Planning Board Rejects 2-Lot, Short-Term Rental Overlay on Ransom Street

Planning Board Rejects 2-Lot, Short-Term Rental Overlay on Ransom Street
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By David Rogers. August 18, 2017. BLOWING ROCK, NC — If various Blowing Rock area real estate professionals are proven correct, the new upscale townhouses on Ransom Street may sit on the market for quite some time, unsold, after the Blowing Rock Planning Board rejected a request for a rezoning overlay that would permit one or all of the units to be rented short-term. The near unanimous decision was made at the Planning Board’s Thursday night meeting in front of more than two dozen residents and other constituent interests.

Blowing Rock News coverage of Blowing Rock Town Government is made possible by a sponsorship from Blowing Rock Medical Park and PLUS Urgent Care, divisions of UNC-Caldwell Health Care System

COVER IMAGE: Ransom Street resident Mike Quinto asked the Planning Board to be consistent, indicating that short-term rentals are already occurring on Ransom Street in addition to the legal rentals at Royal Oaks condominiums.

Planning Board member George Ellis recites the various standards, criteria and conditions for granting a short-term rental overlay district.

Although the Planning Board does not have final say in the matter and only makes recommendations to the Board of Commissioners, receiving the Planning Board’s blessing is an important first step for most projects wanting to go forward.

R&R Builders, the developers of the recently constructed multi-family townhouse complex (four units) at 486 and 488 Ransom Street with a courtyard between the two buildings, requested what is called an “overlay district rezoning” for their property, which is currently zoned R-6M, Multi-family.  An R-6M zoning does not permit short-term rentals unless the property is grandfathered in, such as is the case with Chetola Mountain Resort. What is termed a “Short-Term Rental Overlay District” can be applied to an R-6M or R-10M, according to the Town’s land use ordinances (Town Code 16-9.3.1),

In October 2015, the Blowing Rock Board of Commissioners unanimously approved R&R’s conditional use permit (CUP) request for the construction of the new multi-family development. It had been likewise unanimously blessed by the then sitting Planning Board at its September 2015 meeting.  Both bodies suggested in their public hearings that the project was in keeping with the goals and objectives for Blowing Rock’s growth through infill development that were outlined in the adopted 2014 Comprehensive Plan.

For a review of the 2015 Town Council decision, please click HERE for the Blowing Rock News report on the Town Council meeting of October 15, 2015.

Scott MacIntosh of Blowing Rock Investment Properties spoke as a representative of the applicant, R&R Builders

At the time, one of the key justifications for approving the infill project was the prospect of providing housing in Town that might be affordable for young professionals or older, perhaps retired folks wanting to downsize their residence. The possibility of short-term rentals for the development was raised by then sitting Commissioner Dan Phillips, who asked Planning Director Kevin Rothrock whether the development would be subject to short-term rental restrictions.

Rothrock replied to Phillips’ October 2015 question by noting that it is in a zoning area where short-term rentals would be permitted, “…if an overlay district was established for this piece of property.”

In addressing the Planning Board Thursday night, realtor Scott McIntosh of Blowing Rock Investment Properties, speaking on behalf of R&R Builders, noted that there is significant interest in the properties, “…but the key question every prospective buyer asks is if they can be rented short-term.”

Just as in the October 2015 Town Council meeting where the development CUP request was approved, no resident from anywhere along Ransom Street nor from the immediate neighborhood rose to speak against the use of the new town homes as potential vacation rental properties.  Nonetheless, most of the Planning Board members voted “no”.

Town Manager Ed Evans presented the request in the absence of Planning Director Kevin Rothrock

George Ellis was the lone abstention, stating in his comments after the public hearing that he was “on the fence.”  He said he understood the general objections to short-term rentals, but also suggested that the owner’s right to make reasonable best use of the property for financial gain needed to also be considered, especially since there were other properties in the area renting short-term.

At times, Thursday night’s public hearing on the overlay request got bogged down into a debate over the merits of short-term rentals and the impact on property values, both on the subject property for which the overlay is being applied, as well as on surrounding properties.

Mike Quinto, a Ransom Street resident and proposed developer of three bungalows on a nearby property, admitted that he was “talking out of both sides of his mouth” in extolling the virtues of attracting full-time residents to Blowing Rock, then explaining how having a short-term rental could significantly increase the value of a homeowner’s property.

“Take my neighbor,” Quinto said. “They have a small house on the back side of their property that they rent to a nurse at the Foley Center for $800 or $900 per month, probably. The nurse is a good tenant and a full-time resident of Blowing Rock living in what for her is affordable, in-town housing. The property owner has a dependable revenue stream being generated from their real estate asset.

“But,” he continued, “if that same property owner was permitted to rent their small house short-term to vacationers, they might be able to get $1,000 or more per week for the same rental unit.  There is a dual impact here. On the negative side, the nurse would probably have to find somewhere else to live and maybe it wouldn’t be in town or as close to her job.  At the same time, the property owner sees greater financial gains from the increased cash flow from the rental unit AND the overall property value more than likely will increase because of the revenue stream the rental unit provides. And with that increased revenue stream, the owner can make improvements, whether in terms of exterior (i.e. landscaping, painting) or interior (furniture, carpeting, appliances).”

