Airbnb Chattanooga


January 29, 2016 1:18PM

Chattanooga is the latest city to try to tackle the emergence of short-term rental properties “STRPS” like Airbnb. Chattanooga’s law avoids some of the issues that lead a Nashville judge to issue an injunction against Nashville’s version. The most obnoxious part of the Nashville law is the arbitrary cap placed on the number of non-owner occupied STRPs in neighborhoods. Why should I be prohibited from doing as I please with my home just because 3% of my neighbors already are? By structuring its law around zoning, Chattanooga avoids the silliness involved in invoking the threat presented by Airbnb to “residential character” in areas that have baseball parks, fast food restaurants and industrial riverfront.

Other thoughts:

1) What about owners who made significant investments in property to be used as an Short Term Rental Property who find that investment diminished as a result of the new law? Nashville did not care, to the horror of many first-time investors. As written, Chattanooga’s law is silent.

2) These laws tend to struggle to define STRPs. Nashville’s attempt was particularly ill thought out because the city’s definition overlaps substantially with the definitions for hotels and boardinghouses, which are exempted from the STRPS law altogether. Chattanooga’s law does not have these exceptions, but its definition of STRPs would appear to encompass a whole lot of conduct that probably should not need a permit. What about the college graduate coming home to the nest when dad says he is going to pay rent? What about the old friend passing through who buys dinner? Do we want a permit for that? Chattanooga’s law raises these issues.

3) The current version has an all-out prohibition on signs advertising the property. That’s a speech restriction, pure and simple. An Airbnb-er might have perfectly good reasons to put out a sign for directional or informational purposes, to say nothing of advertising. To single particular speech out for the death penalty is offensive to the First Amendment. This speech restriction in Nashville’s version lead to the injunction.

4) Chattanooga wants STRP owners to pay the same taxes as hotels. That’s pretty stiff. The effective tax rate is getting north of 50%, and that’s before expenses. Frankly, that will make the margin tight for the classic Airbnb-er who just uses his home. Do we really want this market to be controlled by large-scale operations? Can we really justify asking homeowners to pay the same tax that high-density hotels pay?

These are just my thoughts. I am told that the recent meeting was positive and Chattanooga seems to be being much more thoughtful about this than Nashville was.