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Institute for Justice urges Town of Highlands to reconsider crackdown on Short-Term Rentals

ARLINGTON, Va.- The Institute for Justice (IJ) sent a letter to the town of Highlands, North Carolina on August 10, calling on officials to scrap a new proposal to eradicate short-term rental properties in town.

The Highlands Board of Commissioners has proposed amending the town’s Unified Development Ordinance. The amendments would empower the town to use a controversial tool known as “amortization” to reclassify short-term rental units that are currently in compliance with the town’s zoning laws as “non-conforming.” The proposed ordinance would then require these “non-conforming” property owners to submit to a permitting process to determine the appropriate “intensity” of their use. And regardless of their past legality, the proposed “amortization” will then force all short-term rentals to cease all operations within two years.

Many of the property owners who would be impacted by this use of amortization purchased their properties and invested substantial money with the understanding that their intended use as a short-term rental was, and would continue to be, legal in Highlands. Now, the town has effectively pulled the rug out from under them.

“This proposal from the town is an affront to the property rights of residents and property owners who simply want to do something that was perfectly legal at the time they purchased their property,” said IJ Attorney Ari Bargil, the author of the letter. “These are properties being used for residential purposes in areas that are zoned as residential. It is outlandish—and a violation of North Carolina law—for the town to create a permitting scheme for these uses and then to extinguish them outright.”

Under the town’s proposal, owners of short-term rentals will have just two years to recoup the investment they’ve made in the property. The town argues this absolves them of providing just compensation for taking a person’s property, but that’s not true.

IJ fought against a similar use of amortization against short-term rental units in Wilmington. There, officials passed a law that arbitrarily capped the number of properties in the city that could be used for short-term rentals and prohibited any rental from operating within 400 feet of another rental property. Peg and David Schroeder had invested $75,000 into their property to get it ready for short-term renters only for the city to throw them a curveball and change the law. In that case, the North Carolina Court of Appeals struck down Wilmington’s ordinance as unlawful under North Carolina law. Wilmington had to refund over $500,000 in illegally collected permitting fees and is on the hook for hundreds of thousands more in attorneys’ fees.

In addition to Wilmington, IJ has also fought an amortization case in Dallas, where officials targeted an auto mechanic with a land grab. IJ has also litigated against government land grabs at the United States Supreme Court in a case called Kelo v. New London, which led to states throughout the country passing new laws to protect Americans from having their land seized and given to private companies without just compensation.

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