Downtown Nashville (AP Photo/Mark Humphrey)
City officials who attempt to regulate short-term rental companies like Airbnb generally fall into two camps — those who tax, and those who crack down on rentals that aren’t owner-occupied. The latter strategy is generally a response to the notion that such companies limit rental supply and drive up demand, thus increasing housing costs overall. But in some cities — Seattle and potentially Nashville (depending on the outcome of a particularly thorny debate) — the taxing strategy is also being linked to affordable housing development, creating an unconventional funding strategy that looks a lot like the much-debated linkage fee.
Nashville’s legislative fight (which heads to the city’s council chamber next week) is essentially a clashing of those regulatory ideals. It goes something like this: East Nashville Councilman Scott Davis has proposed adding a $2 fee on every short-term rental room night, according to the Tennessean. He’s added that proposal to a piece of legislation backed by Airbnb, with the proceeds going toward a group called the North Nashville Consortium, made up of nonprofits and religious entities that develop affordable housing.
But according to the paper, short-term rental critics have been rallying behind a different bill — one that would phase out short-term rentals in residential neighborhoods that aren’t owner-occupied. The bill to which Davis has proposed adding an amendment has been called a compromise between the activists who oppose Airbnb and the industry itself. But some of those activists are apparently very unhappy with Davis for lending his support to the bill, and accused him of striking a deal with Airbnb.
Davis, however, maintains that his proposal for an amendment is strictly about affordable housing, citing similar fees in New Orleans, Seattle, Chicago and Portland.
One of those cities, Seattle, passed a package of legislation to tax those short-term operators in November. The funds are intended for both affordable housing and the city’s Equitable Development Initiative, which combats displacement. Los Angeles has also toyed with the idea of linking some sort of affordable housing funding stream with its Airbnb tax (though the city voted to tax short-term rental companies in 2016, it still hasn’t officially legalized them). Some of that money does go towards homeless services, but most of it is deposited into the general fund.