NC Appeals Court urged to throw out Chapel Hill’s short-term rental ordinance

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  • A lawsuit at the N.C. Court of Appeals argues that Chapel Hill had no legal authority for the owner residency requirement in its short-term rental ordinance.
  • Chapel Hill adopted new short-term rental rules in June 2021, but delayed the effective date. New rules took effect this year.

The latest filing in a lawsuit at the N.C. Court of Appeals challenging Chapel Hill’s short-term rental ordinance argues that the town had no authority to put that ordinance in place.

The brief filed Wednesday urges appellate judges to reverse a trial court order favoring the town.

“This case poses a simple issue,” wrote attorney Celie Richardson, representing the plaintiff challenging the ordinance. “Defendant-Appellee Town of Chapel Hill did not have statutory authority to enact the Short-Term Rental Ordinance to regulate zoning and land use based on where the owner or owner’s agent lives or doesn’t live, and for what length of time.”

“Ultra vires” is a legal term for acting beyond one’s power or authority.

“For a defense of this ultra vires ordinance, the Town is trying to create issues that may look friendlier to its position but are not part of this case,” Richardson wrote.

The town tries to “mischaracterize” the lawsuit, Richardson argued. The town labels the challenge of an “unlawful owner-agent residency requirement” as a “nonsensical attempt” to regulate the type of person who can own property.

Chapel Hill also tries to create two separate legal standards for ordinances with and without fees. “No authority is presented in support of this proposition, because there is none,” Richardson wrote.

The brief also challenges Chapel Hill’s characterization of the residency requirement as a type of land use, comparing the requirement to single-family or multi-family designations. “If successful, this would be a fundamental change in the nature of land use regulation,” Richardson wrote.

“In short, the Town is seeking reversal of well-settled law,” according to the plaintiff’s brief. “What the authorities cited by the Town for these propositions actually stand for is the principle that all municipal authority is limited by the enabling statutes.”

Chapel Hill approved new short-term rental restrictions in June 2021, then set an 18-month deadline for property owners to comply. That deadline passed in December 2022.

Property owners who offer rentals — rooms, apartments, or full homes — for more than two weeks a year and for people who stay up to 30 days face new regulations. They need a zoning compliance permit and have to follow other rules linked to safety and nuisances. The rules apply to off-site owners and on-site owners renting out extra rooms or apartments. Chapel Hill set limits on the number of short-tern rental properties permitted in multifamily developments.

Town staff estimated in June 2021 that Chapel Hill had about 250 short-term rental properties.

Plaintiff Eric Plow owns Chapel Hill Rentals, which bills itself online as the “#1 rental agency providing short-term and long-term housing that is within close proximity of the University of North Carolina campus.”

He filed his complaint against the town in September 2021. Orange County Superior Court Judge Allen Baddour ruled in favor of Chapel Hill in July 2022.

No date has been set for the Appeals Court to consider the case.