The race to find equity and accountability for short-term rentals 

Short on Time

click to enlarge charlestoncuckooman.jpg

Baird Hoffmire

Seated around a table inside a small room at the Gaillard Center, members of Charleston's Short-Term Rental Task Force were almost two hours into their Sept. 20 meeting when Richard Buchanan first spoke at length. The reserved attorney appointed to the task force by City Councilman Peter Shahid had remained fairly silent as the group debated the finer points of shaping the new set of regulations that will govern short-term rentals throughout the city. But when Buchanan did address his fellow task force members, it wasn't to discuss parking requirements or business permits. His concern was the rapidly changing city that hummed around him.

Across the street from the task force meeting, a blue and orange fumigation tent stretched over Emanuel AME Church, as the building undergoes more than $1 million in repairs in preparation for the church's bicentennial.

New shops and restaurants continue to stretch farther and farther up the peninsula, while the landmark storefront at Morris Sokol Furniture sits empty after almost a century in business.

The building in which the Short-Term Task Force met that day still holds the gleam of the renovations that were completed just two years earlier. The small room where they debated the risks of opening the entire city up to short-term rentals didn't even exist before then. First built in 1968, the original Gaillard is unrecognizable when compared to what currently sits in its place.

Facing the final stages of crafting what will become Charleston's rules on short-term rentals, Buchanan reminded the rest of the task force of the long-reaching consequences of what they decide.

"What we're doing here, what we know as residential is no longer going to be residential as we know residential. We talk about residential. We talk about commercial. We're going to have people getting a business license to run a business in a residential area. The Pandora's box has been opened," said Buchanan. "If we sign off on this, the neighborhoods that we grew up in, it's no longer going to be the same. It's not going to be the same, and there's no turning back."

A Limited Welcome

click to enlarge "In Charleston, I think everyone has a positive view of bed and breakfasts, and that's a term we've used for a long time ... However, nationally and even internationally, everyone is referring to what our bed and breakfasts actually are as short-term rentals." - DUSTIN WATERS
  • Dustin Waters
  • "In Charleston, I think everyone has a positive view of bed and breakfasts, and that's a term we've used for a long time ... However, nationally and even internationally, everyone is referring to what our bed and breakfasts actually are as short-term rentals."

Who can live in Charleston and who is allowed to visit? With home prices surpassing the half-million dollar mark and hotel rooms renting for hundreds per night, it's looking like only one kind of person: wealthy.

According to the College of Charleston's Office of Tourism Analysis, visitors to the Charleston tri-county area are most likely to be white, college graduates earning an upper-middle income. On average, tourists in Charleston spent $944 per adult per trip in 2015.

With the city considering new rules for short-term rentals and bed and breakfasts, it makes you wonder where those with average incomes fit in, not to mention those earning less. The workers who make the beds and bus tables can't afford to park downtown, much less live here. Another recent study by the Office of Tourism Analysis found that almost 30 percent of hospitality workers on the peninsula reported spending more than $100 on parking each month.

Residents are clamoring for a hotel moratorium, but Mayor John Tecklenburg's push for a pause in new hotels hit a roadblock from City Council. Meanwhile, as rising housing costs continue to price longtime residents out of the city, City Council has offered up a proposed referendum to spend $20 million on affordable housing. That final decision will be made by voters in November.

click to enlarge "The Old and Historic District is the primary concern and it's really what has brought us here." -Bob Seidler - DUSTIN WATERS
  • Dustin Waters
  • "The Old and Historic District is the primary concern and it's really what has brought us here." -Bob Seidler

Though progress has been slow, the city's Short Term Rental Task Force finally made some headway as the clock ticked down on their deadline. The 18-member task force is made up of appointees from all over the city, chosen by the mayor and members of City Council. There are bed-and-breakfast owners, real estate professionals, representatives from both Historic Charleston Foundation and Preservation Society of Charleston, an engineer, a professor, small-business owners, and a slew of attorneys. The task force was charged with drafting recommendations for the regulation of short-term rentals and is to deliver those recommendations to the city Planning Commission during a joint meeting scheduled for Oct. 5.

So, are short-term rentals being used as a scapegoat in the debate over preserving Charleston, or are they a legitimate Pandora's box, as Buchanan stated?

