(Editor's note: A factual error in this story was corrected Nov. 21, 2010.)
The city of Beaufort might eventually relax its rules about short-term home rentals in residential areas.
But for the time being, the city is tightening its enforcement of an ordinance that prohibits rentals of less than 30 days in some areas.
It's also seeking out owners who do longer-term rentals without getting the proper license and paying appropriate taxes.
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A recent search on the website Vacation Rentals by Owner found 14 city residences listed for rent. Only three had the proper zoning designation and business license and had paid the required accommodations and property taxes to rent for less than 30 days, according to documents provided by the city.
Owners of all 14 properties -- in addition to other individuals who were suspected of operating illegally -- were e-mailed earlier this month and asked to contact the city's business license inspector within 10 days or face further enforcement action.
According to Beaufort's code of ordinances, those not in compliance could face up to $500 a day punishment, as decided by a municipal court judge.
Among those forced to turn away guests was Rosemary Cousins of Virginia, who said the house she owns on Wilmington Street was booked through December. She canceled those reservations, angering some of her would-be guests, who were forced to change their plans.
Cousins said she was given "bad advice" about whether her short-term rentals were permissable and discovered she was not in compliance when she set up a tax account.
The city and others involved have since "been very supportive, very understanding, and we're all working to that point where some resolution can be made," Cousins said.
City Manager Scott Dadson said when the city has knowledge of rule-breaking, it has no choice but to enforce its regulations.
"We can't ignore it," Dadson said.
Some of the owners contacted by the city said they only rent out their properties for a month or longer -- long-term rentals -- but still were not in compliance because they didn't have business licenses or pay the required taxes.
The recent investigation likely turned up only the tip of the iceberg, Councilman Mike Sutton said.
People who want to do short-term rentals but are not permitted by zoning regulations can't apply for a business license, Sutton said.
"If they show their head, they'll get in trouble for doing it. Hence the problem," Sutton said.
Most council members agree short-term rentals are fine -- even beneficial -- if located in appropriate areas.Short-term rentals offer temporary guests an alternative to hotels, officials said, and let people experience a community whether they're on vacation or considering relocation.
"I think they're an asset; I think they're necessary," Mayor Billy Keyserling said. "But I think people have to be very careful when they operate one to respect neighbors, and there have been cases where that hasn't happened."
Short-term rentals also could encourage people to invest in dilapidated homes -- especially those in the historic district -- and turn them into short-term rentals for profit, Sutton said.
"Any reason to attract an investor to dead properties that have life left is one more tool that we don't have now," Sutton said during a council workshop Tuesday.
The issue arose in July, when John and Erica Dickerson applied to allow short-term rentals in Beaufort's historic district by special exception.
The Dickersons allow short-term leases for a home they own Charles Street -- a commercially zoned property where the practice is permitted.
But when they looked into renting out a house they own on Duke Street for periods of 30 days or less, the city's zoning wouldn't permit it.
After the Dickersons submitted their application, some council members noted that many people do short-term rentals illegally and list them online.
That's when the city then went looking for violators.
City Council approved the Dickersons' application to allow short-term rentals by special exception on a first reading, asking for more discussion and study of the issue before a final vote.
Council set up a focus group -- made up of residents, neighborhood association and city commission representatives and city staff -- which recommended, among other things, that Beaufort expand the application to allow short-term rentals by special exception in all of its residential areas.
That process would require the Zoning Board of Appeals to approve each short-term rental request in a residential area on a case-by-case basis, giving neighborhoods a chance to voice their concerns, officials said.
Council directed staff, which has been working with the focus group, to come back with a recommendation for conditions necessary to get a special exception before council considers a final reading.