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Do hoteliers run Asheville?
Short Term Rentals versus the industry
The Dec. 13 decision by Asheville's City Council to continue a crackdown on proprietors of short term rentals principally benefits the hotel industry. Period.

While some opponents of STRs cite threats to neighborhoods, and others claim that their motive is to preserve affordable housing, both arguments fall flat on close examination. I'll discuss some of this below. And no matter what you've heard, we have absolutely no idea how many short term rentals have been operating here. Black markets are always impossible to assess. With a system of licensure we could actually get some idea what's going on.

At the Dec. meeting I attempted to move the City toward a more rational approach - to make STR use of Auxiliary Dwelling Units legal (I'll paste my rather long disquisition at the bottom of this newsletter), and Brian Haynes and Keith Young joined my effort. An ADU is a rental unit with a stove. If one removes the stove, the same unit qualifies as a Home Stay and is legal. (For some reason the Council which wrote the law in the 1990s wanted people to share cooking facilities. Go figure.)

However the hotel industry won again. We live in a city where the hotel industry has run the table for .... well, I'd say years, but it has actually been a century.
 
Countless tax dollars flow to tourism advertising through multiple channels. Yet a couple of hundred private citizens who sought to reap some benefit are being hunted down and prosecuted. The City is paying an internet sleuthing company $26,000 per year to comb listings (more of your tax dollars at work) and the City Attorney has begun collection proceedings for tens of thousands of dollars in fines (which won't offset the cost - since NC fines go to the school system.) We have hired two new staffers (actually 1-1/2 staffers as specifically measured) and given them a car in which to stake out suspected STRs. The additional bill is $120,000, but that doesn't include legal staff working on taking cases to court. 

Meanwhile the hotel industry has over-built and is scrambling to fill too many rooms. Blocking residents from providing short term rentals is part of the business plan. (See my discussion of the Room Tax, below.)
In this issue:
Short Term Rentals versus the industry
The "housing crisis" argument
The "threat to neighborhoods" arguments: Parking
The "threat to neighborhoods" arguments: Strangers in the hood
The "threat to neighborhoods" arguments: Commercialization/zoning
The "threat to neighborhoods" arguments: Forced LTR
The Portland Model
My comments from the Dec. 13 City Council meeting
Hotel room tax
The "housing crisis" argument
Two years ago Asheville had a 1 percent rental vacancy rate. A "healthy" housing market is said to have a 4-6 percent vacancy rate - which makes sense when you think about people moving, refurbishing, advertising rentals, and so forth. There will always be some empties.

We suddenly learned we had a "housing crisis."  But that wasn't unique to Asheville. What happened is the Great Recession. Housing starts dropped off nationwide when banks quit loaning money and were only gradually recovering. In a tight market prices always rise, so rents were up. Due to the stagnation of wages (also nationwide) many people were paying an unhappy portion of their wages in rent.

Exacerbating the problem was an entirely separate market force—money had rediscovered downtowns. Whereas white-flight had hollowed out downtowns across the country after WWII, wealthy people learned a lesson that has been relearned throughout human history. There is a great deal of convenience, comfort, security and fun in living in a vibrant urban setting - and long commutes are a pain in the butt. Whether you are walking or riding a horse or driving a car, living away from the action imposes a lot of travel time. So rich people started bidding up city space. Again, that hurt affordability for average workers.

Downtown hotel room prices shot through the roof as well.

Enter STRs. Thanks to the internet home owners were suddenly able to book guests in a way that was impractical if not impossible in the past century. There have always been "rooming houses" - that's what local literary icon Thomas Wolfe's mother did for a living. But now there was a way for nearly anyone to participate in that economy. While it was illegal in many cities like Asheville, in residential neighborhoods, the ban was rarely enforced, and pretty much complaint based. Loud parties, parking issues, and other problems were handled on a case-by-case basis, and many of the hosts had no idea they were operating illegally.
 
