Is Nashville’s Airbnb Ordinance Constitutional?  Maybe not. 

By Daniel A. Horwitz

A few weeks ago, Lindsay Boyd penned a fun article for the Beacon Center TN Blog about Nashville’s new Airbnb ordinance entitled “My Dog Has More Freedom Than You Do.”  Contrasting Nashville’s newly enacted “Short Term Rental Property” regulations with the comparatively regulation-free environment available to short term dog sitters, Ms. Boyd explains:

“[T]hose of us residing in Nashville will no longer have the same freedoms that our pets do to shop for accommodations or open our homes to prospective vacation renters.  This spring, the city of Nashville announced a new policy for Airbnb operations.

Now, not only do Airbnb operators have to pay the same taxes as hotels, but those whose homes are used strictly for “short term rentals” (or Airbnb business) must also stand in line to vie for a limited number of licenses granted by the city—available to a mere 3% of households per census tract.  Those who fail to obtain these permits and adapt their services to adhere to further regulations on the number of sleeping rooms, signage, parking, and food service, will simply be out of luck—or become outlaws if they continue to operate unabated.”

After reviewing the provisions of Nashville’s short term rental property ordinance, however, I began to wonder:  can Nashville’s Airbnb regulations withstand constitutional scrutiny?  From my vantage point – at least with respect to the provision of the ordinance that caps the total number of short term rental permits at “[n]o more than three percent of the single-family or detached two-family residential units within each census tract”[1] – the answer is no.

Before jumping into a constitutional analysis of Metro Code 6.28.030, though, it’s worth pointing out what appears to be a drafting error that leads me to wonder if Nashville’s Airbnb ordinance even applies to anyone.  Specifically, the ordinance begins:

“For purposes of this section, ‘short term rental property (STRP)’ means a residential dwelling unit containing not more than four sleeping rooms that is used and/or advertised for rent for transient occupancy by guests as those terms are defined in Section 5.12.010 of the Metropolitan Code.”[2]

Simple enough, perhaps.  Except there’s a problem—skipping to Section 5.12.010, we discover that every relevant term defined in that section is restricted exclusively to hotels.  For example, under Section 5.12.010, “‘Occupancy’ means the use or possession or the right to the use or possession, of any room, lodgings or accommodations in a hotel . . . .”, and “‘Transient’ means any person who exercises occupancy or is entitled to occupancy for any rooms, lodgings or accommodations in a hotel . . . .”  Why is this a problem?  Well, because even assuming that a home rented on Airbnb qualifies as a “hotel” as that term is defined by the Metro Code, the Airbnb ordinance specifically states that “hotels. . .  shall not be considered short term rental property.”[3]  Alright then.

That problem aside, however, the clear intent of the Airbnb ordinance was to subject short term home rentals to regulation, to licensing, and to taxation.  Beyond having to pay taxes and obtain a permit that was not previously required, however, there are several provisions of Nashville’s Airbnb ordinance that residents will likely find distasteful.  Such provisions include requirements that:

-“No food shall be prepared for or served to the transient by the permit holder.”

-“The principal renter of a STRP unit shall be at least twenty-one years of age.”

-“The STRP owner shall not receive any compensation or remuneration to permit occupancy of a STRP for a period of less than twenty-four hours.”

And the most interesting of the bunch:

-“The responsible party shall answer calls twenty-four hours a day, seven days a week for the duration of each short term rental period to address problems associated with the STRP.”[4]

The government typically enjoys broad authority to enact economic regulations of this sort, even when they constitute poor public policy and don’t make a great deal of sense.  For the most part, our constitutional framework trusts the democratic process to fix bad laws, and consequently, the Tennessee Supreme Court has explained that legislative bodies are “privileged to pass good laws, mediocre laws or poor laws.”  See Nashville Mobilphone Co. v. Atkins, 536 S.W.2d 335, 340 (Tenn. 1976).  Stated a bit more pointedly, as former U.S. Supreme Court Justice Thurgood Marshall was fond of saying:  “The Constitution does not prohibit legislatures from enacting stupid laws.”  New York State Bd. of Elections v. Lopez Torres, 552 U.S. 196, 209 (2008) (Stevens, J., concurring).

With respect to Nashville’s Airbnb ordinance, however, there are two potential problems that may very well result in it being struck down as unconstitutional by a reviewing court.  Specifically, the ordinance is subject to potential constitutional challenge based on the facts that: (1) it arbitrarily caps the number of permits available at 3% per census tract; and (2) it’s broad enough that it appears to require parents to obtain a permit if they want to charge their children rent to live in their home.  For the reasons explained below, both of these facts give rise to serious constitutional concerns.

First and foremost, the provision of the Airbnb ordinance that caps the number of available short term rental permits at “three percent of the single-family or detached two-family residential units within each census tract” [5] appears to violate Article I, § 8 of the Tennessee Constitution.  In a similar case involving the right to participate in the filling station business, the Tennessee Supreme Court explained that:  “Although [a] city may have the right to regulate [a] business, it does not have the right to exclude certain persons from engaging in the business while allowing others to do so.”  See Consumers Gasoline Stations v. City of Pulaski, 292 S.W.2d 735, 737 (Tenn. 1956).  According to the Consumers Gasoline Stations Court, such a law is “unconstitutional in that it unquestionably denies the equal protection of the laws to the person forbidden to use his property,” and “being discriminatory in nature[,] clearly violates Article I, Section 8 of the Constitution of Tennessee.”

