Towns across Western North Carolina continue to grapple with the issue of providing adequate affordable housing for residents and enough vacation rentals for tourists. Initially, short-term rentals such as AirBnB and VRBO seemed like a simple solution to meet the growing demand for vacation housing… however the more properties that transitioned to short-term rentals the fewer homes that were available for Lon-term rentals for residents — creating an unexpected housing crisis.
The town of Sylva has become the latest governing board to take up the issue with discussions on the municipality’s current zoning ordinance taking center stage at this month’s board meeting.
While such regulation is relatively new across the state, there is some legal guidance available due to a NC Court of Appeals Case regarding action taken by Wilmington officials. The North Carolina Court of Appeals ruled in Schroeder v. City of Wilmington that state law prohibits a registration requirement for short-term rentals, but the court also ruled that state law allows for general zoning and development standards for short-term rentals.
According to town officials, there are about 20 short-term rentals currently operating within Sylva city limits. Based on the town’s existing ordinance, STR are prohibited in low-density residential districts as well as the general business district, but are relatively unregulated in all other residential districts within the city limits.
“It’s minor still at this point, but a lot of houses are being bought solely for short-term rentals and that’s impacting real estate prices,” Commissioner David Nestler said of his concerns moving forward. “Right now, real estate prices in Sylva are unaffordable to the average Sylva resident and county resident.”
Sylva officials wanted to balance regulation with an outright band — the direction other WNC governing boards have gone such as the town of Highlands. Restrictions for short-term rental (STRs) properties in the Highlands area have been discussed by town leaders since August 2021 when the attorney for the town of Highlands issued a clarification that ultimately stated short-term operations within specific residential areas of Highlands were completely prohibited.
According to Coward, the Unified Development Ordinance (UDO) states at §6.1.C “any use not specifically set forth in the use category is expressly prohibited.” §5.2.1 Residential District R-1 is a “low-density residential district for single-family dwellings” only. Since it does not permit STRs, they are prohibited. On the other hand, R-2, a medium-density district, allows “tourist homes” with a special use permit. A tourist home “includes bed and breakfast homes or inns…where sleeping accommodations of not more than four (4) rooms are provided for occasional transient paying guests.” R-3, a high-density district, does not allow overnight accommodations at all. It should be noted that tourist homes and bed and breakfasts, like hotels and motels, are overnight accommodations and are classified as “commercial uses” in §6.5, thus the requirement of a special use permit.
Highlands has gone back and forth with STR ever since with contentious debates both for and against the rentals and proposed ordinances which includes a lawsuit against the town. The lawsuit calls into question the town’s amendment addressing STR, which passed 4-1 in May to prohibit their operation. Save Highlands — the group suing the town — are doing so under the premise that property owners should be allowed to continue operating their properties the way they have been — prior to the May UDO amendment vote prohibiting such action in the R-2 District.
Sylva’s approach is looking to be less “all or nothing” than the town of Highlands. Sylva officials discussed proposed changes to the town’s short-term rental ordinance that would ensure STRs are not causing further issues such as requiring trash and recycling containers at existing properties and mandating the number of parking spots available for guests.
In terms of where STRs should be located within the Sylva town limits, the proposed changes call for short-term rentals in the medium-density residential, low-density residential, downtown business, general business, high-density residential and professional business districts, but only as an accessory use provided that the primary use of the main structure is owner-occupied, or a long-term rental.
Another proposed consideration would allow Sylva to avoid some of the headache Highlands is currently enduring by discussing if existing STR should be grandfathered in and not have to comply or if a timeline and set length be given to allow them to fall in line if an ordinance is approved. Ultimately, the town of Sylva, with the advice of legal counsel decided to provide an exemption for existing STR moving forward.
A public hearing on Sylva’s draft short-term rental ordinance will take place at 5:30 p.m. Thursday, Aug. 25 at the Sylva Town Hall. To watch the town’s discussion on the proposed ordinance, view the meeting video here.