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VOL. 42 | NO. 14 | Friday, April 6, 2018

Senate votes to override Metro Council on short-term rentals

By Sam Stockard

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The state Senate overwhelmingly passed a short-term rental bill Thursday pre-empting Nashville’s measure to clamp down on “party houses” and phase them out in less than three years.

In a 24-5 vote, the Republican-controlled Legislature approved amended legislation by sponsor Sen. John Stevens, who called it a statewide move to clarify the status of rental property, not an attack on Nashville. The measure grandfathers short-term rentals previously operating lawfully and could allow bans in some cases.

The legislation also would enable local governments to suspend the use of rental properties where other local codes are violated more than three times in a year, including noise and trash problems. But, as amended, it would not allow rights for short-term property rental to transfer to a new owner if sold, which was considered a victory for legislators who opposed the bill.

“It’s still a fundamental difference between how property rights are viewed. Cities, municipalities tend to view them as they have the total ability and control over how you use your property,” says Stevens, a Republican from Huntingdon in West Tennessee. “I disagree. I say that the General Assembly constitutionally has granted them that authority and with respect to short-term rentals we have not clearly stated what the status of those are.”

Stevens’ bill would restrict Davidson County from regulating short-term rental properties for owners who’ve complied with previous zoning laws.

Metro Council passed a measure earlier this year prohibiting non-owner-occupied short-term rentals in residential zones, though they will be allowed in areas where mixed-use zoning enables multi-family housing and apartments. Property owners holding permits will be able to apply for annual renewals until June 28, 2020, the most obvious sticking point with the legislation approved Thursday.

Sen. Steve Dickerson, a Nashville Republican, called the bill a “self-serving attempt by Airbnb to bolster its value in advance of a public stock sale to enrich investors.

“This isn’t about grassroots, this is Astroturf,” Dickerson told fellow senators during Thursday’s debate.

He pointed toward a provision allowing a 30-month window for properties to retain their use as short-term rental in case operations stop, as well as another one enabling them to be considered commercial properties but pay residential utility rates, which are much less expensive.

The Senate version of the bill must go back to the House for approval before it can go to the governor for his signature. The House narrowly approved a much broader version in 2017 prohibiting local governments from banning short-term rentals.

If the bill ultimately passes, Metro’s Legal Department is expected to “offer guidance” on how to comply with the new law, Metro spokesman Sean Braisted says. Metro Council might consider changes to the existing ordinances, he adds.

State Rep. Bill Beck, a Nashville Democrat, points out the Metro ordinance is designed to deal with “party houses” where companies and people own large homes or condos but aren’t close enough “to keep them from disturbing their neighbors and becoming nuisances.”

Despite Stevens’ contention the measure affects the entire state, Beck says the bill is “aimed strictly at Davidson County,” which is one of the three most popular markets in the country for short-term rentals, along with San Francisco and New Orleans. Nashville has an estimated 1,000-plus non-owner-occupied homes used for short-term rental, most of which are located in residential areas.

“The city’s totally pre-empted,” Beck says. “The state Legislature has become the Nashville City Council.”

Beck notes Knoxville and Chattanooga have passed their own measures designed to restrict short-term rentals, but this bill would hit Nashville alone.

State Sen. Jeff Yarbo argues permits for these types of property have always been subject to renewal after one year.

“Zoning in every city, and for as long as any of us can remember, is going to matter for local governments, and we shouldn’t interfere with that as a state Legislature just to help short-term rentals,” Yarbro says.

The proposed version not only required cities to continue issuing those permits, “it actually converts them into an asset that can be sold either to the next buyer or some out-of-state corporation that’s gonna be even less responsive to neighbors and to safety and security concerns,” said Yarbro, a Nashville Democrat. “If they want to protect people’s property rights, it would be one thing. This is granting new property rights to people in the state and really gonna provide folks with a windfall.”

An amendment by Sen. Bo Watson, however, changed that portion of the bill by not allowing property to continue as short-term rental when it changes hands. Yet it would extend the grandfather status for those operating with a permit, and it would eliminate state preemption on the regulation of utility rates and taxes.

“What I don’t understand is the non-owner-occupied and why we would give new rights to people who might not even live in the boundaries of this state,” Watson said, noting the debate also should focus on property around those short-term rentals and their impact on property values.

Watson, a Hixson Republican, pointed out most of the debate has been about Nashville and that his amendment would help the rest of the state by allowing local governments without short-term rental laws to make their own decisions.

People who operate short-term rental in those areas would be allowed to continue, but they would have to go to their local governments to seek approval once ordinances are adopted, he said.

During Senate debate on the bill, Yarbro argued the dispute has more to do with an argument between homeowners and lobbyists than it does with property rights and the nation’s founding, which Stevens broached.

“Talk about picking winners and losers,” Yarbro said, adding to Dickerson’s argument the legislation is designed to benefit out-of-state corporations.

Prior to the passage of Watson’s amendment, Yarbro noted lawmakers have no idea what the grandfathering process is going to be like because it’s going to keep going for 20 years. Manchester, for example, could adopt housing rules for people going to Bonnaroo each summer, he said.

Sam Stockard is Nashville-based reporter covering the Legislature for the Nashville Ledger. He can be reached at sstockard44@gmail.com.

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RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 0 0 0
MORTGAGES 0 0 0
FORECLOSURE NOTICES 0 0 0
BUILDING PERMITS 0 0 0
BANKRUPTCIES 0 0 0
BUSINESS LICENSES 0 0 0
UTILITY CONNECTIONS 0 0 0
MARRIAGE LICENSES 0 0 0