Well, his fellow task force member and manager of advocacy at Historic Charleston Foundation Christopher Cody, says that some types of STRs "would almost be disastrous." Cody has maintained his position that operators of short-term rentals should only be allowed to rent out space in their primary residence and should be required to remain on premise while renting out their property, positions that a strong majority of the task force supported. Other points of agreement that made their way into the group's final set of recommendations include setting the maximum occupancy for rentals to four adults, 18 years or older. Accompanying minors would not be factored into the final head count for short-term rental properties.

Those applying for a short-term rental permit would also be required to submit building plans clearly outlining the areas in their home that will serve as rental units, list their permit number on all rental advertisements, present guests with city regulations and safety information, and provide proof of at least $500,000 worth of insurance.

click to enlarge "There is one issue that we have heard about repeatedly from small-business owners and from the citizens of this city that I think is very clear. And that is the enforcement of our current laws or the lack thereof." -Chris Cody - DUSTIN WATERS
  • Dustin Waters
  • "There is one issue that we have heard about repeatedly from small-business owners and from the citizens of this city that I think is very clear. And that is the enforcement of our current laws or the lack thereof." -Chris Cody

But with these rules taking shape, enforcement remains a major concern for the city staff and the task force. In August, the task force voted in favor of an official recommendation crafted by Cody that called on the Planning Commission and City Council to undertake "emergency enforcement measures and allocate necessary resources" to address illegal short-term rentals. At that same meeting, the group was informed by Lee Batchelder, Charleston's zoning administrator, that city staff simply lacked the resources necessary to police short-term rentals operating outside of the city's current regulations. According to City Planner Jacob Lindsey, who feels that a newly devised set of citywide regulations would greatly aid in enforcement efforts, a funding request for three additional staff members and services related to enforcement will be inserted into the 2018 budget plan.

As for those found in violation of the new regulations, city fines are limited by state law to $1,087 for this type of zoning infraction, but fines can be meted out on a daily basis depending on the offense. Also included under the task force's proposed set of recommendations is giving the city's zoning administrator the power to revoke rental permits for serious offenders.

But just how prevalent are offenses from short-term rentals? In the past, Batchelder has told the task force that offenses in traditional bed and breakfasts in the city are virtually nonexistent. However complaints over unruly Airbnb bachelorette parties causing a ruckus are never far from the minds of many members of the task force. For marketing firm CEO and task force member Shanequa Renee Singletary, the threat of short-term rentals has been overstated.

"The current research and data that we've been presented has come second to hypothetical concerns that may or may not arise, or concerns that could be addressed within the permitting or licensing process, or elsewhere," she says.

click to enlarge "What we're trying to promote is responsible owner-managers. If we're going to allow it, the owner has to be ultimately responsible for what happens on that property." -Kristopher King - DUSTIN WATERS
  • Dustin Waters
  • "What we're trying to promote is responsible owner-managers. If we're going to allow it, the owner has to be ultimately responsible for what happens on that property." -Kristopher King

Class System

Short-term rentals and bed and breakfasts have operated in Charleston throughout the city's history, but there has never been a unifying set of regulations to govern these businesses.

For the city's Old and Historic District, which mostly consists of the area south of Calhoun Street, homes currently must have been built before 1860 if they are to serve as a bed and breakfast, an age requirement that was set in the city's 1931 zoning ordinance. On Sept. 25, the task force voted 9-2 in favor of a three-class system that would set the new age requirement for STRs in this district at 50 years. Moving forward, STRs in the Old and Historic District —designated as Class 1 rentals— would also be required to first earn the honor of being individually listed on the National Register of Historic Places. This means that the National Park Service, which currently oversees the register, would have a major say in what is allowed to become a short-term rental in the peninsula's most historic area.

Moving farther north to the Old City District, or the Class 2 area which stretches across the peninsula bordered by the Crosstown and Calhoun Street, bed and breakfasts must be at least 50 years old. The task force chose to keep this age requirement in place for future STRs in this area, but perhaps their most significant decision was extending the 50-year requirement throughout the city.

