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Live Local, Live Small: The Sharing Economy and its impact on Wilmington and short-term rentals

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The sharing economy is a socioeconomic ecosystem that includes peer-to-peer lending, accommodation rentals (short-term rentals), ride services, and food services among others. It is one of the fastest and most unpredictable growth sectors in the global economy. Credit Suisse is willing to take a swing at a prediction: $335 billion a year in transactions by 2025. That’s incredible, and inevitably the discussion about how it is allocated and by whom has come to Wilmington.

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On Thursday March 17, 2016, the City of Wilmington Planning Department hosted a public input meeting at Forest Hills Elementary School to address issues that have arisen around short-term housing rentals. It is the latest in a string of events that have grown from the new Sharing Economy.

In November Residents of Old Wilmington (ROW) drafted a letter to the Wilmington City Council to request short-term rentals advertised on Air B&B and Vacation Rental by Owner (VRBO) sites be prohibited from operating in the Residential Historic District. Wilmington City Council is moving forward with a public input session and an online survey. The information will be collected, compared with benchmarks in other cities and presented in a report to the council in May.

Over 100 people packed the room in the back of the elementary school to weigh in on the topic. Property owners, neighbors, realtors, elected officials, and short-term rental users were directed to six stations around the room, each focusing on different questions surrounding the issue: zoning, enforcement, bed and breakfasts, length of stay, etc. The planning staff iterated that it’s primarily an issue of defining and applying code, and determining what future enforcement will be. At present, the City Land Use Code doesn’t actually have language to appropriately address the issue. Housing unit, housekeeping unit, guest lodging, and residential hotel are all covered, but not the current realities of the sharing economy.

“This is a charade,” Chris Beck observed. “All this is going to change before they make their new rules.”

Beck has a 35-plus year track record with restoring and preserving historic houses as rental properties. “I’ve restored all the houses, so I care about them! I’ve had more luck in the short-term rental than long-term rental,” she observed. Her short-term rental clients have included a woman having the floors refinished in her own house, parents of UNCW students, a family visiting their son stationed at Lejeune for Thanksgiving. As to the meeting? She was disappointed.

“People came here to have their say,” she told me. “Instead, nobody’s going to have direct input.”

At least two of the people I talked to turned to short-term rentals when the state killed the film industry. Pennie Coussit worked as a driver for “Sleepy Hollow.” “I heard about studio condos in an historic building downtown and bought two so I could make a living,” she explained. “They need to rewrite this plan to include this new way of traveling that came about because of the Internet.” Coussit said she felt her concerns were heard and noted at the meeting. 

“My problem with the expansion of the short-term rentals is that degrading of neighborhoods,” DeYoung explains. “I feel like the reason these people are able to operate businesses in the historic district is because people like myself have renovated homes to create an attractive neighborhood—which allows them to carpet bag on our neighborhood.”

DeYoung would like to see short-term rentals confined to the Central Business District and Mixed Used District. DeYoung was quick to weigh in on another topic that came up frequently during the evening: the restriction of bed and breakfast permits to one per city block. “Part of the reason I’m for the expansion of B&B permits is that puts an owner in my neighborhood and they become my neighbor,” he said.

One of the possibilities on the table is raising the requirement for short-term rentals to requiring a 30-day minimum stay.

Tom Hissam observed there was no station to discuss the economic impact. “Most people only get seven days of vacation time—not 30,” he explained. “You raise the limit from seven to 30 days and that’s a lot of people not coming here to look around [and] seeing if they want to live here.”

“I don’t think anyone in the room would say they don’t want them,” Councilman Kevin O’Grady stated. “They want them in appropriately zoned districts.” O’Grady commented the bed and breakfast station shouldn’t be part of this discussion. “We reached an agreement 12 years ago to keep the bed and breakfasts in check and not let them take over the neighborhoods,” he continued.

Hunter Ford, owner of Burnt Mill Creek and Momentum Surf and Skate, which has a vacation rental upstairs, says Paul Lawler and Kevin O’Grady are both past presidents of ROW. As such he wants them to recuse themselves from voting on the issue when it comes before council.

Camelia Cottage Bed and Breakfast owners Paula Tirrito and Steven Skavroneck say they just want a level playing field. Specifically, they want short-term rentals regulated like they are. Bed and breakfasts are inspected by the health department, fire department and city. They pay room occupancy and sales taxes to the county and state. At this juncture, short-term rentals are not inspected by a governing body. Though they are supposed to be taxed, the tax office has stated on the record  they do not have the staff at present to enforce the policy.

For what it is worth, my 2 cents on the subject is in agreement with inspections on short-term rentals to ensure they meet the minimum safety code. All other issues aside, safety of renters and surrounding neighbors should be the first concern. Any business that interacts with the public should be held responsible for providing a clear path in the event of an emergency and tools to address the problem until help arrives. I agree with Tirrito and Skavroneck that requirements expected of bed and breakfasts seem reasonable for lodgings open to the public: licensing, inspection and tax reporting. If there are indeed as many short-term rentals operating within the city (some estimates put the number at over 200) then room occupancy tax should be collected. As well, licensing fees from their registrations should easily employ one staff position to act as the short-term rental specialist.

Our state, county and city governments routinely remind us they are strapped for cash. Here is an excellent revenue source we already have legislation in place to tax.  Enforce it. The reality is the sharing economy is here to stay. It is only going to continue to grow and strengthen at a rate much faster than government can respond to. The discussion shouldn’t be about limiting people’s use of property; it should be about ensuring greater safety.

Concerned citizens can share their thoughts and experiences with the City of Wilmington Planning Department via an online survey through April 1: www.surveymonkey.com/r/WilmingtonSTR. The only way to have a voice in shaping the direction our city is moving is by showing up and participating.

Timeline for short-term rental discussion:

March 2016: Initial public input meeting

April 2016: Follow-up public input meeting to present proposed changes

May 2016: Staff update to City Council

July 2016: Planning commission reviews proposed amendment

August 2016: City Council considers proposed amendment

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