The latest round of legislative changes across the country has brought about a dramatic curtailing of local municipal power in North Carolina, a new initiative to cut down on disruptive party houses in Philadelphia, and a proposed bill in Honolulu that would increase restrictions on STRs just two years after another bill supporting regulations was passed.
North Carolina: Two bills supporting STR operators
North Carolina further curbed the power of local governments with the passing of House Bill 829. The purpose of this new legislation was to clarify that the limits already imposed on local governments in regulating rental properties were not limited only to regulation covering their building code or minimum housing code. The code restricts local governments in several ways, including the following:
- Permits are only required for ordinance violators, unless the STRs have had more than four violations in the past 12 months, or two or more violations in 30 days, or ranks in the top ten percent of properties that have “crime or disorder problems.” STR operators will have 21 days after receiving a written notice to correct violations.
- Towns can’t require STR owners or operators to enroll or participate in any government program as a condition of obtaining a certificate of occupancy.
- The only taxes that can be levied on STRs are those already in place against other commercial and residential properties, with some exceptions.
One example of how the passing of Bill 829 will affect local governance is seen in Cornelius, NC. The town banned STRs in the early 2010s, but with high tourism demand and the passing of Bill 829, many interests in the town are advocating to have the ban lifted.
Philadelphia, PA: Stronger Laws to Prevent Party Houses
After numerous reports of damage, disruption and violence caused by party houses, the Philadelphia City Council passed a bill that requires operators who rent out their properties through STR platforms to obtain short term rental licenses. The annual fee for a Limited Lodging Operator License is $150, and the initial license fee for a Limited Lodging and Hotels Booking Agent License is $7,000, with an annual renewal fee of $5,000. While there were a few complaints about the effect of the fee on small businesses, the overall response to the bill has been positive.
Honolulu, HI, to Rogue Hotel Operators: “Pick a Lane”
Honolulu had already legislated strong STR controls with the passing of Bill 89 in 2019, which included an end to issuing any new permits for whole-house rentals in an effort to discourage illegal hotel operations, and Bill 85, which banned any STRs in residential areas, including single rooms in owner-occupied homes.
Now the City’s Department of Planning and Permitting (DPP), in response to continuing quality of life concerns, is proposing Bill 41 to continue to reduce STRs and “try and restore some sanity back into the residential neighborhoods.” The proposed bill is generating strong feelings, which have generated 750 pages of written testimony from residents on both sides of the debate. STR operators argue that the 2019 laws have not yet had a chance to make an impact. Many are also strongly opposed to the requirement that operators in condo-hotel buildings would have to hire the same management company used by the building instead of being free to choose their own. Advocates for the bill have been distressed by the impact the rentals have had, with one resident testifying, “As a homeowner, it has devastated my neighborhood, it has devastated the quality of my life.”
The proposed legislation would also put pressure on many buildings in Waikiki that operate as both hotels and apartments. DPP Director Dean Uchida says the agency is trying to force property owners to “pick a lane” and settle on one option, saying, “It’s like they said they were going to do one thing, and they used it for another.”
Other elements of the Bill would include:
- A ban on renting property for less than 180 days (increased from the current 30-day limit), with some exceptions that include students, temporary health care workers and homeowners in transition.
- A tax on transient vacation rentals, where the owner does not live onsite, at the hotel and resort tax rate.
- A $5,000 application fee and a $2,500 annual renewal fee for all STR owners.
- Renters limited to groups with no more than two adults per bedroom.