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How to Implement a Complex Lottery-based Short-term Rental Permitting System in Record Time

Whole-House Short-Term Lodging Permit Allocation System and Process Case Study

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City of Wilmington is a port city in North Carolina with a population of approximately 120,000. Known as a gateway to Cape Fear Coast beaches that offer strong surfs, like Wrightsville, and long boardwalks, like Carolina, Wilmington is a popular tourist destination. Part of downtown’s Historic District, the Riverwalk is lined with restaurants, galleries, and shops. In 2016, when companies such as Airbnb, HomeAway, VRBO. and others were popping up around town, city staff members realized short-term rentals were not covered by the city’s land development code. They started seeking input from the community as to how to potentially regulate this new rapidly growing industry. Nearly two dozen public meetings were conducted on short-term rentals and showed that the topic was very divisive. Opponents argued allowing the practice in residential areas would destroy the integrity of single-family neighborhoods or the character of the historic district. Those in favor said short-term rentals provided an easy source of additional income for homeowners, and provided tourists additional lodging options, thus improving the economy.

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On February 5, 2019, the Wilmington City Council passed an Ordinance that regulated short-term rentals of entire homes in residential districts. One requirement of the Ordinance was a 400ft separation between each short-term rental and a 400ft separation between existing permitted bed and breakfasts and short-term rentals. Knowing that building out the complicated permitting system and administering the permit lottery would require highly specialized knowledge, experience, and technology, the City contracted with Host Compliance. Host Compliance was to build their web-based short-term rental registration portal and manage the allocation of short-term rental permits based on the geographic separation requirement. In addition to these services the City also contracted with Host Compliance for software and services related to monitoring short-term rentals for compliance with the City’s new ordinance, identifying addresses of non-compliant rentals, automating the outreach to illegal operators as well as a 24/7 hotline and online citizen complaint portal to make it easy for neighbors to report and resolve short-term rental related ordinance violations in real-time.

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Host Compliance deployed a custom short-term rental registration portal for Wilmington on March 15, 2019, and the initial registration period closed on April 14, 2019. On April 15, Host Compliance aggregated all registrations and executed a process to assign each registration a random lottery number. Specifically, after mapping the 158 registrations received, eliminating duplicate registrations, homestay registrations, properties within 400 feet of a bed and breakfast, and properties located in commercial districts, Host Compliance determined that 93 registrants were eligible for the lottery and assigned a random “lottery number”. The lottery numbers were used to determine eventual winners between conflicting registrations. The entire process was recorded on video and observed in real-time by a Wilmington City representative in order to ensure transparency and fairness.

As of September 29th, 2019, the City has only received one challenge to the lottery process. Specifically one of those who were denied appealed their permit denial to the City’s Board of Adjustments on the grounds that “that the lottery process was an undemocratic and inequitable solution awarding rights and opportunities to only some citizens”. The Board of Adjustments evaluated the case facts and head City staff’s testimony. It was determined that there was “no reason to believe that the lottery process was not completely random” and that there was “no staff input regarding the outcome of the lottery” the Board of Adjustments upheld city staff’s execution of the lottery process in a 4 to 0 vote. 

In conclusion, Wilmington’s experience shows how a well-architected and executed short-term rental permitting process and system can greatly speed up the implementation of a complicated permitting system. This investment also ensures fairness and transparency in what can otherwise be a controversial and heavily contested process.

If you’re interested in running a similar lottery program, contact us today.
 

Additional Resources

Details of Wilmington NC Short-term lodging ordinance can be found at: https://www.wilmingtonnc.gov/departments/planning-development-and-transportation/short-term-lodging

A current map detailing the output of the permit allocation and lottery process including the 400ft boundary can be found at: http://wilmingtonnc.maps.arcgis.com/apps/View/index.html?appid=cd2d0351748646938720595109d79f68

A “live” link to the online permitting portal build by Host Compliance for the City of Wilmington can be found at:

https://safe.hostcompliance.com/wilmington-nc/permit-registration

City of Wilmington contact for the permit allocation and lottery process: 

Kathryn Thurston
Zoning Administrator
Email: [email protected] 
Phone: 910.341.3249

City of Wilmington Day-to-Day Short-term Rental Project Manager Contact: 

Melanie Feig-Ellers
Zoning Officer
Email: [email protected] 
Phone: 910.341.4695