More downtown Asheville residential projects turn to short-term rentals

Jason Sandford

Jason Sandford is a reporter, writer, blogger and photographer interested in all things Asheville.

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More and more residential construction projects in downtown Asheville are adding the ability of owners to offer their property up as short term rentals, an issue members of the Asheville Downtown Commission expressed concerned about during their Friday meeting.

In a wide-ranging discussion, commission members asked city planners for more information on the STR trend downtown, tossed out ideas about how to handle it and ultimately agreed to write a memo to Asheville City Council. The commission, which acts an advisory board to council, did not take a formal vote. Concerns about the impact of short term rentals on affordable housing in Asheville, and about STRs impacts on neighborhoods in general, continue to spur discussions.

The condo effect

City planner Shannon Tuch opened the discussion by explaining “this new phenomenon” of residential construction projects, many of them in the form of condos, applying for permits to have a certain number of units be short term rentals. Most short term rentals downtown have been existing buildings, Tuch said, but now there’s new construction in the pipeline that’s adding more STRs to the mix.

Another confounding problem, Tuch explained, is that several of these construction projects have gone through most of the permitting process as a purely residential project, then gone back to the city to amend their project to allow for short term rentals. Three downtown projects have done that in recent months, Tuch said. Those amendments are allowed within the process, but it makes tracking the STR issue more difficult, she explained.

These projects are applying for a number of short term rental units that is below the number that triggers automatic review by Asheville City Council. Earlier this year, in an effort to more firmly control the proliferation of of new hotels, council members approved a regulation requiring any lodging use of 21 or more rooms to go before them for final approval.

Commission member Byron Greiner, an experienced Realtor, shed more light on how condo buildings operate, as well as what he’s seen on the ground downtown.

There are a couple of limiting factors when it comes to condo buildings turning to short term rentals, Greiner said. First, covenants and restrictions often don’t allow for short term rental use in condo buildings, and changing those covenants is a difficult process, he said. Also, condo units sold with a short term rental use have to be cash sales.

Those factors aside, Greiner added, condo units with a STR use can sell for a higher price. And it can sometimes be hard to enforce short term rental rules in a condo building.

Bauhaus South Slope is the name of a new project to build 17 townhouses on McCormick Place just south of downtown Asheville; six of those units have been designated as having a short term rental use.

In terms of what’s happening in downtown Asheville, the owners of condos at 37 Hiawassee are seeking to change their covenants to allow short term rentals, Greiner said. The owners of the new condos under construction at 55 South Market have sought permits to allow short term rentals, he said. And the Downtown Commission recently reviewed the plans for 17 new townhouses to be built on McCormick Place just south of downtown, with six of those designated as having short term rental use. (The project is dubbed Bauhaus South Slope.)

Creative solutions

All that action and more has moved Asheville City Council to take action along two tracks over the past couple of years. First, City Council approved rules that made it somewhat easier for people to rent out rooms inside their homes (called a homestay). And City Council increased fines for illegal short term rental operators (those operating without city permits), and stepped up enforcement, which had previously only been done on a complaint-driven basis.

On Tuesday, City Council will consider banning whole house short term rentals in the River Arts District. It is also considering maintaining, and extending, the same ban along the Haywood Road corridor in West Asheville.

Finally, various City Council members have talked about revisiting the ordinance they adopted in February requiring any lodging use with 21 or more rooms to come before them for final approval. And with two new City Council members joining the body later this year (Vijay Kapoor and Sheneika Smith won seats in Tuesday’s elections), there may be renewed discussion about allowing accessory dwelling units to be rented on a short term basis. That’s currently not allowed, but it’s been a contentious issue.

With all that background in mind, commission member Sage Turner asked Friday about what other creative solutions there might be to the vexing STR issue.

Turner, who works as finance manager for the French Broad Food Co-op, which is working on plans for a new mixed-used development downtown that would include affordable housing, wondered if short term rentals could somehow be used to subsidize affordable housing. She asked if the city could allow short term rentals in specific areas of the city for a specific amount of time, then sunset that use. And she asked if the city might develop a running tally of of the mix of downtown residential units and STRs, an index of sorts, that might aid policymakers in their decisions.

Turner, a member of the city’s Affordable Housing Advisory Committee, also read the committee’s stated position on STRs to the commission. (The committee opposes whole house short term rentals, and opposes the STR use for accessory dwelling units.) That position aside, the short term rental/Airbnb industry is popular, growing and impactful, she said.

“If we look at the city and look at where the best places for this industry to exist, I’m wondering if downtown is that place,” Turner said, adding that she’s generally opposed to the industry, but respects the fact that it exists.

Turner continued to push, noting that she met recently with a couple of City Council members who said they were not aware of the extent of the STR trends in Asheville.

“We should be emailing council. We should be following up. It’s on us to inform them,” she said, adding that “I’m not sure Brian represents us that way,” in referring to Councilman Brian Haynes, an ex-officio member of the Asheville Downtown Commission who attended Friday’s meeting but ducked out before the STR conversation, the last item up for discussion in the two-and-a-half-hour meeting.

Commission Chairman Michael McDonough agreed that there should be some form of communication between the commission and council on the issue, and added his own thought that City Council, by adopting new regulations governing hotels, had inadvertently fueled the STR industry.

“We should encourage council to be careful about this throttling down of hotel rooms,” McDonough said. “Council took this public angst about hotels and kind of threw something in the air,” and that action had a ripple effect that added to an increase in non-hotel, short term rentals, he said.

The communication to council should explain that the Downtown Commission “is seeing a significant amount of new housing projects downtown geared toward short term lodging, which we find disturbing,” and that City Council should should revisit its approach toward regulating hotels, McDonough said.

Greiner suggested wording regarding what’s happening in the condo market, and McDonough asked if commission member Dane Barrager could supply comments regarding the contributions to the community of the Downtown Asheville Residential Neighbors organization.

Commission member Pam Winkler seconded a plug for downtown residents. They’re critical to helping small downtown businesses survive economic downturns, she said, and they’re critical to creating a sense of neighborhood in downtown.

Turner agreed to begin drafting the memo.