Memphis City Council cuts red tape for Airbnb hosts

Memphis City Council on Tuesday confirmed its decision to remove “red tape” from an ordinance creating taxes and room fees in the city’s growing short-term real estate rental market.

Council members adopted the minutes of their previous meeting on Tuesday, consolidating the Oct. 18 approval of an ordinance allowing the city to begin charging short-term hosts a 3.5% tax and fees. $ 2 room charge on March 1 – same taxes and fees typically charged. to hotels and motels.

The tax will generate about $ 158,340 per year to pay down debt service for the Memphis Cook Convention Center and FedExForum, and $ 78,000 per year for “destination marketing” by the Memphis Convention & Visitors Bureau.

The city will negotiate deals with third-party hosting platforms like Airbnb and VRBO, which will return the taxes to the city, according to the ordinance.

Charles “Chooch” Pickard, an architect and short-term rental host who represented the local short-term hosts during the negotiation of the ordinance, said the approval of the ordinance without the “onerous” regulation was a “victory” for the hosts.

“It’s so much easier not to have all the paperwork,” he said.

Led by chairman of the board Kemp Conrad, the board previously removed an authorization process and other regulations from the ordinance, leaving taxes and fees in place but not requiring hosts to pay them directly.

Conrad specifically targeted a restriction on food service, saying it was not “Southern” to ban short-term rental hosts from leaving cookies for their guests.

Council members said the Memphis ordinance should be clear enough to avoid a legal challenge similar to that faced by the Nashville ordinance. Davidson County Circuit Judge Kelvin Jones recently ruled that Nashville’s short-term rental order was unconstitutionally vague, though subway lawmakers said they would rework the order to clarify the language . Here’s what Jones said in his written order regarding the ordinance:

“The definitions of (short term rental properties like Airbnb), bed and breakfasts, guesthouses and hotels overlap, so a single property could fall into one, more or all of the classifications. of the aforementioned properties. Court concludes that the definition of (short term rental properties) is unconstitutionally vague as a person of average intelligence would not be able to understand the differences and / or distinctions between (short term rental properties) and hotels , guest rooms and pensions. “

The Memphis ordinance defines short-term rental property as a building or room that is also or in a house, and explicitly exempts hotels, motels, guesthouses, bed and breakfasts.

Justin Owen, CEO of the Beacon Center of Tennessee, a libertarian group that supported the court challenge to the Nashville ordinance, said in a statement that the Memphis ordinance was “a prime example of reasonable and fair regulation.”

“Memphis has taken a simple and balanced approach to regulating short-term rental properties without infringing on the property rights of Memphis owners,” he said after the council vote. “We applaud Memphis City Council for following the Constitution, and we hope cities like Nashville and Chattanooga will learn a lesson from Memphis’s approach.”

But the lack of regulation in the ordinance is troubling for hotel and motel owners, who fear the trend towards short-term rentals could have massive, long-term consequences for the local hotel industry, which will make carpooling driven by Uber and Lyft. boom “pale in comparison,” said Kevin Kane, chairman of the Memphis convention and visitors bureau.

“You are going to see apartments, hotels, everyone will jump in this space,” he said.

Kane has publicly expressed concern to council members that the ordinance does not do enough to keep tenants safe in the short term, and warned against swift passage of the ordinance without regulation.

But Conrad said council could revisit the ordinance if there were any issues – a comment echoed by board member Berlin Boyd, who co-sponsored the ordinance with Edmund Ford Jr. and had previously expressed concern about the ordinance. the removal of regulations.

“We can evolve as the platform evolves in Memphis,” Conrad said.

“I think it’s definitely something we can revisit,” Boyd added.

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