Chapel Hill approved short-term rental rules in 2021. A big change is coming Jan. 1.

Owners of Airbnb, Vrbo and other short-term rentals in Chapel Hill will have to get the town’s OK to operate them beginning Jan. 1 or find longer-term tenants to live in their units.

Town Manager Maurice Jones reminded the Town Council about the pending change in his weekly email message Wednesday. The council approved the short-term rental rules in June 2021, setting an 18-month deadline — Dec. 23, 2022 — for property owners to comply.

Starting Jan. 1, property owners who rent an apartment, room or home for more than 14 days a year, to people who stay for up to 30 days, will have to get a zoning compliance permit and follow other safety and nuisance rules.

The rules apply both to those who operate dedicated short-term rentals and don’t live on site and those who do live in the homes but want to rent out an extra room or apartment.

Dedicated STRs will be limited to high-density residential, commercial and mixed-use zoning districts, such as the Blue Hill District, where the council has not specifically restricted the use.

STR owners who continue operating without a permit or who violate the rules after Jan. 1 will receive a warning and have time to fix the problems, said Rae Buckley, the town’s development services manager. Future options could include revoking an operator’s STR permit and issuing fines.

The application for a short-term rental zoning compliance permit will be posted Jan. 1 on the town’s Online Permit Center website at chapelhillnc.viewpointcloud.com/categories/1083.

Property owners can contact town staff with questions at 919-968-2718 or permits@townofchapelhill.org.

Chapel Hill’s new rental rules

These rules will take effect Jan. 1:

▪ Short-term rental operators must include a zoning compliance permit number in any advertisements.

▪ Only two apartments or condos can be short-term rentals in multifamily developments, unless there are more than 66 units. In that case, up to 3% of the total number of units can be STRs.

▪ An owner must be on site if the property is rented out to two different tenants at the same time.

▪ STRs can only be rented to someone who is 18 or older, and the person has to stay at least 18 hours, including one overnight stay.

▪ Only two people are allowed per bedroom, plus two extra people, not including children under age 12.

▪ Property owners must respond to emergencies within two hours, and must post their name, phone number and email address inside the unit.

▪ Events that could affect neighbors will require a separate, special events permit.

▪ STR owners must pay occupancy taxes, in addition to other local, state and federal taxes.

Residents having problems with a short-term rental in their neighborhood can reach out to the town through its Good Neighbors page, at tinyurl.com/57whkk9c.

Public concerns

Cities around the state started considering how to regulate short-term rentals several years ago, as more property owners turned to online marketplaces like Airbnb to earn extra cash and provide visitors with less-expensive lodging options.

This year, Airbnb rolled out a new “Airbnb-friendly” apartment program in Raleigh, Durham and dozens of other cities, The News & Observer reported. The program allows tenants to rent out a spare room or even their entire apartment if their landlords agree to let them participate.

However, unlike hotels, which must pass regular inspections and follow public health and safety guidelines, there are few rules for short-term rentals.

In addition, neighbors in some cities have grown increasingly concerned about the proliferation of STRs in established neighborhoods, especially those that bring parties, illegal parking and other nuisance behaviors.

In 2019, the Chamber for a Greater Chapel Hill-Carrboro, local hoteliers and the citizens group Chapel Hill Alliance for a Livable Town asked the Town Council to put some rules in place.

The groups argued that rules would protect neighborhood standards and slow the conversion of affordable housing into investor-owned rentals. They said the rules would level the playing field for hotel operators by requiring STR operators to meet public health standards and pay occupancy taxes.

Chapel Hill had more than 300 short-term rentals before the pandemic, which stopped most travel and forced some hotels to let employees go. By June 2021, town staff reported there were roughly 250 STR rentals remaining in Chapel Hill.

Although the industry has started to rebound, there were still only about 247 homes for rent in Chapel Hill as of Thursday, according to AirDNA, an online portal that tracks Airbnb and Vrbo rentals. Most required renters to stay for at least a night or two, the data showed.

Raleigh, like Chapel Hill, also limits where short-term rentals can operate and requires owners to get a zoning compliance permit each year.

Lawsuits filed

Other cities, including Wilmington and Blowing Rock, have been forced to change their rules after being sued.

A decision earlier this year by the N.C. Court of Appeals forced Wilmington to drop its registration process and a requirement that STRs be located a minimum distance from each other.

The ruling forced the city to reimburse roughly $500,000 in fees, plus interest, according to published reports.

In December, another appeals court decision upheld an STR operator’s “free use of property” after he sued the town of Blowing Rock over its new short-term rental rules.

In that case, the court agreed with a Watauga County Superior Court judge that the short-term rental should have been allowed to continue as a “grandfathered” use that was in place before the new rules.

The town did consider the Wilmington decision in crafting its permit system, Buckley said in an August interview. She noted that Chapel Hill’s rules are different because they are based on zoning and allowable land uses and do not include a registration requirement.

They’re similar to the town’s rules for home-based businesses, which focus on things like parking and noise, she said.

“That part really isn’t affected by the Wilmington decision. We reviewed the ordinance after that decision, and I think there may be a few tweaks here and there, but ultimately, the basis of it wasn’t challenged,” Buckley said.

What remains unclear is whether the Blowing Rock ruling will have an effect. The N&O was unsuccessful in its attempts to reach Town Attorney Ann Anderson.