Amendments	Fiscal Memos
HA0155	Amendment 1-0 to HB1020
HA0491	Amendment 2-0 to HB1020
HA0580	Amendment 3-0 to HB1020
HA0594	Amendment 4-0 to HB1020
HA0604	Amendment 4-1 to HB1020
HA0605	Amendment 4-2 to HB1020
HA0606	Amendment 4-3 to HB1020
HA0609	Amendment 4-4 to HB1020
HA0608	Amendment 5-0 to HB1020
HA0612	Amendment 6-0 to HB1020
HA0613	Amendment 7-0 to HB1020
HA0623	Amendment 8-0 to HB1020
HA0626	Amendment 9-0 to HB1020
HA0627	Amendment 10-0 to HB1020

	Amendments	Fiscal Memos
SA0279	Amendment 1-1 to SB1086
SA0849	Amendment 2-2 to SB1086
SA0850	Amendment 3-3 to SB1086
SA1000	Amendment 4- to SB1086
SA1001	Amendment 5- to SB1086
SA1007	Amendment 6- to SB1086
SA1008	Amendment 7- to SB1086
SA1010	Amendment 8- to SB1086
SA1011	Amendment 9- to SB1086
SA1031	Amendment 10- to SB1086
SA1033	Amendment 11- to SB1086
SA1034	Amendment 12- to SB1086
SA1035	Amendment 13- to SB1086

NOTE: Each fiscal memorandum applies only to the amendment(s) identified in the memorandum. The fiscal memorandum must be matched to any amendments that have been adopted.

Fiscal Summary

Increase State Revenue - $346,200/FY18-19/General Fund $4,000/FY18-19/Department of Revenue $692,400/FY19-20 and Subsequent Years/General Fund $8,100/FY19-20 and Subsequent Years/Department of Revenue Increase State Expenditures - $76,100/FY18-19 $145,800/FY19-20 and Subsequent Years Increase Local Revenue - $369,600/FY18-19 $739,200/FY19-20 and Subsequent Years

Bill Summary

This bill revises and enacts various provisions regarding short term-rentals, as discussed below.

REGULATION OF SHORT-TERM RENTAL UNITS.

This bill requires a short-term rental unit provider to:

(1) Maintain at least $500,000 in liability insurance or coverage to cover damage done or suffered by any person renting the unit from the short-term rental unit provider. This requirement may be by an online short-term rental unit marketplace maintaining such coverage on the short-term rental unit provider's behalf; and
(2) Comply with all requirements regarding fire sprinklers, smoke alarms, and carbon monoxide alarms.

This bill prohibits a local governing body from:

(1) Prohibiting the use of property as a short-term rental unit; or
(2) Restricting the use of or otherwise regulate a short-term rental unit based on the short-term rental unit's classification, use, or occupancy.

This bill authorizes a local governing body to:

(1) Enact, maintain, or enforce a local law that regulates property used as a short-term rental unit if the local governing body demonstrates by clear and convincing evidence that the primary purpose of the local law is the least restrictive means to protect the public's health and safety;
(2) Apply a local law that regulates land use to a short-term rental unit in the same manner as other residential dwellings. This provision includes local laws concerning residential use and other zoning matters, noise, property maintenance, and nuisance; and
(3) Limit or prohibit the use of a short-term rental unit to prohibit or restrict the: housing of sexual offenders; operating a residential treatment facility or similar facility; selling of illegal drugs; selling of beer or alcoholic beverages or other activity that requires a permit or license; or operation as an adult-oriented establishment.

For purposes of all the above-described provisions, "short-term rental unit" means a residential dwelling, including a single-family dwelling or a unit in a multi-unit building, such as an apartment building, condominium, cooperative, or time-share, that is rented wholly or partially for a fee for a period of less than 30 consecutive days.

OCCUPANCY TAX

Generally under present law, metropolitan governments and cities that have adopted home rule are authorized to impose a tax upon the privilege of occupancy in any hotel of each transient (which is a person who exercises occupancy or is entitled to occupancy for any rooms, lodgings or accommodations in a hotel for a period of less than 30 days). This bill includes short-term rental units in the definition of hotel for purposes of applicability of the taxes.

For purposes of the above-described taxes, "short-term rental unit" means a residential dwelling, including a single-family dwelling or a unit in a multi-unit building, such as an apartment building, condominium, cooperative, or time-share, that is rented wholly or partially for a fee, if the municipality in which the short-term rental unit is located complies with the following: the tax must be levied in the same amount and manner for operators of hotels that are not short-term rental units as it is for operators of hotels that are short-term rental unit providers; and on and after January 1, 2019, tax must be collected and remitted subject to the conditions set out in this bill (discussed below) that allow an online short-term rental unit marketplace to collect and remit the tax.