Tourists who couldn't afford hotel rates took advantage of these lower priced options, and others who preferred a homey atmosphere did the same.

There seem to have been a couple or a few hundred people participating in Asheville and it had no discernible affect on the housing shortage. Nor did stepped up enforcement have anything to do with the construction boom that now has our vacancy rate up to a "healthy" 5-7 percent. Rent increases have leveled off, some new developments are offering the first month free (an 8 percent reduction for the first year), and we can safely assume that rents on older units will soon drop.

Meanwhile it turns out that about half of AirBnB hosts quit each year. Not everyone enjoys the work or the interruption of chatting with a flow of new acquaintances. (See the Portland Model, below).
The "threat to neighborhoods" arguments: Parking
Based on no evidence at all, some NIMBYs (Not In My Back Yard) have insisted that short term rentals constitute a threat to neighborhoods. The purported threats involve crowded parking, the presence of strangers, "commercialization," the diversion of housing stock that "belongs" to the community at large, and more. I addressed the housing crisis above, but here I'll take on some of the others.

Parking issues can be solved and exist completely apart from STRs. In fact, a statistical study would probably find that short term guests contribute less to parking problems than long term renters. A couple renting a unit probably has two cars, weekend visitors probably have one. A family with two parents and two teens may have four cars, a weekend family visit may involve Uber or Lyft or a taxi from the airport. Nor is there any demonstrable link between parking and the length of stay. A 30 day rental (the legal minimum) might have no cars or ten. Where on-street parking is a problem in residential areas we can easily regulate it by assigning two spaces per home - which the inhabitants can apportion however they wish.
The "threat to neighborhoods" arguments: Strangers in the hood
Some STR opponents are terribly distraught over the idea that strangers may be staying next door. I have to wonder what sort of insular environment they are living in. There are strangers in my neighborhood every day. Lawn care, house cleaners, plumbers, carpenters, electricians, utility workers, newspaper deliverers, friends of friends, maybe an occasional suspicious character casing homes for later robbery.

People who book rentals through AirBnB are more routinely vetted than any of the above. If a patron of AirBnB causes trouble at one location she or he will not be able to rent elsewhere. The system is self-policing - in the same way that eBay vendors or customers who cheat or default are blackballed. This is one of the great virtues of systems with rigorous feedback. 

And I would wager that very few modern Americans live in neighborhoods where everyone knows everyone, where everyone is on the up-and-up, where new owners or renters don't cause problems, and so forth. We are an enormously mobile society and residents come and go with regularity. Even a long-term renter may have out-of-state-plates.
The "threat to neighborhoods" arguments: Commercialization/zoning
In my view the danger of commercialization is a strange argument, similar to the "strangers" problem discussed above. With daily traffic on my street from UPS, FedEx, furniture store, carpet installers, construction traffic, and on and on - commerce intrudes constantly. Moreover, many people telecommute or otherwise work at home. Some run eBay stores out of their homes, others hang out attorney or other service shingles, some do massage therapy and others may teach or tutor.

The separation of land uses via zoning is archaic and is being rapidly supplanted around the world by what's termed New Urbanism. Of course we want toxic and noisy industries as well as large scale shopping centers kept out of residential areas, but even those malls are on the wane. The new model is for everyone in an urban area to live within a 5 minute walk of most necessities. "Mixed use" is the new ideal. Automobile based suburbia is on the way out, now seen as inconvenient and unsustainable in a world beset by climate change.

Asheville is implementing a new form of zoning, one area at a time. It is referred to as a Form Based Code. Instead of telling people what they can do on their property, we ask people how they want their neighborhoods to look. We then create a zoning overlay that encourages mixed use. In multi-story buildings that can mean retail on the street level and offices or residences upstairs. In single-story neighborhoods it means allowing some commercial intrusion. 

Uses of old buildings are changing. For example in Montford and Haw Creek churches have been repurposed as restaurants, as a commercial kitchen, and as a shared office space to provide people who work from home with some of the amenities common in larger businesses (copiers, 3-D printers, conference rooms and so forth).

