STRP Case Ruling Today

Judge Kelvin Jones apparently ruled today that Metro’s short term rental ordinance is unconstitutional. Stacey Barchenger and Joey Garrison have the most complete reporting I have seen. You should read their story for background.

There are wildly different perspectives on what the ruling means. The Beacon Center said in a press release that this lower court ruling “is an enormous victory for the Beacon Legal Foundation” and “sends a loud and clear message to cities across the state when it comes to restricting homeowners’ rights in the new economy.” They believe they have defeated all short term rental regulation in Nashville. At the other end of the spectrum, the Vice Mayor and one of my colleagues tweeted late today that they think, without an authorizing ordinance, short term rentals are not an allowed use at all in property that is zoned residential. These are obviously very different perspectives.

Here’s what I think I know:

  • The ruling was given verbally from the Judge in the courtroom. There is no written ruling and apparently won’t be until the court reporter completes a transcript of the hearing. There is no binding order of the Court until it is on paper and signed by the Judge. This may take as little as a few days or as much as a few weeks — so it will be soon either way. But the lack of a signed order at this time underscores the idea that everyone should take a breath and wait to see exactly what is being decided.
  • I am told, and Ms. Barchenger reports, that the entire STRP statute is being struck down. For determining next steps, the precise basis of the ruling matters. Specifically, if it is correct that the basis of the ruling is solely due to vagueness, that can be corrected. There would probably be multiple ways to make short term rental laws very precise in their meaning. Again, seeing a transcript or a written order will be important for people to understand the implications and possible next steps.
  • It is going to take at least a few business days — probably longer — for everyone’s view of the new landscape to come into focus. My initial reaction is that both ends of the spectrum have things to worry about.
  • I’ll start with the side claiming that, without an authorizing ordinance in place, short term rentals are not allowed because: (1) they are taxed as hotels; and (2) hotels aren’t an allowed use in residential districts. The Beacon Center has been making arguments on Twitter about why they think this is wrong. I’ll just mention that I have heard that the BZA apparently ruled sometime in the last few years that short term rentals are an allowed use in residential zones in Nashville. I don’t know if this is true, and that BZA ruling would have been before the State Attorney General stated that short term rentals should be taxed as hotels. Regardless, I suspect that the “short term rentals are dead” argument would have to deal with that BZA ruling somehow.
  • At the other end, there is the argument that property rights are vindicated now, and there are no short term rental regulations in Nashville any longer. This argument has to contend with the possibility that either the lower court, or the Court of Appeals, might allow the ordinance to stay in place pending appeal. The plaintiffs might also be the dog that caught the bus. They clearly succeeded today, but based on my conversations this afternoon with multiple investor-owned short term rental operators, this decision creates massive uncertainty about what happens next. Uncertainty is bad for business.
  • Five minutes after I learned about the ruling, I got a call from the Tennessean and told them, “If the thought is that the law regarding investor-owned short-term rentals is vague, that sort of pushes us toward having no regulations or outlawing them completely.”
  • Now I’ve known about this for almost 9 hours, and I think I still feel the same way.
  • For better or worse, Nashville came up with a set of rules that tried to balance the desire of some to run a short term rental business in their residential real estate with the desire of their neighbors to enjoy their neighborhood free of sometimes distracting business activity. Now we have a judge telling us that our attempt to find that balance failed and that it is unconstitutionally vague. That is probably going to force us to take a side — to decide that short term rentals are an allowed, unregulated use for a residence, or to decide to prohibit that use in a clear, non-vague way.

My inbox and phone blew up when the ruling came out. I’m going to see what the actual court order says when it comes out. I’m going to listen to what Metro Legal has to say about the impact of the ruling and about options for Nashville. I’m definitely going to hear from a whole lot of Davidson County constituents about what they think should happen next. I’m not going to rush to a decision about any of it — it’s been less than half a day and there isn’t enough information available to make a decent decision, or to even know what all the questions are.

 

Bob Mendes

Bob Mendes represents all of Nashville as a Council-At-Large member of Nashville’s Metro Council. He is Chair of the Council’s Charter Revision Committee, a member of the Metropolitan Audit Committee, and a member of the Council’s Budget & Finance Committee, Rules & Confirmations Committee, and Ad Hoc Affordable Housing Committee. Bob also practices business law at Waypoint Law PLLC. Bob’s complete bio is here. You can follow Bob @mendesbob.