Following a ruling from a three-judge panel from the North Carolina Court of Appeals ruling the City of Wilmington’s short-term rental ordinances violated state law, City Council will vote on returning more than $500,000 to those who paid the fees.

According to the documents from the City of Wilmington, they’d also pay interest.

“Pursuant to North Carolina General Statute 160D-106, registration fees collected since the inception of the program amounting to $443,428 and related third-party processing fees amounting to $10,189 will be reimbursed to the respective homeowners. Accrued interest, calculated at a rate of 6% and estimated to total $57,867 will also be remitted to the homeowners. The City being mindful of the above statute, held the registration monies collected during the litigation of this matter,” according to an ordinance on which council will vote Tuesday.

While the City says they held the registration fees following the initial lawsuit filed by homeowners, the money would be directed from the City’s General Fund.

“This ordinance appropriates $511,484 of General Fund - fund balance for these reimbursements and accrued interest. Of this amount, $308,665 will come from fund balance assigned as of June 30, 2021 for short-term rental reimbursements and the balance of $202,819 will come from unassigned fund balance,” according to the ordinance.

It’s a move that could have possible ramifications for cities across the entire state as cities like Asheville that also require forms of permits and registration.

“The City of Asheville is aware of the recent Court of Appeals decision, and is reviewing the pertinent local ordinances to determine if any adjustments need to be made. However, Asheville general prohibition against whole home short term rentals remains unaffected,” a City of Asheville spokeswoman Kim Miller said in an email to WECT.

Asheville’s short-term rental website still links to registration applications, however, the ordinance itself is not listed on the page, instead it reads: Read the Ordinance (See Item 9 – Homestays) – Updates coming soon.”

From the city’s Board of Appeals to the State Appeals Court

For years, the City of Wilmington has charged those using their homes as short-term rentals registration fees despite state law explicitly forbidding cites from doing just that.

A court case made it all the way to the Court of Appeals and a decision was issued in March of 2022.

Wilmington still has the option to appeal the Court of Appeals ruling, however, if the proposed ordinance is approved, it could signal the city is no longer wanting to defend its policies. Two courts have already ruled against Wilmington, and since the Court of Appeals ruling was unanimous, the North Carolina Supreme Court does not have to hear an appeal.

“If the decision is unanimous, further review of a decision of the Court of Appeals is limited to those cases that the Supreme Court accepts in its discretion,” according to the State Court of Appeals website.

Changes to the city’s website where short-term rental registration was previously listed as a requirement have been made, which could indicate the direction the city is leaning on the decision to appeal.

“The City of Wilmington will no longer require registration for short term rentals or enforce the cap and separation requirements in the City’s short term lodging ordinance due to a recent court decision.  All other provisions of the ordinance remain in effect,” the page reads.