This is the new normal. It is tied to the new popularity of downtown living mentioned above. Living in remote suburbs is less and less popular. Homes for sale in those remote communities are often on the market for months or years. And the young generation are turning away from car ownership as an expensive and unnecessary part of their lives.
The "threat to neighborhoods" arguments: Forced LTR
This argument is tangential to the "housing crisis" assertions discussed above. 

Some STR opponents insist that if ADUs cannot be rented short term they will automatically be available for long term rental. This is very often not the case. For example home owners with an apartment might want to keep it available for friends or family who visit occasionally. Perhaps a child is attending college but is home for holidays and summer break and uses the unit as a semi-independent home during those times. Others may like the idea of making some extra money with STR, but don't want a full time tenant living upstairs or down, or above the garage out back. (Full time tenants can be difficult to evict, and may bring intrusions or visitors that are unwanted.)

An extension of this argument is that forcing the ADU owner to rent long term will increase affordable housing. The truth is that many STR hosts invested a lot of money and effort in upgrading their units. The STR market is quite competitive and gaining a great reputation on AirBnB means more tenants and commanding a higher price. (And remember, many made this investment thinking that the business was entirely legal.) These upgraded units will not be "affordable" as long term rentals. They will be at the top of their market niche.
The Portland Model
Portland, Oregon, is among the forward looking cities who understand that STR can be part of a strategy to increase the availability of LTRs over time. Portland has decided to incentivize construction of ADUs by making use as an STR legal. Furthermore, they offer discounts on building permits for ADUs. The reasoning is as follows: Because many AirBnB hosts quit each year, someone who builds a new ADU for STR isn't likely to continue renting short term for a long time. But each new unit will be in use for 75 years. Due to this bonus construction of ADUs in Portland has gone from a handful each year to approximately one per day.

Other cities including Eugene, Oregon, Austin,Texas, Santa Fe, New Mexico and New Orleans have decided to follow suit in various ways. Most ban whole house short term rentals, but permit STR of ADUs. Appropriate rules about the hosts' presence, availability in case of problems, parking, insurance and safety inspections have been adopted in some cities. 
My comments from the Dec. 13 City Council meeting
 
I appreciate the effort made by members of the task force. It is generally helpful to garner input from the community on serious issues facing the City.
 
However I believe this process was deeply flawed for a number of reasons including the methodology, the exclusion of participants, misinformation and a lack of context.
 
First and most obvious is the reported vote from the task force. On Council we can’t vote yeah and nay on the same question. Participants were permitted to vote twice, both for legalization and for maintaining the ban on Short Term Rental of Accessory Dwelling Units. Some participants don’t seem to understand the vote or the voting method and the lack of transparency is troubling. The results presented were made to appear objective but the interpretation appears to be entirely subjective. At least one participant felt he was misled in the process.
 
Secondly, the most critically affected parties were excluded from the discussion. We created a $500 per day fine, boosted enforcement with an extra $120,000, and then asked STR operators to come in and discuss their business. As a practical matter that means they had to quit renting or risk prosecution. Nor could they solicit letters of support from neighbors who were perfectly happy with the STR next door.
 
The whole debate has been conducted in the shadow of the Bowen Report which indicated a 2014 rental vacancy rate of 1 percent. But that information was already dated when Mr. Bowen delivered it in January 2015. It has become less and less accurate every month since. Mr. Bowen said a 4-6 percent vacancy rate is normal in a healthy market. In the third quarter of this year one industry analysis shows a 6.8 percent vacancy rate. As measured by Mr. Bowen’s yardstick we now have an excess of rental units. Elimination of a few dozen Short Term Rentals had nothing to do with that change.
 
