Nashville council advances new Airbnb rules, setting up legislative showdown

The Metro Council advanced a new set of proposed regulations over short-term renting in Nashville after a marathon public hearing late into Tuesday night that saw the popular form of lodging once again on trial.

It sets up a legislative showdown on Jan. 16 that could have a major say on the future of Nashville's budding short-term rental industry.

That's when the council also will take up a competing proposal — one opposed by online hospitality companies such as Airbnb and HomeAway — to phase out short-term renting in residential-zoned homes that aren't occupied by their owners. Both bills will be considered on third and final votes.

The council voted 19-14 on a second of three required readings to approve an ordinance recommended by an ad hoc committee of five council members assigned earlier this year to study the issue. Four council members abstained from voting.

The bill would strengthen caps on the number of non-owner-occupied rentals allowed in suburban parts of the county and create a new "anti-clustering" provision to prevent the concentration of future short-term rentals. All existing short-term rentals would be grandfathered in.

More: Nashville's new 'compromise' Airbnb proposal already opposed by short-term rental critics

'We tried,' councilman says of search for compromise

The proposal has been called a "compromise" by its backers in the council, but neighborhood advocates who oppose short-term renting expressed their strong distaste during a public hearing that lasted 2½ hours.

Airbnb hosts, conversely, pledged their support, while making clear they aren't happy with all of the bill's provisions.

"This is obviously a very divisive issue," said at-large Councilman Jim Shulman, lead sponsor of the bill, adding that the purpose was to come up with a "resolution."

"We've got a tough issue, and the ad hoc committee certainly tried."

Tuesday marked the latest battlefront in an emotional multiyear fight over the future of short-term renting in Nashville, which has exploded in popularity amid the city's tourism boom.

► More: Nashville's emotional and divisive Airbnb debate

Critics push for phase-out, say residential zoning at stake

Short-term rental critics blasted Shulman's bill because it would continue to allow non-owner-occupied short-term rentals in neighborhoods zoned for residential homes — activity they've blamed for the bulk of their complaints.

Speakers told horror stories of sex parties in next-door backyards and said short-term renting has turned homes into party hotels. They called short-term rentals, often owned by investors, an attack against residential zoning itself.

"This is about what was once a community disappearing family by family due to this industry," said Kim Sorensen, who said more than half of her Pennington Bend street is consumed by short-term rentals. "The tourists on my street can easily outnumber the residents on any given day.

"This does absolutely nothing for my neighborhood," she said of Shulman's bill. "It can actually make things worse."

Opponents of short-term rentals have put their support behind a separate proposal opposed by Airbnb to phase out investor-owned short-term rentals from residential neighborhoods.

That bill, backed by lead sponsor Councilman Larry Hagar, was slated for consideration on a third and final vote Tuesday. But Hagar instead delayed voting on his bill so it can be heard alongside other short-term rental proposals later this month. Hagar said his legislation is the real "compromise bill."

The city of Knoxville passed similar regulations that target non-owner-occupied short-term rentals in November.

Horror stories are exaggerated, Airbnb supporters say

But supporters of the ad hoc committee's bill have cited the threat of interference from the Republican-led Tennessee legislature if the council votes to prohibit any type of short-term renting.

Megan McCrae, on behalf of the Nashville Area Short-term Rental Association, said the ad hoc committee's legislation is "far from perfect" but urged its support over the ban. She characterized short-term renting as "living the American dream" by leveraging rights as property owners.

► More: Finding a resolution in Airbnb debate proves difficult

She also suggested that the complaints of critics are exaggerated and not a true reflection of short-term renting.

"Being pro-STR does not mean that we're anti-neighborhood," she said. "We believe that the two can peacefully exist and ask that you do not vote in favor of any bill that would impose any ban on any type of short-term renting."

Other proposal in play, too

The council also voted 17-16 to advance on a second of three readings legislation backed by Councilman Brett Withers that would halt future non-owner-occupied short-term renting in residential neighborhoods but grandfather in existing permit holders. That bill also will be considered in two weeks.

The council, meanwhile, voted 21-6 to defeat a proposal that would have allowed hotels to locate in residential neighborhoods. Councilman Freddie O'Connell, a short-term rental critic, introduced the proposal to make a point.

"We're basically offering the hospitality industry into our neighborhoods, and I think this would keep it at a level playing field," O'Connell said.

Under Shulman's bill, the number of non-owner-occupied short-term rentals permitted in suburban and rural parts of Davidson County — neighborhoods outside the urban zoning overlay — would be reduced to 1 percent of the census tracts in those areas.

Currently, the cap is 3 percent across the county. The cap would remain at 3 percent inside the urban zoning overlay, which includes neighborhoods such as East Nashville, Germantown, Salemtown, 12South and Sylvan Park — places where short-term renting is most popular.

Nashville has struggled with regulating short-term rentals and been unable to properly enforce initial rules that were adopted in 2014. Neighborhood activists have blamed short-term renting for uprooting longtime residents. But hosts who rent out their homes say they're simply exercising their rights as homeowners.

In preparation for a fight, Airbnb last year armed the council with lobbyists to push back at the proposal to phase out investor-owned short-term rentals. In recent weeks, Airbnb also has paid substantial dollars to launch a television advertising blitz to make its case to Nashvillians.

The industry also has turned to the state legislature. The Tennessee House of Representatives approved legislation last year backed by the short-term rental industry that would prevent local municipalities, including Nashville, from instituting any type of ban on short-term renting. Although the bill stalled in the Senate, it remains a threat ahead of the state legislature convening in Nashville next week for session.

Airbnb, in backing Shulman's legislation, has argued it's acted in good faith and demonstrated a willingness to compromise.

Reach Joey Garrison at jgarrison@tennessean.com or 615-259-8236 and on Twitter @joeygarrison.

By the numbers

Number of permits for each type of short-term rental in Nashville. Many short-term rentals in the city are believed to be unregistered, meaning the numbers are likely higher.

Non-owner occupied: 1,019

Owner-occupied: 784