Charlotte’s development rule book has had its fair share of hot-button topics, from efforts to build denser housing to regulations around tree protection.

But there’s one topic that’s received more public comment than any other: short-term rentals. For the first time, the city proposed regulations around the growing short-term rental market, found mostly on sites like Airbnb and VRBO.

The debate over short-term rentals has raged over the past decade as the market has grown.

In Charlotte, city officials have been discussing how to balance complaints from neighbors over problem properties and the fact that some people rely on the rental properties for additional income.

Some argue the rentals provide an option for tourists to stay while others say the rentals take more stock out of a limited pool of affordable housing.

The regulations appear in the first draft of the Unified Development Ordinance, a 608-page document that will become the rules for what can be built where in Charlotte for years to come. The city released the draft in October as it worked to overhaul the city’s zoning and land use policies.

But between intense public comment on the topic and a recent court ruling in Wilmington, city staff and officials appear poised to reexamine its proposed language on short-term rentals. That includes a requirement to keep all “whole dwelling” short-term rentals separated by 400 feet.

The review could mean “potential modification” when the next draft of the UDO is released next month, according to a comment posted recently by city staff on the UDO website.

It’s unclear what prompted the review or what direction the city might head. The city declined to make interim planning director Alyson Craig available for an interview last week.

On April 14, Mayor Vi Lyles called a special meeting set for May 5 where she and City Council will hold a UDO work session. It’s not yet clear whether they will discuss the rentals issue.

What Charlotte is proposing

In the UDO, the city proposes that someone renting out a whole dwelling would need to get a zoning use permit on two conditions: That the property owner show proof of possession of the property and that the permit be clearly noted in any listings or advertisements.

It also states that short-term rentals have to be separated by at least 400 feet from another rental in the residential-zoned areas of the city.

Zoning permits and separation requirements can be found throughout the UDO.

Any new adult care homes, for example, would need to be separated by 800 feet from any existing adult care homes in one of the residential zoning districts. All drug treatment clinics must be separated by 800 feet from one another, under the proposed regulations.

In a March 25 interview, Craig, the city’s interim planning director, told the Observer the zoning permits could give the city a better handle on how many short-term rental listings are in the city. The city could then use that data to make better decisions around specific regulations like a separation requirement.

For short-term rentals, the city proposed a number of other regulations, including having a local manager available around the clock. It also includes parking requirements.

The city has received hundreds of comments from the public on these regulations, more than on any other topic.

Some residents thanked the city for the 400-foot rule, saying they live close to someone who rents out their home and have problems with loud noise and other issues. The rentals are a “detriment of our community” as Airbnb corporate owners “gobble” affordable housing stock and monetize the properties through rentals, one person commented.

Still, many people expressed how they own the rentals and rely on the supplemental income.

A short-term rental community in Charlotte

Like many other big cities, Charlotte is no stranger to short-term rentals.

As of mid-April, there were 3,170 active rentals in the city, according to AirDNA, a vacation rental research firm.

Zoom into where Interstate 85 meets Sugar Creek Road and you’ll find Brett Ermer’s street of rental communities.

Located just off the Sugaw Creek Disc Golf Course on Merlane Drive, Ermer built 24 single-family homes starting around 2019. He initially planned to sell them but had trouble finding buyers. That’s when he had the idea to convert them into short-term rentals.

At first, he ran into some problems with loud parties and people being disruptive.

But, today, Ermer will tell you the model has been a success. He regularly hosts people visiting from out of town and even construction crews on a job for a few weeks.

Security cameras and policies about a minimum age and minimum two-night stays have helped cut back on issues. His community has a strict no party or event rule that comes with a $1,000 fine if broken. It also helps that Ermer lives in one of the homes himself.

When he heard about Charlotte’s proposed regulations, he thought it was unfair. He also doesn’t understand the logic of the 400-foot separation rule.

“In my opinion, this is the best way to do this,” Ermer said on a tour of North End Park, the name he’s given to his rental community, “because we have full control. You can provide a very controlled environment and there’s no neighbors that are going to be disturbed by this activity.”

‘You can only do so much’

Ermer sympathizes with residents who live in more traditional single-family neighborhoods and are upset about disruptive rental homes.

He supports the idea of some sort of rental registry, and thinks there should be more consequences for the people who rent the homes and abuse the properties.

As a host, Ermer said, “you can only do so much.”

Ermer’s homes are all built in a Scandinavian style with a pointed, triangular roof and clean design. They sit about 20 feet apart from each other.

If Charlotte’s UDO regulations were adopted as written, Ermer said he’d be put out of business. The same goes for the more than dozen people who clean the homes and take care of the property.

The Wilmington case

Ermer was keeping a close eye on the Wilmington case, which centers around an ordinance the City Council approved two years ago that required at least 400 feet separation between short-term rentals. The ordinance also put a 2% cap on rental properties in certain parts of the city.

Both the separation requirement and percentage cap meant people operating short-term rentals had to register their properties.

The city gave out registrations through a lottery system. Any existing rental operator who did not get a registration had to stop renting the home out within one year.

That’s what led to a challenge in the courts.

David and Peg Schroeder, who operated a short-term rental in Wilmington, filed a lawsuit in October 2019, after losing out on a registration to a nearby property, StarNews Online, a daily newspaper reported. The case wound up at the state appeals court, and a ruling was handed down April 5.

The ruling struck down certain parts of Wilmington’s short-term rental ordinance, but not all of it. The court made the ruling based on a state statute that prohibits local governments from requiring “permits and permissions to lease or rent” and “registrations of rental properties.”

It affirms that cities can still regulate short-term rentals through general zoning laws, government and legal experts told The Charlotte Observer.

Charlotte city spokesman Cory Burkarth acknowledged that the Wilmington ruling was a factor as city staff reexamines the short-term rental language. The large number of public comments is also being used by staff to review the regulations, Burkarth wrote in the email.

Wilmington case implications

The Wilmington ruling doesn’t necessarily prevent Charlotte from implementing its own separation requirement, said Rebecca Badgett, an attorney educator with the UNC School of Government.

The question becomes how closely is any requirement like that tied to getting the required zoning permit? And, how would Charlotte decide which property within 400 feet gets the permit?

One possible avenue Charlotte could take is a grandfather clause, Badgett said, meaning any existing short-term rentals could still operate.

More than two dozen comments on the UDO draft were by people who operate short-term rentals asking for a grandfather clause.

“If not, this will result in one of the properties (either ours or our neighbor’s) being unable to be rented as a short-term whole-dwelling rental, and potentially lead to discord between us as property owners if one of us is granted a permit and the other is not,” one rental operator wrote.

What the Wilmington ruling makes clear, Badgett said, is that short-term rentals are an independent land use. That means they can have independent zoning laws on them, much like a bed and breakfast or day care center.

Development standards like parking requirements, limits on large events, trash management, insurance and safety requirements can be applied to short-term rentals — as long as they’re not tied to any registration program, Adam Lovelady, a colleague of Badgett’s, wrote in a recent blog post.

There’s a good argument, Lovelady wrote, that a separation requirement could stand even with the Wilmington ruling.

Ultimately, cities have to decide what’s best for their community, Badgett said.

“The key focus has to be on the safety and community at large,” she said.

What does that mean?

It’s open, Badgett said, to different interpretations.