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VOL. 39 | NO. 1 | Friday, January 2, 2015

Cities across Tennessee deal with short-term rental safety, zoning issues

By Hollie Deese

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Nashville isn’t the only city struggling with how to handle short-term rental properties.

Just about every jurisdiction in the state has been caught off guard by the explosive rise in the new shared economy, and what that means for decades-old zoning laws.

In 2008 in Hamilton County, William J. Patterson, Jr., and his wife, Alison B. Patterson, had listed their Soddy Daisy home online to rent short-term to vacationers instead of listing it to sell when they moved. After all, 2008 wasn’t exactly a boom time in real estate.

The Patterson’s home was in an R-1 single-family residential zone, but since they no longer lived there, a Hamilton County Commissioner at the time, Dan Wade, charged them with violating the local zoning regulations after they refused to stop renting.

A trial court found the Pattersons use of the home for commercial purposes violated the zoning regulations, and a trial court rejected the couple’s argument that the zoning regulations were unconstitutionally vague. They determined the couple knowingly violated the regulations anyway, and charged a penalty of $49.99 for each day of violations – a total of more than $22,000.

But the Tennessee Court of Appeals agreed the vagueness of the zoning regulations was unconstitutional. They reversed the decision and the case was dismissed.

Of course, that was when Airbnb and VBRO were just beginning. Today, a search on Airbnb for a January weekend in Chattanooga pulls up more than 50 listings – including properties in Soddy Daisy.

Kim Bumpas, president of Visit Knoxville, said in an email that the organization does not partner with any of the Airbnb listings in Knoxville and, to her knowledge, they are not submitting occupancy tax, which fund Visit Knoxville.

Still, that 2009 Appeals decision is what Metro Nashville Zoning Administrator Bill Herbert has been using to provide guidance as to how each county should regulate STRPs in their zoning code. And because of the decision, he says Metro has no authority to require homeowners to get a permit.

Herbert states in a letter that STRP use is different than a hotel, and that zoning ordinances must be strictly construed in favor of a property owner’s right to free use of his or her property.

“My understanding is he does not feel like he has legal standing to tell people they can’t do this unless there is something specifically in our code that says they cannot,” says Metro Council member Burkley Allen.

At the state level, Allen says one thing that comes up is the use of sprinklers and whether they would need to be included in any of these short term rental properties.

The state fire marshal has ruled that all STRPs should be considered “R1’’ [a type of residential zoning] occupancy, which require sprinklers.

“Last April, something happened in East Tennessee where the state fire marshal in Sevierville said all cabins need to be sprinkled,” Allen says.

In April 2014, a fire broke out in a three-story multi-room cabin where more than 20 family members were staying for a reunion. Two people died in the fire, including a 5-year-old boy. The cabin was built when Sevier County did not have building codes and did not have a sprinkler. Cabins built now are all required to have a sprinkler system.

“This was a very, very large facility, and logic would say it has no standing as being treated like a residential house,” Allen adds. “But that is still something that is working its way across the state, and we are trying to work together with the state fire marshal and say we are not sure we agree with the current way you have interpreted this.

“Most of the people who [work in] Codes that I have talked to say it makes sense to require smoke detectors, which is what we have in the current bill. We think sprinklers are big time overkill for something that is four bedrooms or smaller. This would kill them in East Nashville I would think.”

James Kelley, president of the Richland-West End Neighborhood Association, says if the city starts issuing permits for structures that don’t comply with state fire requlations and something tragic does happen, the city could then be liable it is issuing permits for something it knows violates a state regulation.

“Are these houses adequately equipped to have a bunch of people staying in them?” he asks. “The property owner is liable, but the problem is if you have eight people and something burns up, and you don’t have sprinklers, and you don’t have exits. That is a problem that at least in other parts of the country – if you have an Airbnb you have minimum standards. And this is something people don’t want to talk about either because clearly it costs some money to deal with life safety issues.”

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