The City of Greensboro is considering a new zoning ordinance that will allow real estate speculators to turn residential neighborhoods into havens for short-term rentals administered by companies like Airbnb, VRBO, or similar companies that are not so well run.
Under current law, homeowners have the right to rent out all or part of their homes to short-term tenants (fewer than 30 days) so long as the owner resides on site. This is a great way for homeowners to reap the value of their property while still being accountable to neighbors.
But under the proposed law, institutional investors will be able to buy any kind and any amount of residential property in the city -- houses, apartments, condominiums -- and turn it into a commercial enterprise -- a hotel-like business very unlike a traditional residence.
The operators of these businesses will not be required to have an office in Greensboro or even in Guilford County and they will not be required to provide contact information to the neighborhoods where they do business. If they habitually rent to people who make a lot of noise or cause problems in your neighborhood, you may have no one to call.
The proposed law puts no limit on how many units the investors can own nor on how closely they can be spaced. Over time such businesses can crowd out normal residents; I have seen such a neighborhood in Arizona, where state law prevents their regulation.
This is not an unlikely scenario in Greensboro. A landlord in my neighborhood, who owns most of the residences at one end of one of our streets, told me that he gets offers every week from out-of-state investors who want to buy his properties. He said that if he chose to sell to them, one of our neighborhood's streets, currently a mixture of single- and multifamily residential, could become a commercial hotel zone almost overnight.
The proposed ordinance contains some language to discourage the use of such rentals for large gatherings, but the wording is so vague that operators would often be able to weasel out of enforcement. Even if they didn't, the burden of reporting violations would fall on neighbors, and the wheels of zoning enforcement turn very slowly. Neighbors could be stuck with months of non-compliant investors. And would the next owners be any better?
This was the experience of one of my neighbors, a single woman living alone next to a short-term rental. Over many months she was unnerved by late-night comings and goings outside her bedroom window (which would be permitted under the proposed ordinance), and experienced one all-night party with over 50 people in the front yard. The owners were hostile to her when violations were reported. She was tempted to leave the neighborhood and it took months for zoning enforcement to alleviate the problems.
The city's zoning enforcement administrator has told me that the city does not currently have the staff to enforce the proposed ordinance and would depend on a third-party vendor to track properties through sites like Airbnb and VRBO. But there is nothing in the ordinance guaranteeing that the city would hire such a vendor, nor that it would be effective at policing investors trying to avoid scrutiny by using less reputable websites.
What's the motivation for the new ordinance? I've heard informally that some city leaders think Greensboro doesn't have enough affordable hotel accommodations and see this as an easy fix for that perceived problem. But for a lot of reasons, it's a lousy solution, if the problem actually exists.
First, the burdens the new ordinance creates will fall unequally on neighborhoods. High-wealth neighborhoods and newer ones will see few downsides, either because of the economics of the business model or because of HOA deed restrictions. Instead, pre-war, middle-income neighborhoods, some of which have historically been starved of capital investment because of unfair lending practices, will become target rich environments.
Such neighborhoods that work hard to maintain a good quality of life will be especially attractive to investors whose aim is to profit from neighborhood ambience without shouldering the responsibilities of being a good neighbor. You won't see them volunteering for Neighborhood Watch, beautification projects, or organizing holiday celebrations. Their aim is to be free riders on those efforts, monetize the ambiance, move the profits they gain out of the neighborhood, and lay the burden of enforcement on the community's back. This is sometimes called "the devil's socialism," where profits are privatized and the problems are borne by the community at large.
The economics of the proposed ordinance definitely favor the interests of the investor class -- those who have excess capital or easy access to credit and are seeking ways to leverage it -- over working- or middle-class homeowners whose main investment is their home.
If you're wondering why the proposed ordinance tips the scales so heavily in favor of those who would skim profits from neighborhoods while minimizing accountability to them, the makeup of the committee that wrote it will give you a clue. Of the fourteen members of the committee, only two represented neighborhoods, and those two were not at all pleased with the proposal. They were far outnumbered by representatives from Triad Real Estate and Building Coalition, the Greensboro Realtors Association, the tourism industry, owners of short-term rental businesses, and attorneys of various stripes. The technical term for stacking a regulatory committee this way is "letting the foxes guard the henhouse." Just kidding! It's actually called "regulatory capture", which is what happens when the people whom a law is supposed to regulate get to write the law themselves.
You can probably tell I think it's a terrible idea to open residential neighborhoods up to what amounts to a citywide change-of-use rezoning at the behest of industries that have no interest in maintaining neighborhoods' quality life. If you agree with me, I urge you to call the Mayor and City Council and let them know what you think.
David Wharton is a 30-year resident of Greensboro and has been involved in crafting and administering the City's land use policies for over 15 years.
A public hearing on the proposal will be heard at 5:30 pm, Wednesday, March 1, 2023, Council Chamber, Melvin Municipal Office Building, 300 W. Washington St.