In 2019, the city approved an ordinance that would regulate short-term rentals (STRs). The ordinance included a cap on rentals and a lottery for areas that had more STR applicants than allowed. It also had requirements that homeowners register their properties with the city if they wanted to operate a rental.
Then, a lawsuit was filed by Dave and Peg Schroeder — who had purchased a property to use as a vacation rental when not occupied by family, according to WECT News. The city lost in Superior Court but appealed.
Last month, the North Carolina Court of Appeals ruled that the City of Wilmington violated state laws by making the Schroeders and other homeowners register their properties along with collecting registration fees. Despite the city's protests, the court found that the language of the law was very clear, stating that the law prohibits cities from requiring any permits or permissions for STRs — and adding that the law was "in no way ambiguous." In the wake of the decision, other North Carolina cities — including Charlotte — are also scrapping or reexamining proposed or existing STR regulation plans.
Mayor Bill Saffo wanted to explain that the city doesn’t intend to appeal the decision made by the court of appeals.
“We need to be very clear to those citizens out here that when this was taken to court, from the Superior courtroom to the appeals process, that it was a unanimous decision at the appeals level,” he said.
In a statement following the agenda review meeting, the city confirmed it would not appeal the case and would amend its ordinance to remove registration, cap, and lottery requirements.
"All other provisions of the ordinance will remain in effect, including parking and insurance requirements, bedroom maximums, ground floor restrictions in the Central Business District, local manager requirement, and nuisance related requirements," according to the city.
City council members will vote at its Tuesday night meeting on an ordinance that will pay out over $500,000 dollars to reimburse residents who paid registration fees.
According to the city, "Registration fees collected since the inception of the program amounting to $443,428 and related third-party processing fees amounting to $10,189 will be reimbursed to the respective homeowner. Accrued interest, calculated at a rate of 6 percent and estimated to total $57,867 will also be remitted to the homeowners."
The city plans to have reimbursement checks, along with an explanation for the refund, delivered to STR operators who paid fees by June 30.
The city cited the following rationale for the original restrictions.
- The city sought to balance the negative effects against the benefits of a properly regulated STR market and protect the community.
- The ordinance intends to preserve the integrity of neighborhoods, limit disruptions to the primary purposes of neighborhoods (a place where people actually live), help ensure public safety, and minimize the effects on housing affordability.
- Benefits of STRs include property owners incentivized to keep properties in good repair, stabilizing home ownership, maintaining property values, and strengthening the local economy.