"If we do this, there will be no short-term rentals on Daniel Island. One-third of West Ashley, one-third of James Island is not going to qualify. We're going to have lawsuits on our hands," Buchanan told his fellow task force members during their Sept. 20 meeting.

But when the group met the following week, it was decided that the 50-year mark should stand as the line in the sand for short-term rentals citywide. While some STR owners in these portions of the city may soon find themselves able to operate without fear of offense, new STRs in one neighborhood could eventually be brought under the same regulations as everyone else.

Current regulations limit legal short-term rentals to commercially zoned areas in the Cannonborough-Elliotborough neighborhood. While all existing, fully permitted, legally operating bed and breakfasts and STRs on the peninsula will be allowed to continue operating under the old rules, the future for Cannonborough-Elliotborough proved to be a thorny issue for the task force.

A draft ordinance from city staff based on task force comments suggested a one-year sunset period before bringing future STR operators in Cannonborough-Elliotborough in line with the newly recommended requirements. Currently, city staff estimates that at most 20 percent of legally eligible properties in this neighborhood are operating as short-term rentals. The one-year delay on enforcing the proposed requirements for STRs in Cannonborough-Elliotborough proved to be too much of a hurdle for the task force, and it was decided that how best to manage this neighborhood would have to be decided in a separate ordinance.

click to enlarge "The current research and data that we've been presented has come second to hypothetical concerns that may or may not arise, or concerns that could be addressed within the permitting or licensing process, or elsewhere." -Shanequa 
Renee Singletary - DUSTIN WATERS
  • Dustin Waters
  • "The current research and data that we've been presented has come second to hypothetical concerns that may or may not arise, or concerns that could be addressed within the permitting or licensing process, or elsewhere." -Shanequa Renee Singletary

But regardless of what is finally decided for this area, short-term rentals in Charleston will always be divided by those who came before the final ordinance is put in place — meaning those who can leave homes completely unattended while they rent out the entire property — and those who came after.

Sarah, a former STR host who has asked for anonymity, lives in a neighborhood adjacent to Cannonborough, and says the rules catering to some and not others has long been a problem.

"I am one of a dwindling number of African-American homeowners downtown," she says. "They speak of preserving the neighborhoods downtown, well this has nothing to do with preservation, and everything to do with privilege."

Sarah adds, "My ancestors rented their homes out to African-American people back in the '40s through '60s when blacks weren't even allowed in hotels and were marginalized based on the color of their skin. But now that I have a chance as an individual homeowner in a 'fair economy' to participate in this trend, I'm denied access and blocked just based on the location of my house."

A Question of Affordability

One concern among those who publicly oppose allowing short-term rentals to operate freely across Charleston is how these properties will affect housing costs in a city already beleaguered by rising rents. While the proposed requirement that STRs can only be operated while the home's primary owner is present, and age requirements on rental units would deter far-off investors from building new homes for the sole purpose of short-term renting, careful consideration must be paid to how housing prices could be affected by short-term rentals.

"There's no question that AirBnb moves the needle, but how much and is it even significant?" asks Dr. Daniel Guttentag, a new professor at College of Charleston's Department of Hospitality and Tourism Management. While his research deals more with the consumer side of AirBnb, he notes that a few areas have embraced home sharing, such as Halifax, Nova Scotia, and Bermuda. In these communities, Guttentag says, renting out homes has long been a part of their economies — locations with limited supplies of land and real estate, like Charleston.

Christopher Cody notes that while college students living off-campus "absolutely does play into our affordability issues," he says the students add more value to the community than tourists. While both groups may shop and dine at local establishments, putting dollars into the local economy, Cody says the students visit a larger web of more diverse businesses and need more services, such as veterinarians, car mechanics, and barbers.

Cody admits that there is a positive impact to the historic fabric of Charleston when an STR is held to the same standards as a traditional bed and breakfast, while allowing a resident to have extra income or maintain a historic property. He says, "Our goal at Historic Charleston Foundation has always been to harness the positives of short-term rentals," and to make sure neighborhoods aren't "hollowed out by STRs."

Charleston isn't alone in grappling with how best to manage STRs. Unfortunately, set regulations on short-term rentals have played a part in driving some operators from the area to cities more supportive of the industry.

