right to live in their neighborhoods without the intrusion of overnight accommodations.  Our desire to live in a traditional, commercial-free neighborhood should take priority over the handful of investors who have been violating the existing UDO in order to maximize their profit.

We shouldn’t allow those suing the Town to prevent our community from doing the right thing for the Town’s long-term future.”

- By Christopher Lugo