ASHEVILLE, N.C. — In this top tourist town, there’s a lot of money to be made renting a house or apartment to weekend visitors.
Except it’s illegal in almost all cases. And doing it can mean big fines, according to stringent city rules passed three years ago in response to concerns over neighborhood disruption and exacerbation of Asheville’s housing shortage.
It’s a fight that’s playing out across America, in big cities such as New York and San Francisco as well as smaller hubs, as housing advocates and city leaders try to balance the popularity of short-term rental platforms — which have allowed millions of property owners to find new side incomes — against the needs of permanent residents facing a dwindling supply of affordability housing.
In Asheville, most property owners caught running a short-term vacation rental, known in common parlance as an “Airbnb,” stop before the $500 a day fine is imposed, Asheville officials say.
Reid Thompson isn’t one of those.
As of May 10, Thompson had racked up $850,000 in fines. That’s according to a March 22, 2017, legal complaint from the city plus daily accruals calculated by The Citizen Times for his three rentals in the Five Points neighborhood just north of downtown.
The longtime resident said he ignored letters from the city, which he said disrupted his neighborhood and pushed him into the short-term rental business by allowing a grocery store to turn his street into a commercial truck corridor.
“I guess my thinking is, ‘Yeah, that’s a huge risk.’ But I don’t think their fines are collectible, because I think they are outrageous and capricious,” he said.
The city, meanwhile, is suing Thompson to collect the money and make him stop the rentals, which Asheville’s rules make illegal in nearly every part of the city.
The primary goal with enforcement isn’t to collect fines, but to make property owners stop breaking the short-term rental rule, city attorney Robin Currin said. North Carolina law requires that the fines, like all such civil penalties, go to the local school board.
“Even when fines have been assessed, the city works with the property owners to resolve those fines once they have brought the property into compliance,” Currin said.
From a cottage industry to big business
In the days before Asheville was a modern tourist mecca, few people cared if a neighboring house or apartment accommodated renters for a weekend or two.
It wasn’t allowed in areas zoned for residential use, but before 2015 the fines weren’t enormous — $100 a day. Enforcement was infrequent and only happened when someone complained.
Then three major things happened: Asheville blew up as a must-see travel destination, the city faced a housing crunch, and Airbnb and other online short-term rental platforms became big business.
The result was a clash between would-be short-term rental owners, including some who said it was one of the few ways for them to make a decent income in Asheville, and those who said the trend was turning neighborhoods into de facto hotel districts and making it hard for residents to afford housing.
The City Council has fallen on the side of tighter regulations with a ban on new short-term rentals in nearly all of Asheville, $500-a-day fines and aggressive enforcement.
In one exception, property owners can appeal to the council for special zoning to allow the rentals. In another exception, people can do something called a homestay, renting out a couple of rooms provided the long-term resident is present.
“For decades, Asheville has been a popular destination with a vibrant vacation rental market,” said Airbnb spokesman Christopher Nulty in an emailed statement. “We are eager to work with the City of Asheville to develop new rules that regulate short-term rentals, not punish them.”
Rental proponents pushed back with two lawsuits, according to a Citizen Times public records request for all legal actions from 2015 through February of this year. Both were dismissed.
The city, meanwhile, brought two lawsuits against owners it said failed to pay fines. One owner, Anne Marie Doherty, said she was facing nearly $300,000 in fines on two properties. She insists she didn’t receive a violation notice the city sent and only learned after two years that the penalties had been piling up.
“I would not have let fines accrue like that. I’m not the kind of person that could live with that stress,” said Doherty, who lives in one of the properties in the Grove Park neighborhood.
She settled with the city for $5,000 plus another $5,000 paid out over two years but said she’s considering whether to restart her own legal action against the city because of trouble she has had getting municipal staff to sign off on a homestay permit.
At the time of the city’s March 22, 2017, complaint against Thompson, his fines were $232,500 and continued to climb.
A grocery store and a 14-year fight
Thompson said he didn’t want to turn his properties into Airbnbs.
When he was working as a real estate appraiser in 2000, Thompson said he saw potential in a street of run-down homes just outside of downtown, which was creeping out of decades of decline.
“When I bought the properties, I was literally running prostitutes off my front porch,” he said.
At one point, he owned more than five buildings on Maxwell Street, which is buffered from the main drag by a former A&P grocery store that had been converted into a home health workers office.
In 2004, Greenlife Grocery of Chattanooga, Tenn., turned the site back into a grocery store, kicking off a long-term conflict with Thompson and other nearby property owners. Residents said the problem was a new loading dock that brings small and large trucks onto their street and turned Maxwell into a busy loading zone, even in early-morning hours.
Rachael Dean Wilson, spokeswoman for Whole Foods Market, which now owns the store, said despite the long-running complaints, Greenlife “strictly adheres to the city ordinance that dictates where, when and how deliveries to the store can be received and ensures that the delivery truck drivers follow those rules as well.”
Thompson and some other residents say noise and other disturbances have made it hard to keep long-term tenants, so they started renting to tourists who are gone during much of the day and into the night.
With fines stacking up, Thompson is now looking for a different remedy: asking for a zoning change that allows the rentals. At a May 2 Asheville Planning and Zoning Commission meeting, he and and his representative, Joe Minicozzi, an urban development consultant, made the pitch.