Asheville

Downtown high-end Airbnb-to-hotel conversion ‘incomplete,’ city says

The attorney representing the developer who applied to convert a group of unpermitted downtown Airbnbs to a hotel has said the developer of the building plans to continue to pursue the approval of the project despite the city of Asheville stating the 17 N Market St. application is “incomplete,” and would require all building owners to sign-off on the project.

Land use attorney Derek Allen, with the Asheville-based Allen Stahl and Kilbourne, told the Citizen Times in mid-June that he believes the application “qualifies for approval.” Allen represents 17 N Market St building developer Brett Krueger.

“Our clients applied for Small Hotel approval only for the units they own, being 10 of the 13 units at 17 N. Market Street,” Allen said in a June email, noting that the approval of the application would allow rentals for periods of less than 30 days. “Simply put, our clients’ Small Hotel application qualifies for approval, and that is what they are asking for,” Allen continued.

The historic 1923 North Market Street building has been at the center of a legal battle between its full-time residents and a group of out-of-town condo-owners who, after unpermitted rental of the units for nearly two years, submitted an application to convert their units to a “small hotel” after being sent notices of violation from the city of Asheville.

In March, the residents sued the building owners to stop short-term rental activity on the property and prevent the hotel application. A motion to dismiss the suit and counterclaims stating building residents owe the rental owners $60,000 a month for reporting them to the city and that the ordinance regulating short-term rentals is illegal were filed in early-June. Between March and June, more rental activity has occurred, with the city sending out another notice of violation June 12.

For the hotel application to proceed, the city’s Legal Services Department stated the application would require permission from all building owners as they “all have ownership interests in the common elements,” which include parking, hallways, doors and upper level designated to be “owners only.” In a mid-June email to the Citizen Times, Allen Stahl and Kilbourne land use attorney Jesse Swords argued the hotel application for the building should be approved on the basis that the common areas are “not providing ‘lodging,’ and therefore need not apply for a change in use.”

Amid lawsuit, rental activity has continued. Through it all, building resident Christian Oliver has been encouraging the city to enforce the rental ordinance and prevent further unpermitted rental activity, emailing the Citizen Times, members of city staff and city council that he was “losing faith in Asheville.” Ken Pierce, Oliver’s neighbor, said he felt the lack of city enforcement has been eroding his trust in the municipal process, while Joan Pierce, his wife, said the situation has “eaten away” at her joy in the city.

Ken Pierce said that while they have the resources to fight the hotel application and unpermitted rental activity, there are likely others in the city facing similar circumstances who don’t have the same resources, creating “an almost class-based” struggle to who is equipped to legally defend themselves. The Pierces have no plan to leave and plan on continuing to fight the application. “I’m not going anywhere. I love it here,” Joan Pierce told the Citizen Times.

Allen told the Citizen Times in June that the owners of the rental units believe they qualify for vested rights—unconditional rights that cannot be taken away from a property owner—because the “project pre-dated the city’s short-term rental regulations.” However, Allen said vested rights isn’t the focus of either the application or the lawsuit because the Small Hotel regulations “make that a moot point.” The small hotel application would “simply allow rentals for periods of less than 30 days,” Allen said.

The original application to redevelop the property was submitted in December 2017, but the building was not purchased by the developers until March 2018—after the short-term rental ordinance was established. Certificates of occupancy were issued in 2021. Before the building was approved to be redeveloped into condos, members of the Downtown Commission were told by city staff in January 2018 that the building was to be residential and not include short-term rentals.

Former Downtown Commission Chair and current City Councilmember Sage Turner told the Citizen Times she was “disappointed to see” the recently submitted counterclaims from the short-term rental owners and noted she was “disappointed to see a local firm involved in the countersuit.” “Telling the city you are going to build housing, then turning it into short-term rentals is exactly what we are trying to avoid,” Turner said.

Andrew Fletcher, who served on the Downtown Commission at the time of project sought approval from the city of Asheville, has said he would not have voted to approve the development had the developer acknowledged they wanted to use short-term rentals. Now, he wants the ordinance enforced. “It seems like time and again it’s the developers that win those battles of ‘who the rules are for,’ and local residents, even when the law is on their side, cannot get an outcome that’s fair to them.” Fletcher said.

Despite the city’s statement that the application is incomplete and the legal battles surrounding the conversion of the downtown Airbnbs to a hotel, the developer remains committed to pursuing approval for the project. The ongoing conflict between building residents and out-of-town condo-owners highlights the complexities of short-term rental regulations and the challenges faced by residents in enforcing these rules.

It remains to be seen how this situation will unfold and whether all parties involved will come to a resolution that satisfies the concerns of both the building residents and the city of Asheville.