Short-term rentals: Anderson v Metro Nashville

The Tennessee Court of Appeals recently decided the short-term rental property case involving challenges to the definitions of the ordinance, the 3%, and attorneys fees. As you may recall, the trial court had found the definitions void because of vagueness, concluded that there was no monopoly in the use of a 3% cap, and awarded attorneys fees.

The Court of Appeals concluded that the constitutional vagueness issues had been mooted by the adoption by Metro Nashville of a new ordinance with updated definitions, that while the 3% might be characterized as a monopoly, it was nevertheless serving a public purpose by balancing the concerns of neighborhood residential uses against an influx of short-term rental properties. Finally, since in view of the court’s rulings the plaintiffs have not prevailed, the court reversed the award of attorney’s fees.

Perhaps the most interesting part of the decision is the discussion concerning the 3% cap. The court’s conclusion that even though it may be somewhat monopolistic, to the extent that it is offset by a concern of the legislative body for the well-being of the residential neighborhoods, It survives scrutiny.