NASHVILLE, TN – Metro Council members are thinking about imposing a moratorium on short-term rental properties where the owner isn’t a resident and, as usual, money is a factor.
Changing rules opens a can of worms that raises several other issues, including laws on public accommodations — Civil Rights — as well as the economic value of STRPs. See the Tribune’s print edition for more on Civil Rights.
A number of city leaders want to stop and think about how to accommodate residents concerned about their safety and property values. There’s also a concern for the benefits of short-term rental properties for residents who live in a nearby home.
Councilman Freddie O’Connell is one of those leaders who’s thinking about the economic development of his district. O’Connell represents the Jefferson Street area which has three Historically Black Colleges and Universities in the immediate area and he’s talked with at-large Councilwoman Sharon Hurt, CEO/president of Jefferson St. United Merchants Partnership.
“I think we’ve got a lot opportunities,” O’Connell said. “There’s a redevelopment district along Jefferson Street, and the Downtown Code, thanks to my predecessor, Erica Gilmore, comes up to Jefferson Street.
“The conversation now is going to unfold among a lot of the property owners along Jefferson Street about what partnerships, what incentives, they want as long term holders of property,” the councilman said.
His conversation with former Councilman Lonnell Matthews, who now works in the mayor’s office, reveals Matthews’ “idea of University Court, or U Boulevard or University City.
“Knowing you’ve got three HBCUs clustered there,” O’Connell continued, “if you go over there, thinking what students, faculty and staff would benefit from, you don’t see a lot of amenities threadlike you see at Hillsboro Village provides students at Vanderbilt and Belmont.”
Such businesses — amenities — are part of a local economy that should be fostered for students, long-time residents ands the city as a whole, he said.
Short-term rental properties should be a part of that mix and accommodated under better regulations, he said.
Supporting the idea are data made available to media in Nashville in February. A report provided to The Tennessee Tribune follows.
Short-term rental properties (STRP) commonly called B&Bs, represent less than 1 percent of the total housing market in Nashville, according to a business specializing in whole home vacation rentals.
STPRs have generated $477.2 million in economic activity and more than 5,000 local jobs in the city, according to an economic impact report by HomeAway, the home vacation rental business.
The economic impact is a combination of visitors’ direct spending in lodging and direct spending on other purchases combined with indirect and induced spending.
New findings from the study include:
· STRPs generated $477.2 million in total economic activity and more than 5,000 jobs when combining direct spending with industry-standard induced spending effects.
· STRP guests in Nashville generated $262.1 million in direct spending, including lodging ($61.5 million) and all other expenditures ($200.6 million).
· For every $100 spent on lodging in Nashville, visitors spent an additional $104 on food, $109 on transportation, $48 on entertainment and recreation, and $65 on retail shopping in the local economy.
“Traditional whole home vacation rentals have been the preferred accommodations choice for generations of families visiting Nashville and communities across the state,” said HomeAway Senior Director of Government Affairs Matt Curtis. “Beyond offering families the unique opportunity to experience Nashville together, vacation rentals have become a vital part of Nashville’s thriving tourism economy, supporting small businesses and allowing homeowners to utilize their property to cover their mortgage, save for retirement or help pay for education.”
According to data from HomeAway property owners,
· 70% of HomeAway owners cover 50% or more of their mortgage.
· 54% of HomeAway owners cover 75% or more of their mortgage.
· 70% of owners use rental income to make household improvements.
· 21% of owners use rental income to pay for their child’s education.
Census data for the Nashville area indicates that permitted STRPs make up less than 1 percent of the Nashville area’s total housing market.
· There were approximately 298,808 total housing units in Nashville in 2015.
· There were approximately 2,945 STRs active in Nashville in 2015.
· Vacant properties categorized as seasonal, occasional or recreational use (SOR) can be a good proxy for potential STRPs. SORs represented 0.4% of the total Nashville housing market in 2015.
“Our city’s short-term rental community has long been a valuable economic driver for local neighborhoods and the city as a whole,” said Elizabeth Smith, president of the Nashville Area Short Term Rental Association. “By offering traveling families and groups the option to stay in a home together – at a price that’s often less than what it costs to stay in a hotel – our rentals help travelers spend their tourism dollars in neighborhoods and businesses across the city.”
According to the report, the Greater Nashville Apartment Association predicts that approximately 25,000 new units will be added to the current regional multifamily inventory in the next few years.
“As a result of our analysis, it’s clear that the relatively small number of short-term rental houses diversifies the local lodging options available while complementing more traditional choices such as hotels. The result is a win-win for the community; more choices for travelers, and more economic activity for Nashville,” said the author of the study, Jon Hockenyos, President of TXP, Inc.
The economic impact of STRPs in Nashville was calculated by estimating the direct accommodations spending of visitors staying at STRPs combined with the visitors’ direct spending on other purchases. Using these figures, specific multipliers provided by the U.S. Bureau of Economic Analysis RIMS II model for the Nashville MSA were applied to estimate the induced and indirect spending impacts.
The report was created by TXP with support from HomeAway. TXP is an economic analysis and public consulting firm that offers a full range of economic analysis and forecasting services to public and private clients. The study was conducted by using 2015 visitor spending data from D.K. Shifflet & Associates as well as data from the US Census Bureau.
