Asheville Airbnb fight nearing $1M in fines for property owner

ASHEVILLE - In this top-destination tourist town, there's a lot of money to be made renting a house or apartment to weekend visitors.

Except it's illegal in almost all cases. And doing it can mean big fines, according to stringent city rules passed three years ago in response to concerns over neighborhood disruption and exacerbation of Asheville's housing shortage.

Most of the time, property owners caught running a short-term vacation rental, known in common parlance as an "Airbnb," stop before the $500 a day fine is imposed, city officials say.

Reid Thompson isn't one of those.

As of May 10, Thompson had racked up $850,000 in fines. That's according to a March 22, 2017 legal complaint from the city plus daily accruals calculated by the Citizen Times for his three rentals in the Five Points neighborhood just north of downtown.

While most people might be panicked at the daily click of a negative $1,500 odometer, Thompson actually isn't counting. The longtime Maxwell Street resident said he ignored letters from the city, which he said disrupted his neighborhood and pushed him into the short-term rental business by allowing a grocery store to turn his street into a commercial truck corridor.

"I guess my thinking is, 'Yeah, that’s a huge risk. But I don’t think their fines are collectible because I think they are outrageous and capricious,'" he said.

The city, meanwhile, is suing Thompson to collect the money and make him stop the rentals, which Asheville's rules make illegal in nearly every part of the city.

The primary goal with enforcement isn't to collect fines, but to make property owners stop breaking the short-term rental rule, city attorney Robin Currin said. North Carolina law requires that the fines, like all such civil penalties, go to the local school board.

"Even when fines have been assessed, the city works with the property owners to resolve those fines once they have brought the property into compliance," Currin said.

Thompson, who owns the property through the limited liability company Parkway Court, is still in violation and has never come into compliance or offered to do so, she said.

From a cottage industry to big business

In the days before Asheville was a modern tourist mecca, few people cared if a neighboring house or apartment accommodated renters for a weekend or two.

It wasn't allowed in areas zoned for residential use, but before 2015 the fines weren't enormous — $100 a day. Enforcement was infrequent and only happened when someone complained.

Then three major things happened: Asheville blew up as a must-see travel destination, the city faced a housing crunch and Airbnb and other online short-term rental platforms became big business.

The result was a clash between would-be short-term rental owners, including some who said it was one of the few ways for them to make a decent income in Asheville, and those who said the trend was turning neighborhoods into de facto hotel districts and making it hard for residents to afford housing.

The City Council has fallen on the side of tighter regulations with a ban on new short-term rentals in nearly all of Asheville, $500-a-day fines and aggressive enforcement.

In one exception, property owners can appeal to the council for special zoning to allow the rentals

In another exception, people can do something called a homestay, renting out a couple of rooms provided the long-term resident is present.

Rental proponents pushed back with two lawsuits, according a Citizen Times public records request for all legal actions from 2015 through February of this year. Both were dismissed.

The city, meanwhile, brought two lawsuits against owners it said failed to pay fines. One owner, Anne Marie Doherty, said she was facing nearly $300,000 in fines on two properties. She insists she didn't receive a violation notice the city sent and only learned after two years that the penalties had been piling up.

"I would not have let fines accrue like that. I'm not the kind of person that could live with that stress," said Doherty, who lives in one of the properties in the Grove Park neighborhood.

She settled with the city for $5,000 plus another $5,000 paid out over two years, but said she's considering whether to restart her own legal action against the city because of trouble she's had getting municipal staff to sign off on a homestay permit.

At the time of the city's March 22, 2017, complaint against Thompson, his fines were $232,500 and continued to climb.

A grocery store and a 14-year fight

Thompson said he didn't want to turn his properties into Airbnbs.

When he was working as a real estate appraiser in 2000, Thompson said he saw potential in a street of run-down homes just outside of downtown, which was creeping out of decades of decline.

"When I bought the properties, I was literally running prostitutes off my front porch," he said.

At one point, he owned more than five buildings on Maxwell, a street buffered from the main drag of Merrimon Avenue by a former A&P grocery store that had been converted into a home health workers office.

In 2004, Greenlife Grocery of Chattanooga, Tennessee, turned the site back into a grocery store, kicking off a long-term conflict with Thompson and other nearby property owners. Residents said the problem was a new loading dock built facing them that brings small and large trucks onto their street and turned Maxwell into a busy loading zone, even in early morning hours.

The city is partly to blame, they said, for allowing trucks to access the street and block it and sidewalks during loading.

Residents' well-documented fight with the store and the city took its toll, playing into the exit of former Asheville planning director Scott Shuford and leading to Thompson's ban from city buildings.

Rachael Dean Wilson, spokeswoman for Whole Foods Market, which now owns the store, said despite the long-running complaints Greenlife "strictly adheres to the city ordinance that dictates where, when and how deliveries to the store can be received and ensures that the delivery truck drivers follow those rules as well."

Wilson said the store looks for ways to minimize the noise that is an unavoidable part of running a retail grocery business.

Enforcement of truck issues falls to the Asheville Police Department, whose spokeswoman Christina Hallingse said some trucks are allowed on Maxwell, including those under 10,000 pounds and garbage and recycling trucks.

Officers get calls about trucks on Maxwell, Hallingse said, and when they do, they go and see if the sidewalk or road is being blocked.

"The responding officer will most often seek out the driver, inform them of any applicable ordinances, and ask the driver to move the truck."

If the problem isn't fixed, a citation is issued, she said.

MORE: Airbnb: Asheville is 'most hospitable' U.S. city, ahead of Portland, St. Louis

MORE: Amid new city restrictions, Airbnb brings a state-best $20M to Asheville hosts in 2017

Trying something else

Thompson and some other residents say noise and other disturbances have made it hard to keep long-term renters, so they started renting to tourists who are gone during much of the day and into the night.

With fines stacking up, Thompson is now looking for a different remedy: Asking for a zoning change that allows the rentals. At a May 2 Asheville Planning and Zoning Commission meeting, he and and his representative, Joe Minicozzi, an urban development consultant, made the pitch.

A commission decision on the conditional zoning request would serve as a recommendation to the council, which would make the final decision.

Minicozzi told the commission members the street had lost the protections of the residential zoning under which it was now regulated and one of the least obtrusive uses besides homes would be short-term rentals.

"I understand the staff concern, and it’s valid, that we have a housing issue in our community and we can’t have this happening everywhere," he said.

"But when looking at other grocery stores in the city, there is no other grocery store in the city that has unmitigated and unbuffered loading in the residential area."

Fellow Maxwell resident Brandee Boggs told commission members the street has all the headaches of a commercial lane.

"I was also woken up this morning to snap boom as the power lines popped again, second time this week, as you’ve heard," Boggs said.

Commission members said they were sympathetic to residents' complaints, but thought Thompson was asking for too many exceptions to rules that would require additional parking and buffering requirements. They asked Thompson to come back with changes on July 19.

Commission Chair Laura Hudson said allowing the rentals isn't "completely off the table."

Thompson, meanwhile, said negative publicity from the fight and his ban from city buildings has hurt his real estate career. The rentals are a way for him "to afford to live in the city," he said.

"I'm just trying to turn lemons into lemonade."