This bill specifies that the above-described requirements regarding imposition of the tax on short-term rental units will apply in any city, town, or county in this state, including any county having a metropolitan form of government that has authorized a tax to be levied on the privilege of occupancy of a hotel pursuant to any ordinance, resolution, or private act. This bill further specifies that to the extent there is a conflict between this bill and any private act, resolution, or ordinance that imposes a tax on the privilege of occupancy in a hotel, this bill will govern. This bill authorizes the legislative body of any city or town, by ordinance, or county, by resolution, to modify any ordinance or resolution enacted prior to January 1, 2019, that conflict with this bill.

BUSINESS TAX

This bill specifies that:

(1) Short-term rental unit providers are subject to the business tax as providers of a taxable service; and
(2) Services rendered by an online short-term rental unit marketplace are not considered to be performing a taxable service under the Business Tax Act.

SALES AND USE TAX

This bill specifies that the sale, rental or charges for any rooms, lodgings, or accommodations furnished to persons by a short-term rental unit provider or an online short-term rental unit management company are subject to the sales and use tax laws. This bill further specifies that on or after January 1, 2019, any tax collected on a short-term rental unit provider (defined in the same way as described above for other tax purposes), or an online short-term rental unit management company, must be collected and remitted subject to the conditions set out in this bill that allow an online short-term rental unit marketplace to collect and remit the tax.

Under this bill, when a short-term rental unit provider utilizes a short-term rental unit management company to manage a short-term rental unit owned by the short-term rental unit provider, the sales and use tax levied on the sales price of such unit will be imposed on, and must be remitted by, the short-term rental unit management company to the commissioner. This provision does not prohibit the short-term rental unit management company from collecting the tax from the consumer.

COLLECTION AND REMITTANCE OF TAXES

This bill authorizes an online short-term rental unit marketplace to register with the commissioner of revenue for the collection and remittance of all of the various occupancy taxes and the sales and use tax with respect to imposition of such taxes on the sales price of a short-term rental unit. Such an election will be effective only if the online short-term rental unit marketplace makes an election to remit all such taxes.

Any online short-term rental unit marketplace making the election pursuant to this bill will be subject to the provisions in the same manner as if the online short-term rental unit marketplace were directly engaged in renting short-term rental units to occupants for tax collection and remittance purposes only. This bill specifies that no short-term rental unit provider will be subject to the taxes described above with respect to any short-term rental unit transaction for which the short-term rental unit provider has received written notice or documentation from an online short-term rental unit marketplace that the online short-term rental unit marketplace has paid or will pay the taxes. Any such notice will be sufficient proof that the online short-term rental unit marketplace and not the short-term rental unit provider is liable for the taxes that the online short-term rental unit marketplace elected to remit.

Under this bill:

(1) Any online short-term rental unit marketplace that has made an election as described above, with respect to each short-term rental unit transaction facilitated by the online short-term rental unit marketplace, must collect and remit the taxes, even if such sale is occasional or isolated. The online short-term rental unit marketplace must report its taxes monthly and remit the aggregate total amounts for each respective jurisdiction for each month; and
(2) Taxes payable by an online short-term rental unit marketplace in accordance with these provisions will be subject to audit only by the commissioner at the commissioner's sole discretion. Audits of an online short-term rental unit marketplace will be conducted solely on the basis of the tax identification number associated with each online short-term rental unit marketplace and will not be conducted directly or indirectly on any individual short-term rental unit provider or any transient to whom short-term rental units are furnished. An audit must be conducted on the basis of returns filed by the online short-term rental unit marketplace with the commissioner, and if requested by the online short-term rental unit marketplace, must include all tax types for which the online short-term rental unit marketplace has made an election to collect and remit; and
(3) If an online short-term rental unit marketplace is required to disclose any personally identifiable information relating to any short-term rental unit provider or transient to whom a short-term rental unit is furnished, such information is confidential.

This bill prohibits an online short-term rental unit marketplace from advertising or stating in any manner, whether directly or indirectly, that the above-described taxes will be assumed or absorbed by the short-term rental unit provider; that it will not be added to the occupancy; or that, if added, any part will be refunded.

