John Locke Update / Research Brief

Raleigh’s Restrictions Could Make It Harder for Families Seeking Shelter from the Storms

posted on in City & County Government, Law & Regulation, Legal Update, Local Government, Property Rights, Rights & Regulation
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WTVD reports on a market innovation filling an obvious need during a natural emergency: where can thousands of temporarily displaced families find places to stay?

You can’t just build new hotel rooms overnight, after all, and emergency shelters can be unpleasant havens of disease.

The problem is that lodging supply cannot adjust quickly to accommodate a sudden spike in demand. It’s a problem straight out of Luke chapter 2: too many people looking for guest rooms at the same time leave some families without.

To make matters worse for hotels, if they price according to the sudden spike in demand, they face accusations of price-gouging. They’re essentially forced to sell out and leave needy families going without.

In steps Airbnb with new supplies — and even volunteers who offer these supplies charitably:

Until Sept. 16th, families displaced by Hurricane Dorian and deployed relief workers will be able to stay at the homes of more than 800 Airbnb hosts in Florida, Alabama, Georgia, South Carolina and North Carolina. The offer is part of Airbnb’s Open Homes program. For more information, go to Airbnb’s website.

Airbnb’s map showed dozens of listings available in Charlotte, Raleigh, Durham, Greensboro and Winston-Salem.

This is great, right? Well, next year, the City of Raleigh will effectively restrict how generous its homeowners can be with emergency lodging. A new state law may help, but it’ll probably take a lawsuit to find out.

On May 21st, the Raleigh City Council passed tight restrictions on homestays (or short-term rentals), the kind of business Airbnb is in as the top “community-driven hospitality company.” Those restrictions (with some exemptions) include:

  • You can’t rent your whole house
  • You can’t rent more than two rooms
  • You can’t rent to more than two adults per room
  • You can’t rent rooms with a kitchen or cooking space
  • You can’t rent rooms with privacy from the main home
  • You can’t rent to anyone unless you are present on-site during their stay
  • You can’t rent at all without first getting a permit for $172 and renewing it annually for $86

The restrictions will take effect on January 1, 2020, and the fine for any violation will be $500 per day.

On July 1st, Session Law 2019-73 was ratified. According to the Legislative Analysis Division of the General Assembly, this new law limits the ability of local governments (such as Raleigh and Asheville, whose limits inspired Raleigh’s) to regulate properties subject to the state Vacation Rental Act.

Furthermore, it is certainly the legislature’s intent to do just that, as is their prerogative under the Local Government section (Article VII) of the North Carolina State Constitution.

But Raleigh city spokeswoman Julia Milstead told IndyWeek that, “after reviewing [the law], we do not believe it has any impact on the city’s current regulations related to short-term rentals.”

It’s a strange position for Raleigh to be in. On the one hand, the city proudly keeps a web page listing accolades for what a hip, tech-savvy, vibrant place it is for young workers and families. On the other, its regulatory climate seems geared to prevent any emerging innovation that may upset the old ways.

In the meantime, as IndyWeek reported, “a lawsuit challenging the city’s rules … is in the works.” If the next city council doesn’t rethink Raleigh’s restrictions, that might be what it takes.

Jon Sanders is an economist studying state regulations, that spreading kudzu of invasive government and unintended consequences. Serving as Senior Fellow of Regulatory Studies and also Research Editor at the John Locke Foundation, Jon gets in the weeds of all… ...

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