Asheville high-end condo owners propose hotel conversion to avoid short-term rental fines

ASHEVILLE - A group of condo owners in a high-end downtown building are looking to avoid a city ordinance strictly regulates short-term rentals by seeking to convert the building to a hotel.

The proposal comes after a series of short-term rental violations were filed against those who were renting out their condos at the 17 N Market St. building. The violations, which can lead to a $500 a day fine, were issued to a "few people" who were renting their condos the location, according to Brett Kreuger, one of the condo owners looking to convert the building.

Since the process to develop the site into the current condominiums began in 2017, the development has seen the city of Asheville's regulatory process for short-term rentals rapidly evolve.

"When we sold the units, we did not put in the restrictions that you could not rent these short term — there's no restriction against it," Krueger said of the Market Street building restrictions. "And the city — during the time that we built this building — they changed the rules."

The city — which banned STR's within every area except zoned Resort Districts in 2018 — confirmed multiple notices of violation have been filed for STR activity in the building.

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"The City has issued several notices of violation for short-term rental activity within the building at 17 N Market Street," city spokesperson Kim Miller said in an email to the Citizen Times. "Subsequently, the building management has expressed a desire to convert the project into a hotel."

Krueger is a Charlotte-based developer who has worked on other hotel and mixed-use projects in Asheville, like the Windsor Boutique Hotel and the mixed-use South Slope development at 50 Collier in South Slope — also known as "District Brewery."

The building falls within the Hotel Overlay for small hotels, where the proposal would throw the condo owners under a different regulatory system. The Hotel Overlay would require owners to submit a full Public Benefits Table for approval, where condo owners would have to provide $3,000 a room to the affordable housing or reparations funds.

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One of the two bedroom condos at the location was most recently listed at over $1 million on Zillow. A three-bedroom condo at the location has been listed at over $2.2 million.

Krueger said seven condos — six two-bedrooms and one three-bedroom — would see the conversion to a hotel, while the remaining condos would not be a part of the project. Krueger said "there's only two people that live in the building full-time."

In total, there are 13 condos in the building.

Krueger said the current owners would have to sign an agreement with a management company, but would still be able to "stay at their place."

"We sold all the condos within our projected timeframe. And, you know, I think everybody there's very happy, but people don't always stay in their place all the time," Krueger told the Citizen Times. "And so they'd like to supplement that with some income."

As of Jan. 16, at least one listing on Airbnb uses the exterior of 17 North Market St. in an active listing. The listing goes for $206 a night.

Condominiums began in 2017, converted "ugliest building in town"

The project to convert the 17 North Market St. building to condos began in 2017, with the developer — Spectrum Building Co. — converting the "ugliest building in town" to "one of the nicest looking," Krueger said.

"The concept was to do these kind of individually and sell them. We have parking on site and the project was very successful," he noted.

The proposal is the not first to propose the conversion of downtown housing to rental units. In October, two homes in the downtown Asheville national register historic district were proposed for a total renovation to become a 15-room hotel.

Krueger said the goal is to follow Asheville's rules and regulations, where the plan had been discussed with city staff during a Dec. 12 pre-assistance meeting.

"Our goal is to comply with existing rules and regulations of Asheville and not to skirt them and not to get around them," Krueger said.

As the project is seeking a Level I planning approval through the city, no public participation opportunities will be allowed on the project. The new hotel will visit the Asheville Downtown Commission.

An upcoming Jan. 22 event at Asheville-Buncombe Technical Community College's Ferguson Auditorium will consider a measure that will restrict STR's within Buncombe County — a first for wider rental regulation in the Asheville-Buncombe area.

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Will Hofmann is the Growth and Development Reporter for the Asheville Citizen Times, part of the USA Today Network. Got a tip? Email him at WHofmann@citizentimes.com. Please help support this type of journalism with a subscription to the Citizen Times.

This article originally appeared on Asheville Citizen Times: Asheville condo owners seek to convert to hotel after violations