ASHEVILLE: The developer who planned to convert unapproved short-term rental units into a hotel has filed an appeal with the City of Asheville’s Board of Adjustment to overturn the city’s legal determination that the conversion would violate North Carolina building codes, adding to what has become a complex legal battle over the downtown building’s status.
On behalf of developer Brett Krueger, Allen Stahl Kilbourne land use attorney Jesse Swords filed an appeal of the city’s decision on the hotel application on July 24. The appeal states that the city’s legal concerns about the hotel conversion at 17 N. Market St. are “without merit.”
In the filing, Swords wrote that the “common elements” of the 17 N. Market St. building – such as doors, hallways and common areas – are not defined as “accommodation” in the city’s Unified Development Ordinance and are subject to easements in the building’s HOA agreements that would allow “tenants, guests, invitees and customers” to move through the condo building without having to convert the building’s common elements into a hotel.
Because the application only seeks to convert certain rooms in the building to “hotel” status, the easements allow guests to move through the building without changing its zoning, so the application should be upheld, Swords wrote.
The idea of converting individual units into hotels without providing affidavits for the common areas of the property, which are presumably used by hotel guests, is met with resistance from the city and permanent residents.
In April, Asheville City Assistant Attorney Eric Edgerton sent Swords an email explaining that the city had legally arrived at the request and that it was “incomplete” because it did not have the consent of all of the building’s homeowners who had ownership rights to the common elements.
Edgerton wrote that the city’s legal department believes allowing the application would violate its interpretation of local planning and development regulations set forth in NC General Statute 160(D), which requires landowners to “expressly authorize someone else to submit a development application for a property they own.” According to the building’s HOA agreements, the common elements are owned as an undivided whole by the unit owners in the building, but physical adaptations and additions are managed by the HOA, according to the building’s HOA agreements, which are on file with the Buncombe County Register of Deeds.
“As I understand it, any change of use that involves using portions of 17 North Market as a small hotel will require that the common areas be used by hotel guests,” Edgerton wrote on April 18.
“Every unit owner in the building would therefore have to sign a change of use application, provided they have full ownership rights to the common elements,” Edgerton continued.
Speaking on behalf of the city’s legal team, spokeswoman Kim Miller said on Aug. 21 that the city does not comment on ongoing legal matters, noting that the Board of Adjustment hearing on the appeal, originally scheduled for Aug. 26, has been postponed to Sept. 23.
In June, the city’s law department told the Citizen Times that “hotel permits of this type require the consent of all building owners, usually evidenced by an affidavit. The city has no plans to change this practice.”
In addition to appealing the City’s decision on the hotel application, three of the short-term rental unit owners filed additional appeals with the Board of Adjustment. The purpose of the appeals was to invalidate violations of the unauthorized short-term rental activity reported on June 5 of this year.
Court date set in 17 N. Market St. case
Since the city banned new short-term rentals from opening in the Central Business District zoning area in 2018, only apartments with an “existing” STR permit are allowed to rent within the CBD. At 17 N. Market St., none of the condos have an existing zoning permit, and yet they were listed on short-term rental sites like Airbnb or Vrbo for years, the Citizen Times reported in February.
When the city reported violations in November 2023, the owners of the short-term rentals applied to convert those very units into a “hotel.” Frustrated full-time residents of the building, who had not learned of the hotel plan before it was filed with the city, responded to the hotel application with a lawsuit in March seeking to determine that the application was not legal because it violated homeowners association covenants.
In the case, which featured a motion to dismiss, counterclaims from STR unit owners and a full response from plaintiffs to those motions, the first hearing is scheduled for noon on Sept. 23 in Buncombe County District Court – the same day as the Board of Adjustment’s hearing on the appeals.
In July, the North Carolina State Real Estate Commission warned against the practice of renting without proper zoning regulations, and the Citizen Times reported that a well-known Asheville real estate agent, the vice chairman of the Planning and Zoning Commission, was the agent in charge of the units at 17 N Market St.
On July 30, the NCREC initiated proceedings for “further investigation” against that broker and another broker involved in the sale of the units, according to a letter from the NCREC obtained by the Citizen Times.
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Will Hofmann is the growth and development reporter for the Asheville Citizen Times, part of the USA Today Network. Have a tip? Email him at [email protected]. Please support this kind of journalism with a subscription to the Citizen Timesit.