Finally this task force did not consider the context of their deliberations.
A major driver of the debate is concern expressed by those who say that STRs are a threat to neighborhoods. If that is the issue, then we on Council need to decide how we can best address threats to neighborhoods with the resources we have available. If identifying the most urgent neighborhood problems had been the function of the task force it might have identified barking dogs or gas powered leaf blowers, noise from the stump grinder on Riverside, or parking problems or the need for a new leaf vacuum truck, or any number of things.
 
As Chair of the Public Safety Committee I would say the most serious neighborhood problem in Asheville is the fact that we lead the state in pedestrian deaths. We have been reminded of that with two cyclists hit in recent weeks and the tragic death of two children crossing a road which has no marked crossings. Judging by the signs around town that urge drivers to Slow Down, I’d say concern about speeding is widespread. A pedestrian struck by a car going 20 mph has a 95 percent chance of survival. At 40 mph the survival rate goes down to 10 percent. Why do I mention that?

Not far from where I live, Barnard Ave. is a cut through between W.T. Weaver Blvd. and Edgewood Rd. As more people discovered it, a lot of outsiders began to use it at alarming speeds. Recently the City installed 8 speed bumps and traffic has calmed remarkably in just a few weeks. Most cars are now traveling at the posted speed of 20 mph.Transportation Director Ken Putnam tells me that each speed bump cost $2500, so that’s a $20,000 improvement for that neighborhood.

The additional STR enforcement money,$120,000, would cover 8 speed bumps in 6 more neighborhoods. We can’t afford to put sidewalks on every street like Barnard, but we can afford some traffic calming there. It would be great to give Ken Putnam the resources he needs to address a long list of other streets that need calming.
 
So as a Council member who needs to make the best choices for our City, I ask myself, is a neighbor who hosts well-behaved short term guests in an Accessory Dwelling Unit the bigger threat to a neighborhood? Or is it strangers racing through at breakneck speed? We could put down speed bumps in six more neighborhoods each year instead of chasing down your next door neighbor who rents some rooms. Or we could direct that money to sidewalks on Lakeshore or Haw Creek, or install pedestrian crossings on Fairview Rd. where those two children died. I am clear on the choice I would make for my own neighborhood.
 
Here’s where I come down. The reported Task Force vote was questionable and contradicted by participants. It did not include substantive input from the most affected parties. It operated under the misapprehension that the 2014 rental housing crisis is ongoing. And in consideration of a purported negative impact on neighborhoods it did not consider the big picture of how the City ought to apportion limited resources to address the most serious problems in the community. Finally I note that when the City ran a survey on our Web site, 77 percent of respondents favored adding Accessory Dwelling Units to the Homestay program, and in testimony before Council a majority of speakers agreed.

It is time for this Council to make a decision that should have been made a year ago and I believe something like the Portland solution is the best path forward.

 
Therefore I move to instruct Staff to prepare the regulatory changes needed to make Short Term Rental of Accessory Dwelling Units legal in the City of Asheville.
 
 
***
The vote was 3-4, with Bothwell, Haynes, Young in favor
Manheimer, Mayfield, Smith and Wisler opposed
The hoteliers won again. 
Hotel room tax
For years the hotel industry fought an increase in the room tax. Asheville's was about the lowest in the state and the City wanted an increase with some of the money to go to the City. After all, we provide all kinds of services to the many tourists who visit.

The industry said "NO WAY! A higher tax will drive away business."

Then they built too many rooms. Suddenly the industry demanded an increase in the room tax - to pay for more advertising to fill their beds. And they got it. (Note that the tax has always been dedicated to increasing tourism. When some money is occasionally handed to the City it is to improve the Civic Center or Soccer Fields or other things that can be added to the attractants for visitors.)

Also note: AirBnb collects room taxes from its hosts and remits them as required by law. Other STR operators do this voluntarily. Some presumably do not. With a legal system we would know how many, who they are, how many visitor nights there are, and much more.
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Bothwell for Buncombe  •  POB 1877  •  Asheville, NC 28802

http://cecilbothwell.com

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