Judge Kelvin Jones’ ruling in a suit brought by the Beacon Center of Tennessee that Nashville’s short-term rental property (STRP) ordinance is “vague and unconstitutional,” reported in a Tennessean story by Stacey Barchenger and Joey Garrison, was definitely not the answer either party in the lawsuit wanted to hear.
In fact, it raises a number of questions that neither Mayor Barry nor Metro Council anticipated: Who gets to operate Airbnbs in Nashville? Anybody who wants to? Just a select few? Only the hotel industry? Who should regulate them? And who enforces those regulations?
The suit was brought in August 2015 by the Beacon Center of Tennessee, which doesn’t believe in land-use zoning. Beacon brought the suit on behalf of P.J. and Rachel Anderson, who had been renting their Salemtown house on Airbnb a few days each month while they traveled. When the Andersons decided to move to Chicago, they planned to keep their house as an investor-owned Airbnb. That’s when they discovered that the ordinance Metro Council passed in 2015 limits the number of non-owner-occupied STRPs to three percent of the properties in each Nashville census tract. No more permits were available in Salemtown.
Beacon’s suit contended that Metro’s “poorly crafted ordinance…unnecessarily infringes on P.J. and Rachel’s constitutional rights” because of its “arbitrary 3% cap on the number of non-owner occupied permits available,” according to its website.
Metro’s lawyer did the equivalent of rolling her eyes by asking the court to dismiss Beacon’s suit as meritless.
Both Judge Jones and Beacon are right about one thing: Metro’s short-term rental ordinance is a big, fat, unruly mess.
Even before Judge Jones' verdict, there were so many complaints about Nashville’s STRP permit system and enforcement issues that Mayor Barry recently hired a consulting firm to determine whether enforcement should fall under the Codes department or another department, and what exactly we’d be enforcing.
This confusion was entirely predictable. Nashville’s ordinance, drafted by Councilwoman Burkley Allen and passed by the Metro Council in February 2015, contains no clear guidelines regarding enforcement of permits. It also provides no funding or staffing to enforce the permit requirement or police the “party houses” and illegally parked cars that now infest some neighborhoods.
One reason Nashville’s ordinance is so problematic is that — although it affects every type of zoning in the city — it was passed as a code change rather than a zoning change. The latter would have required the approval of the Planning Commission and a public hearing before the council. That would have given the Nashville residents who are now living with these properties an opportunity to weigh in on the ordinance.
By passing Nashville’s industry-friendly STRP ordinance as a codes change, Allen bypassed the sort of vociferous public opposition that resulted in outright rejection of investor-owned STRPs in New Orleans and Denver. Austin passed an ordinance much like Nashville’s, but recently bowed to pressure from local residents who had discovered how incompatible the needs, schedules and behavior of short-term renters are with those of families who keep regular hours and need a good night’s sleep.
Allen was trying to solve a legitimate problem. By the time Nashville’s ordinance passed, we already had hundreds of STRPs — both the “sharing economy” model, where people rent rooms in their homes, and investor-owned houses and apartments—operating here with no regulation. “It was the Wild West,” she recalled.
However, as Metro’s attempt to rein in and regulate these properties, Nashville’s STRP ordinance should have included measures to minimize negative impacts on neighbors. Our ordinance includes only one such concession: the three percent cap on the number of investor-owned STRPs — which the Beacon Group challenged in court. And the cap still allows properties to cluster; some streets and condo complexes are now de facto hotel districts.
So why did we get such a bad ordinance?
Very simply, the right of Nashvillians living in neighborhoods zoned residential not to have busy commercial enterprises open right next door was overshadowed by Metro’s egotism as the “it city” and its greed for new tax revenue. Since the ordinance passed, STRPs have generated about $2 million for Nashville’s Tourism and Visitors Bureau. (In a tacit acknowledgement that STRPs drive up rents and real estate prices for permanent residents, a sixth of the tax revenue generated by STRPs goes to the Barnes Fund for Affordable Housing.)
Revenue is also the reason the industry lobbies hard for investor-owned properties: While STRPs are promoted as part of the “sharing economy”—local people renting rooms in their homes to paying guests—the dirty little secret Airbnb doesn’t want you to know is that investor-owned, non-owner-occupied houses and condos make a lot more money, because they rent more often, to larger groups, at higher costs. About two-thirds of the 2,262 houses and condos permitted to rent short-term are this type. At least 1,500 more properties currently operate without permits.
So Airbnb, HomeAway and other industry stalwarts employ an army of lobbyists who write and promote laws that allow investor-owned properties and large groups.
And that’s exactly what Nashville got: an ordinance that allows unsupervised mini-hotels to open in every residential neighborhood.
There’s one easy and ideal solution: eliminate the troublesome investor-owned properties altogether.
Metro should either let everyone turn any property they want into an STRP, throwing out decades of zoning precedent — the Beacon Group’s position, but not one most people support — or no one should be able to do it.
