Short Term Rental Property Overview

January 1, 2016

In February 2015, the Metro Council passed BL 2014-909 and 951, which provided definitions and guidelines for the emerging phenomenon of Short Term Rental Property. At that time, Nashville had over 1,000 short term rental properties (VRBO, air bnb, homeaway, Flipkey etc.), most of which had appeared since 2010. Short term rental is actually an important part of our hospitality economy, but the Metro Code was, up to that point, very unclear about how STRPs fit into our zoning laws. After studying what other cities had done to manage the growth of short term rental properties in residential areas and after talking to STRP owners, rental website representatives, conventional Bed and Breakfast owners, neighborhood groups, Metro Codes, Planning, Historic, Legal, Finance, County Clerk, Fire Marshal, Convention and Visitors Bureau, and state hospitality representatives, we passed legislation to clear up these ambiguities.

The legislation defines short term rental property as a dwelling unit to be rented for transient occupancy for less than 30 continuous days. It allows short term rental as an accessory use in all districts that allow residential use. There are a number of conditions to provide for the safety of the occupants and to ensure that this use is appropriate for the neighborhoods where it is allowed.

The bill limits the number of bedrooms and occupants. It limits the number of non-owner occupied STRP’s in a given area. It prohibits exterior signs. It requires occupants to abide by our noise and trash ordinances. It requires that the owner of the property apply for the permit. It requires the owner to have adequate insurance and fire protection. It states that the owner must pay all applicable state and hotel taxes, a portion of which now goes to the Barnes Affordable Housing Fund. It provides a means for revocation of the permit if owners or tenants do not abide by the applicable regulations.

We passed the legislation in February because the majority felt that there is a place for this type of property use in Nashville. It is providing a need as Nashville’s hotel industry works to catch up with the growth in the number of visitors coming to the city. Many visitors prefer to stay in a neighborhood, and while they are there, they spend their money in the local commercial districts nearby, spreading Nashville’s prosperity beyond the downtown area. Many short term rentals provide income that enables the homeowner to stay in his or her home. The short term rental properties are well kept because they have to look appealing to sell on the internet, and because the owners need good ratings from their guests to stay in business.

However, the Council agreed that there also needs to be balance to ensure that our neighborhoods are respected and cannot become de facto commercial hotel districts. Some very popular areas already have a number of STRP’s on the same street. Too much of a good thing can be detrimental to stability and community, and existing neighbors deserve protection from being overwhelmed by transient visitors. Provisions for revoking a permit are spelled out with a required waiting period to reapply and penalties for operating without a permit.

In the process of creating and revising this bill, there were three well attended community meetings and a very extensive Council public hearing which included both positive feedback and constructive criticism. Adjustments were made based on that input. Multiple Metro departments reviewed the legislation and provided revisions until they were comfortable with the language and the requirements placed on them. The resulting bill was a group effort that was intended to be relatively simple and enforceable.

Six months into the actual implementation of the regulations, the Codes Department has gained valuable experience about the registration process and the enforcement requirements. Over 1200 properties have gotten permits and there are still about 8 or 9 applications coming in daily. The required taxes have provided several hundred thousand dollars to the Barnes Fund. Many properties are operating according to all the regulations, and a few are not. We are working with Codes to refine the enforcement mechanisms and to make several changes to the ordinance that will aid them in that effort.

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