Setting up a home as a short-term rental may soon get a little easier in Fayetteville.
The Planning Commission on Monday voted 6-2 to recommend removing a rule that requires owners of short-term rentals to get a permit from the commission before they can begin operating. The City Council will have the final say in the coming weeks.
Operators would still have to get a business license and a safety inspection to operate legally in Fayetteville.
Short-term rentals are categorized as either Type 1 or Type 2.
Type 1 rentals are homes that the owners live in, but sometimes rent out rooms or the entire house to guests when they’re out of town. Permits are not required for Type 1 rentals.
Type 2 rentals are rented all year, and have no owners living in them. Type 2 owners currently have the additional requirement to obtain a conditional use permit from the Planning Commission.
Owners of both types must pay the city’s 2% hotel, motel and restaurant (HMR) tax, and are required to obtain vacation rental or short-term rental insurance coverage. They must also designate a representative who can be at the unit within three hours in case of an emergency. The law also states that no more than 2% of all residential units in Fayetteville can be Type 2 rentals.
The regulations were adopted in April 2021, but owners were given a grace period to come into compliance. Planning Commission meetings have since included 22 permit requests, with 10 featured on Monday’s agenda. More are on the way, however, since a total of 53 applications have been submitted since the grace period ended.
City staff said after working with the new regulations for over 15 months, some adjustments can be made to streamline the approval process.
Britin Bostick, the city’s long-range planner, said the city has so far issued 339 business licenses for short-term rentals, which includes 63 for Type 1 properties and 276 for Type 2. City staff denied a total of 103 applications, but those were because of incomplete business licenses, not problems with owners.
“Those (applications) were not denied because people didn’t have suitable properties,” said Bostick. “They just simply didn’t complete the requirement.”
In total, the city has received five complaints about short-term rentals, only two of which resulted in a violation notice. Both violations were resolved quickly without staff needing to revoke anyone’s business licenses.
Bostick said with so many applicants and so few problems, staff believe any future issues can be resolved using the business license enforcement mechanism, which allows staff to administratively revoke the license of a problematic short-term rental owner.
Under the current permit process, Bostick said complaints and investigations must come back through the Planning Commission which could take weeks to resolve. And those discussions are limited to the property’s compatibility as a short-term rental, not necessarily an owner’s ability to properly manage renters.
“That’s a big driver behind why we’re making our recommendation,” Bostick said.
Since most of the complaints have so far been about parties being held in short-term rentals, that type of violation is best handled administratively through the business license enforcement policy, she said.
Staff said while things have been mostly smooth, they still believe the regulations should be a permanent part of city law. That would require the City Council to eliminate a Dec. 20 sunset clause which was built into the original ordinance.
“We think this is certainly an appropriate regulation for the city,” Bostick said. “We think it provides great enforcement provisions.”
Commissioners Mary Madden and Jimm Garlock said they like the idea of speeding up the code enforcement process, but they’re concerned about removing the permits since they require neighbors to be notified when a property owner wants to convert a home into a Type 2 short-term rental.
“It’s fundamentally important for neighbors to be aware if a property next door, across the street or around the corner is going to potentially become vacant 50% of the time and have people coming in and out the other 50% of the time,” Madden said.
Jessie Masters, the city’s development review manager, said a condition could be added to the business license application process that would require a short-term rental owner to notify their neighbors of any plans to convert a home into a rental. Several commissioners said they would welcome that change, and suggested the city’s long-range planning commission consider a formal recommendation for it.
Madden said while it’s not yet an issue in Fayetteville, neighborhoods can become destabilized when a large amount of homes are converted into short-term rentals with no full-time occupants.
“Are we aware of how much this may be fundamentally changing our neighborhoods?” Madden asked, pointing to some cities that are facing a housing crisis that’s attributed to an influx of short-term rentals which have reduced an already limited housing supply.
“We’re living in a community where housing affordability and housing for families is a very serious problem,” said Madden. “A lot of these properties are basically going from residential properties to commercial properties for all intents and purposes and a lot of their property values seem to be going up.”
Madden and Garlock voted against the proposal, while commissioners Andrew Brink, Mary McGetrick, Porter Winston, Quintin Canada, Sarah Sparkman and Matt Johnson voted to recommend the change. Joseph Holcomb was absent Monday.
Those who voted in favor said while the city might need to one day adjust its fundamental approach to short-term rentals, the lengthy permit process should be eliminated in the meantime if only to give some relief to city staff who have recently been tasked with preparing a large amount of applications that don’t appear to need Planning Commission approval. They also said getting a recommendation to the council quickly is important to ensure a decision can be made before the Dec. 20 sunset clause strikes the entire ordinance completely.
Garlock said he voted against because he thinks a public notification solution is needed now.
“I think it’s kind of shorting the neighbors by not notifying them,” he said.