Like the filling station ordinance that was at issue in Consumers Gasoline Stations, by capping the total number of available short term rental permits at three percent per census tract, Nashville’s Airbnb ordinance has the clear effect of “exclud[ing] certain persons from engaging in the business while allowing others to do so.”  Id.  Consequently, unless the Tennessee Supreme Court relaxes its interpretation of Article I, § 8 in a future case, the permit cap on short term rentals established by Metro Code 6.28.030 violates Article I, § 8 of the Tennessee Constitution.

Second, Nashville’s Airbnb ordinance broadly provides that: “No person or entity shall operate a STRP or advertise a residential property for use as a STRP without the owner of the property first having obtained a STRP permit issued by the department of codes administration.”[6]  If a property owner fails to comply, “[t]he penalty for operating a short term rental property without a permit [is a] fifty dollar fine,” and “[e]ach day of operation without a permit shall constitute a separate offense.” [7]  Additionally, as noted above, “short term rental property” is defined as “a residential dwelling unit containing not more than four sleeping rooms that is used and/or advertised for rent for transient occupancy by guests[.]”[8]

Given the broad scope of the ordinance’s definition of “short term rental property,” Nashville’s Airbnb ordinance appears to be expansive enough that it interferes with constitutionally protected family living arrangements.  To illustrate why, suppose, for example, that Johnny is coming home from college, and his parents want to charge him rent to live in their home while he looks for his own place to live.  Assuming that he stays for less than thirty continuous days (in which case the arrangement would fall outside the ambit of the ordinance), can Johnny’s parents charge him rent without a permit?

The answer appears to be no, because charging Johnny rent would immediately transform his parents’ home into a “short term rental property” that his parents require a license to operate.  Why?  Well, because under the terms of the ordinance, their home would be “a residential dwelling unit”  that is “used . . . for rent for transient occupancy by guests[.]”  Consequently, Johnny’s parents must not only obtain a permit from the department of codes administration prior to charging Johnny rent, but they must also pay sales taxes on whatever rent he pays them.  Moreover, Johnny’s parents are legally prohibited from cooking Johnny food while he’s living with them, because the ordinance also provides that: “No food shall be prepared for or served to the transient by the permit holder.”[9]  Furthermore, while Johnny is staying in their home, Johnny’s parents are required—under penalty of law—to serve at Johnny’s beck and call because Metro Code 6.28.030(J) provides that they must “answer calls twenty-four hours a day, seven days a week for the duration of each short term rental period to address problems associated with the STRP.”[10]  Of course, all of this assumes that Johnny is at least twenty-one years old; if he is not, then the entire arrangement is illegal, as the ordinance also provides that: “[t]he principal renter of a STRP unit shall be at least twenty-one years of age.”[11]

As noted above, “[t]he Constitution does not prohibit legislatures from enacting stupid laws.”  New York State Bd. of Elections, 552 U.S. at 209 (Stevens, J., concurring).  However, the Constitution does provide that “when the government intrudes on choices concerning family living arrangements, [courts] must examine carefully the importance of the governmental interests advanced and the extent to which they are served by the challenged regulation.”  See Moore v. City of E. Cleveland, Ohio, 431 U.S. 494, 499 (1977).  Put differently—when it comes to regulating family living arrangements, the United States Supreme Court has made unmistakably clear that “the Constitution protects the sanctity of the family.”  Id. at 503.

To the extent that Nashville’s Airbnb ordinance requires parents to obtain a permit before charging their children rent for short term lodging, a colorable claim can be made that the ordinance interferes with citizens’ constitutionally protected “choices concerning family living arrangements” without sufficient justification.  Id. at 499.  Requiring a citizen to obtain a permit before being able to enjoy a constitutionally protected right is highly questionable, and for the reasons illustrated above, the extent of the interference imposed by Nashville’s Airbnb ordinance is also fairly substantial.  Whether a reviewing court would construe the ordinance as merely an economic regulation—in which case a challenger would bear the insurmountable burden of proving that it does not bear a rational relationship to any conceivably legitimate government interest—or whether a court would instead construe the ordinance as a constitutionally suspect regulation of family living arrangements, however, only time will tell.

Questions about this article?  Email Daniel Horwitz at daniel.a.horwitz@gmail.com.

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[1] Metro Code 6.28.030(Q).

[2] Metro Code 6.28.030(A)

[3] Metro Code 6.28.030(A).

[4] Metro Code 6.28.030(I), (J), (L) & (M).

[5] Metro Code 6.28.030(Q).

[6] Metro Code 6.28.030(C).

[7] Metro Code 6.28.030(R)(6)(b).

[8] Metro Code 6.28.030(A).

[9] Metro Code 6.28.030(I).

[10] Metro Code 6.28.030(M).

[11] Metro Code 6.28.030(J).