How the Codes Department Achieves 90%+ Compliance With Host Compliance

Nashville attracts millions of visitors each year. To support this tourism, Nashville’s short-term vacation rental (STR) market exploded, and suddenly, the famous honky-tonks weren’t the only hosts to late night parties — so were short-term vacation rentals (STRs).

The Metro Government of Nashville and Davidson County faced growing public concern for STRs operating illegally. “Nobody wants a fleet of micro-hotels, bought up by investors, popping up in their quiet residential neighborhood,” said Jon Michael, Zoning Administrator. “That’s why you have a permitting scheme.”

While some STRs were operating in residential neighborhoods illegally, other STRs were operating in the correct zone but weren’t obtaining permits and paying taxes. There were also accounts of hosts filling STRs with as many beds as possible. The Code Department was quickly met with a backlog of complaints.

Metro was struggling to enforce their STR regulations through a mostly complaint-driven process. Trying to identify addresses and manage compliance manually proved impossible — there are over 60 active rental websites and they keep information like addresses and contact information private. “It doesn’t mean anything to have the permitting scheme if you can’t enforce it,” added Michael.

Metro moved forward with a Request for Proposals (RFP) process to explore available software solutions. Granicus’ Host Compliance software addressed all of Nashville’s pain points. Not only did it provide high rates of address identification, but it provided an all-in-one solution for communicating with hosts and providing an online portal for them to apply for a permit and pay taxes.

With Host Compliance, Metro can identify illegal operators before there ever is a complaint —from the safety of their desks. “It’s an insane use of resources to send code enforcement officers out into the field every day to try and catch illegal operators. It’s dangerous,” said Michael.

Since implementing Host Compliance, Nashville has more than doubled their compliance rate; 5,525 or 91% of STRs have a permit and are paying taxes with Metro.

“Being able to enforce our permitting scheme takes heat off the codes department. Before, we’d receive criticism from the public, from government leaders, from the media that we weren’t doing our jobs. Now, we can show that we’re doing our jobs, and we’re doing them well.”

When a short-term rental host applies for a permit, the associated fees go into the Metro’s general fund to pay for pensions, public safety, pothole repairs, etc. Some of the fees go into an affordable housing fund where they’re used to facilitate affordable housing for lower income families. “If an investor owns 10 rental houses in Nashville, and he’s using eight of them as short-term rentals, that’s eight houses that can’t be rented out to the young couple getting started, to the single mom, or to the retiree,” said Michael. Using the funds from short-term rentals helps ensure sustainable development in Metro.