Former Charleston resident and AirBnb host Ellen Pfeiffer decided to move to Frederick, MD, a city she says has "no written restrictions being imposed on STRs, only the application of common sense" and rents out her home there.

"With no downtown hotels in the historic district, the city is endorsing, in fact promoting, STR hosting," says Pfeiffer. "The local residents do not want the building of hotels within the boundaries of the historic district, as they believe it will diminish the quality of historic preservation which is so valued."

Commercial vs. Residential

At the 2012 U.S. Conference of Mayors, which former Charleston Mayor Joseph P. Riley Jr. attended, there was a unanimous resolution passed in favor of allowing short-term rentals. Among other things, the resolution states that "the U.S. Conference of Mayors urges support for economic development opportunities through the visitors industry by encouraging regulations of the short-term rental industry that establish a reliable way for the municipality to identify and contact the short-term rental owner; make the tax collection and remittance obligations clear to the short-term rental owner; and treat short-term rental tenants the same as long-term rental tenants. Regulations that accomplish all three can achieve a high level of compliance, and are highly effective."

This document also states that, "Using a property as a STR does not change its status from residential to commercial. Regulations should clarify the definition of residential use to include short-term rentals."

The debate about short-term rentals started heating up as Riley was leaving office, and Tecklenburg, whose wife was fined in 2014 for operating an illegal short-term rental, stepped into the position. Over time, the position of the city has evolved. After being selected almost a year ago, Charleston's Short-Term Rental Task Force has met almost a dozen times to decide what will shape the city's new regulations. A regular at every meeting is artist and former STR host Matt Doszkocs, a passionate proponent of owner-operated short-term rentals. Doszkocs expressed his opinions to the task force in late August, following a presentation by Joseph Montano, government affairs manager with Expedia, which oversees popular short-term rental platforms HomeAway and VRBO.

During his presentation, Montano told the task force that the average property owner listing rentals on HomeAway is a 55-year-old woman with a higher education. According to Montano, more than 70 percent of those listing their properties on HomeAway are able to cover more than 50 percent of their mortgage by renting out their homes. For Doszkocs, the debate boils down to extending equal rights to property owners throughout the city.

"Regular people renting out spare rooms in their Charleston homes goes back to our earliest records," says Doszkocs. "However, today, the city's wealthy are allowed to operate B&Bs, but the socioeconomically less fortunate are not."

Priced Out

The city's 2016 Peninsula Hotel Study found that the average daily rate per room on the peninsula has increased by almost 53 percent since 2006, and now sits slightly above $200 a night. For those traveling on a modest budget, this makes staying in downtown Charleston inaccessible. These budget travelers often turn to STRs in order to afford to stay in a popular destination.

Having operated an STR both in and outside of Charleston, Pfeiffer thinks that stringent STR rules would eliminate or reduce the number of available STR hosts, and as a result restrict the availability of less-expensive accommodations for potential visitors.

"In turn, this reduction in tourism will reduce the economic base for revenue flowing to the restaurants, historic tours, local social venues, etc.," Pfeiffer argues.

When comparing the impact of hotels and STRs on neighborhoods, Dr. Guttentag says that for STRs, "undoubtedly, the impact is spread out." Those visitors are choosing an STR property because it offers a kitchen and a washing machine and more room for traveling with children. Guttentag's research shows that, "Staying with Airbnb leads many guests to increase the time they spend in a destination." He says this type of traveler stays longer and spends more money at local businesses.

With the final set of recommendations governing short-term rentals voted upon by the task force, city staff will fine tune the proposed ordinance set to go before the Planning Commission and City Council. Mayor Tecklenburg sat alongside task force members for the first portion the group's final meeting. He thanked them for their service and got a glimpse at a draft of the ordinance that will eventually be debated in council chambers.

Meanwhile, some suggest that city officials look beyond the confines of Charleston and examine how other cities handle the growing empire of short-term rentals.

"I would recommend that Charleston 'open up' their thinking and not formulate an overly restrictive set of regulations," says Pfeiffer. "Restrictive laws are, for the most part, neverending — meaning that you cannot effectively anticipate/predict every instance to be addressed by these perhaps well intended restrictions."

Pfeiffer adds, "It will be impossible to keep everyone happy with the outcomes."


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