July 28, 2017

Nashville Airbnb case continues

By Caleb R. Trotter Attorney
Courtesy, Beacon Center

Back in October we reported that Nashville homeowners Rachel and P.J. Anderson had prevailed in their challenge to Nashville’s restrictive and unconstitutional limitation on short-term rentals. Unfortunately, instead of doing the right thing and amending its law to respect the rights of all Nashville property owners, the city appealed that loss. Today, PLF filed yet another amicus brief supporting the rights of Nashvillians to use their property to support their family.

As we previously discussed, in response to the growing popularity of websites like Airbnb and VRBO, and at the behest of the hotel industry and a few disgruntled neighbors, Nashville capped the number of available permits for non-owner-occupied short-term rental properties at 3% of properties within a census tract. Nashville did not cap the number of permits available for owner-occupied properties.

If you’ll recall, the Andersons enjoyed renting out their home on Airbnb while they traveled for P.J.’s musical performances, and did so with an owner-occupied permit. But when Rachel received an opportunity that would have required the family to temporarily relocate to Chicago, a problem arose. Because they wanted to keep their Nashville home for their eventual return to Nashville, and they preferred to rent it out on a short-term basis to avoid greater wear-and-tear that typically accompanies long-term rentals, they needed to swap their permit for a non-owner-occupied permit. Unfortunately, though, all of the permits in their census tract were already taken.

As a result, the Andersons challenged that burdensome restriction as unconstitutional, and the trial court agreed and held it to be unconstitutionally vague. On appeal, the Andersons argue that the 3% cap also runs afoul of the Tennessee Constitution’s Anti-Monopoly Clause. In short, because the cap reserves the market for non-owner-occupied short-term rentals to the lucky few who were first to acquire permits, the cap is subject to the “legitimate relation” test, which it fails.

But in response to the Andersons’ argument, Nashville argues that the legitimate relation test is similar to the federal rational basis test and urges the court to adopt an overly deferential application of that test. Regular readers of Liberty Blog will recall that the government often claims that the rational basis test is essentially a rubberstamp of legislation. That is wrong. Thus, PLF’s amicus brief provides the court with numerous examples from the United States Supreme Court, multiple federal circuit Courts of Appeals, and even other Tennessee cases, that show that rational basis review provides a meaningful check on government overreach. With a better understanding of the court’s role in reviewing anti-competitive legislation, hopefully the court will affirm the Andersons’ victory and let them continue to enjoy the fruits of their property.

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Anderson v. Metropolitan Government of Nashville and Davidson County

Two Nashville ordinances banned any form of advertising short-term rentals with signage on the property, and capped the number of non-owner-occupied short-term rentals to three percent of the properties in each census tract. Rachel and P.J. Anderson periodically rent out their home via Airbnb and sued to strike down the law as violating their First Amendment right to advertise their home and their Fourteenth Amendment right to equal protection. Nashville repealed the advertising ban and a trial court ruled that the remaining provisions were unconstitutionally vague. Nashville appealed and PLF filed an amicus brief supporting the Andersons and all Nashville property owners.

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