State Legislature Vets Airbnb Regulation

NASHVILLE, TN — Local governments statewide are enacting regulations — and even outright bans — of short-term rentals like Airbnb and now the General Assembly is taking a look at state-level rules.

In between ousting Jeremy Durham and fixing the state's DUI laws to come back into compliance with federal road-funding rules, the legislature is holding hearings on short-term rentals, led by Sen. Jack Johnson (R-Franklin).

A number of cities have already passed local laws on tax collections, occupancy and even penalties for property owners whose guests cause trouble; six proposals are moving through the Metro Council now.

Johnson tells WPLN he is concerned not just about a patchwork of rules across the state but about striking a balance between increased competition while making sure everyone is playing by the rules.

“Some Airbnb properties are paying the appropriate taxes and some aren’t, so there’s some conversation about should we have some type of statewide application of tax that is remitted back to local governments?” he told the radio station. "I’m also sympathetic to the family who lives in a quiet neighborhood and a 15-passenger van shows up for the weekend and it’s a bachelorette party and there’s a lot of loud noise and drinking.”

Arizona is the only state with a statewide law on short-term rentals, which prohibits local bans on short term rentals, while allowing for local rules on parking and public safety, and creating a state tax collection system. The Arizona law has since become the basis for model legislation from the American Legislative Exchange Council, a sort-of consortium of conservative lawmakers from across the country. Johnson told WPLN he is not working from a template.

The popularity of Nashville as weekend party-spot has increased at the same time as the popularity of online short-term rentals, which has left Metro government scrambling to keep up, enacting the first set of rules last year and tweaking rules on occupancy, signage and permitting along the way. The regulations have caught the ire of, among others, free-market think tank The Beacon Center, which regularly files and threatens lawsuits.

Johnson's hearings on short-term rentals — the first is scheduled for 9 a.m. Thursday — and any state law trumping local ordinances would seem to continue the General Assembly's new fascination with enforcing Dillon's Rule, a 19th-century court decision that essentially gives state government broad authority to counteract local governments.

One concern about the expansion of short-term rentals is that it drives up housing costs by limiting rental availability to more permanent renters. This is exacerbated when a property is a so-called "commercial listing," that is: a short-term rental property that has no permanent occupant and is rented full-time, like a hotel room. A study from FiveThirtyEight showed that of the more than 1800 Airbnb listings in Nashville, nearly 12 percent were commercial listings, one of the highest rates in the country.

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