Quinto also addressed a sensitive subject to many in the audience and sitting on the Planning Board: the alleged violation of short-term rental restrictions of other property owners on Ransom Street and elsewhere within Blowing Rock town limits.  He noted that owners renting their homes for less than 28 days are often made available on peer-to-peer platform websites such as Airbnb and Vacation Rentals By Owner (VRBO).

Planning Board chairman David Harwood asserted that to recommend approval would be tantamount to approval of “spot zoning”

“Whether you realize it or not,” Quinto cautioned the Planning Board, “it is happening.  This property owner (R&R Builders) is doing it right and coming to the Town for permission to rent short-term.  You need to be consistent (in applying the Town ordinances). If the Town denies them the right to rent short-term as the best use of their property, then what are you going to do about the ones who are (thumbing their noses) at the restrictions?”

Quinto admitted that his proposed three bungalows on Ransom Street would benefit from short-term rentals so he has a vested interest in the Planning Board’s recommendation to the Town Council on this project.

Ellis, who abstained from the final vote, took great pains to outline for everyone’s benefit the six standards, criteria and conditions for granting a Short-Term Rental Overlay District, as outlined in the Town Code (for the exact wording of Town Code, CLICK HERE). Paraphrased, he outlined:

[1] The proposed amendment was initiated by the owner of property within the proposed District.

[2] The proposed overlay is within an existing R-6M zone.

[3] Since construction is complete, it is now an existing multi-family complex. While it now effectively has a single member (the developer) property owners association, that number will be expanded as soon as the units are sold and the developer will back out of the POA.

[4] The proposed short-term rental must be compatible with established land uses in the immediate vicinity.  Some of the neighboring properties are single family homes, but some of those may be being rented short-term. Plus Royal Oaks is nearby, and another multi-family complex is across the street.

[5] No expected adverse impacts from vehicular traffic should be experienced as a result of short-term rentals

[6] Additional screening may be required by Town Council if it concludes that the property is inadequately screened from adjacent residential properties

Despite the testimony by Quinto and others that short-term rentals were occurring in the Ransom Street neighborhood, including legally at Royal Oaks condominiums (In researching this report, Blowing Rock found 7 condos for rent short-term on the Airbnb and VRBO platforms online, as well as at least one entire house on Ransom Street currently available), most Planning Board members seemed to conclude that granting a short-term rental overlay district for the subject property would not be compatible with established land uses in the immediate vicinity.  Chairman David Harwood articulated an argument that to grant such a request would amount to “spot zoning,” which is generally regarded as zoning specific parcels within a larger zoning area for uses that are contrary to the municipality’s master plan.

Afterwards, Blowing Rock News solicited the thoughts of others at the meeting that were not sitting on the Board for their viewpoints, if different.

“I really don’t understand this Planning Board decision,” one local businessman said, speaking on condition of anonymity because he does business with one of the board members. “You had no one from along Ransom Street get up and speak against the request for an overlay that would permit short-term rentals. Those are the people directly affected. If the proposed overlay district is incompatible, those are the people who would be saying so and they were clearly given notice of the request and this public hearing.

“You also have evidence of short-term rentals already occurring in the neighborhood and in the immediate vicinity, legally and illegally,” he added. “These people (R&R Builders) are trying to do it the right way by, essentially, asking permission. They are following the process laid out for them when they were applying for the conditional use permit in 2015. And the longer those units sit on the market, the less likely they are to appreciate in tax value, which impacts the Town’s revenue from property taxes. Blowing Rock needs to increase its tax base without increasing property tax rates any further.

“And,” he continued, “it also means that occupancy taxes from what would be legal short-term rentals will not be collected by the TDA, one-third of which goes to the Town toward infrastructure improvements and maintenance.  I don’t want to get into a discussion regarding the merits or not of short-term rentals, but in my opinion the only Planning Board members that were really thinking critically about this issue were George Ellis, who at least seemed to understand enough of the intricacies of the issue to give him pause, and Joe Papa, who at least offered a couple of conditions upon which he could approve the project.

“Now in other jurisdictions,” he noted, “government policy makers are making these sorts of decisions about short-term rentals in order to protect the interests of the hotel industry and local real estate management companies because existing lodging businesses are the most hurt by the competition from Airbnb and VRBO into an area. If that is what they are doing, they need to be upfront about it. On its own merits, this decision by the Planning Board just doesn’t fly, in my opinion, for whatever it is worth.”

Blowing Rock News has so far been unable to speak with R&R Builders’ principals or MacIntosh to ascertain their next steps in the request process, if any. Presumably they could go directly to the Board of Commissioners with their request, but without the blessing of the Planning Board the odds are not in their favor for approval.

In other business, the Planning Board met jointly with members of the Blowing Rock Appearance Advisory Commission (BRAAC) and representatives of Destination by Design to review and provide input on the proposed Sunset Drive Streetscape and Gateway Project. Several ideas and opinions were floated, but no decisions were made. The Destination By Design team indicated they would now take those suggestions from the Planning Board and BRAAC and incorporate them into the next iteration of the design proposal.

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