By Michael Praats | July 15, 2020 at 2:21 PM EDT – Updated July 15 at 9:02 PM
CAROLINA BEACH, N.C. (WECT) – Plans to regulate short-term rentals in Carolina Beach are on hold for now while town staff continues to work on the proposed ordinance that didn’t exactly ‘jive’ with state law, according to the Town Manager.
Although it has been a topic of discussion among town residents, town leaders have steered clear of the topic for years. In fact, former Mayor of Carolina Beach Joe Benson said on multiple occasions he believed the town needed to wait on guidance from state lawmakers since the topic has been one the General Assembly spent some time discussing — but have failed to reach any consensus on yet.
In May, the Town Council voted to set a public hearing for June to discuss amending the town’s zoning ordinance to regulate short-term rentals. On June 9, town leaders were given a look at what exactly the new regulations could look like if they were approved.
The following regulations were initially proposed for the town’s zoning ordinance:
- Any rental which is available for a rental period of less than 31 days shall register as an short-term rental.
- The length of stay must be a minimum of one full night or 24 hours.
- The property owner(s) shall register an short-term rental.
- Short-term rentals shall register with New Hanover County for Room Occupancy Tax.
- The registration fee is defined in the town’s annually adopted rates and fee schedule.
- The annual short-term rental registration fee is due on July 1 of each year. A renewal form will be mailed to all registered short-term rentals prior to the expiration of the current registration.
In Carolina Beach, short-term rentals are big business with more than 1,000 active rentals in the small beach town, according to data provided to the town by New Hanover County. This means there are approximately 1,000 chances for the town to collect room occupancy tax (ROT), but one of the concerns with unregulated rentals is that homeowners won’t willingly collect or pay that tax to the county (which the town eventually receives).
In New Hanover County, every hotel, motel, short-term rental, or any other business or individual offering lodging is subject to charging a room occupancy tax. Each municipality as well as the unincorporated area of the county can charge 6% for ROT.
For beach towns like Carolina Beach, this tax plays a crucial role in providing funding for beach nourishment and promoting tourism, which is why local governments want to ensure they are getting all the funds they are owed. The county breaks down the distribution of the funds in half, 3% and 3%.
“The first 3% collected will be distributed with 60% for beach nourishment. The remaining 40% is to be used by the Tourism Development Authority (TDA) to promote travel and tourism throughout New Hanover County … The additional 3% collected in the unincorporated area will be distributed to the TDA to promote travel and tourism in the unincorporated area, and to help fund the cost of dredging the county’s inlets and connecting channels if a county inlet loses federal funding. These inlets include Carolina Beach Inlet, Mason Inlet, and Masonboro Inlet,” according to New Hanover County.
In June, the town was presented with several options for moving forward that would see the town track short-term rentals, and charge owners of them registration fees. However, unlike the City of Wilmington, there are no plans for the outright ban on rentals or limiting the number permitted in a district.
The need to keep track of short-term rentals to collect taxes has not faced the same resistance that the prohibition of rentals has in other towns, but even without resident pushback, it still is not an easy task for town staff.
On Tuesday evening, Town Manager Bruce Oakley said town staff was postponing the ordinance until it could be reworked due to possible conflicts with state law.
“We are still doing some work on that, we found some of the laws that passed don’t quite ‘jive’ with the ordinance and what we proposed. We’re going to push that back and do a little more work on that and bring that back to Council at a later time,” Oakley said.
That law reads, in part, “In no event may a city do any of the following: (i) adopt or enforce any ordinance that would require any owner or manager of rental property to obtain any permit or permission from the city to lease or rent residential real property, or to register rental property with the city.”
While the law itself seems to contradict the moves made by other municipalities, like Wilmington, Carolina Beach appears to be waiting for more legal advice before moving forward with any new regulations.
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