Taxes collected pursuant to these provisions will be distributed on a monthly basis by the department to the applicable local governing body in which the short-term rental unit was located and the tax was collected. The department may deduct an administration fee of 1.125 percent of the collected tax to cover its expenses of administering the collection and distribution of the tax.

SAFETY OF SHORT-TERM RENTAL UNITS

Under present law, if a local government adopts mandatory sprinkler requirements for one-family and two-family dwellings that would apply to dwellings used as establishments providing hospitality services, then those mandatory sprinkler requirements are applied only to those dwellings constructed on or after the date the mandatory sprinkler requirements took effect. This bill specifies that hospitality services includes short-term rental units.

This bill specifies that the requirements for smoke alarms and carbon monoxide alarms applicable under present law to hotels will also apply to short-term rental units. The short-term rental unit provider will be responsible for performance of maintenance, repairs, and tests as are necessary to ensure that every smoke alarm and carbon monoxide alarm required in the short-term rental unit is operational at all times.

This bill specifies that the Hotel and Public Swimming Pool Inspection Act does not apply to short-term rental units.


EFFECTIVE DATE

With the exception of the definition section in the provisions governing collection and remittance of taxes, those provisions will take effect January 1, 2019. The specified definitions and all other provisions of this bill will take effect upon becoming a law.

ON MAY 5, 2017, THE HOUSE ADOPTED AMENDMENTS #1 AND #3 AND RESET HOUSE BILL 1020, AS AMENDED.

AMENDMENT #1 specifies that a local governing body may not prohibit "or effectively prohibit" the use of property as a short-term rental unit. This amendment removes this bill's prohibition on a local governing body restricting the use of or otherwise regulating a short-term rental unit based on the short-term rental unit's classification, use, or occupancy.

This amendment rewrites this bill's provision that authorizes a local governing body to enact, maintain, or enforce a local law that regulates property used as a short-term rental unit, so that a local governing body may enact, maintain, or enforce such a law if:

(1) The primary purpose of the local law is to protect the public's health and safety; and
(2) The law does not prohibit or effectively prohibit the use of a property as a short-term rental unit.

This amendment removes the insurance requirement described in item (1) under the REGULATION OF SHORT-TERM RENTAL UNITS section of the bill summary. This amendment instead requires an online short-term rental unit marketplace to notify a short-term rental unit provider that lists a short-term rental unit on the digital platform provided by the short-term rental unit marketplace, that it is recommended that the short-term rental unit provider inquire as to the coverage and exemptions under the provider's homeowner's or renter's insurance policy imposed by the provider's insurance company upon short-term rental activities.

This amendment also revises/clarifies the tax provisions to specify that a municipality may levy the taxes described above in the bill summary "if the municipality permits collection and remittance" as set out in the bill instead of "if the tax is collected and remitted" pursuant to this bill and to require, on and after January 1, 2019, local governments to permit an online short-term rental unit marketplace to collect and remit the tax as set out in this bill. This amendment also clarifies the taxes to which the election to remit applies and specifies that such an election will only be effective during the time when the department is responsible for the collection of the taxes as described below.

This amendment rewrites this bill's provision that required that the taxes collected pursuant to this bill be collected and remitted in the same manner as the sales and use tax, and instead requires the following:

(1) Within 90 days after this bill becomes effective, a local governing body imposing any tax set forth in this bill, except for the sales and use tax, with respect to any short-term rental may elect, in a manner prescribed by the department, to continue to administer all such taxes. If a local governing body adopts or is authorized to impose any such tax, the local governing body may make such election, or amend a previous election, within 30 days after the adoption or enactment of such tax. If a local governing body does not make such election, or amend a previous election, within the time prescribed, such taxes must be collected by the department and administered in the same manner as the sales and use tax;
(2) Within 90 days after this bill becomes effective, unless a local governing body has made an election, the local governing body must furnish the department a certified copy of each resolution, ordinance, public act, or private act adopting or authorizing the local governing body to impose the taxes in this bill, except for the sales and use tax, and inform the department of the applicable rate and the effective date of that rate. If a local governing body adopts or is authorized to impose any such tax after this bill becomes effective, unless a local governing body has made an election, or amended a previous election, it must furnish such certified copies and information to the department within 30 days after the effective date of the adoption or enactment of such tax. The department may not be obligated to collect such taxes if a local governing body does not provide the required information; and
(3) The department must publish and maintain a list of all taxes it collects pursuant to this bill and the applicable rates of tax.

This amendment also removes this bill's provision whereby taxes payable by an online short-term rental unit marketplace would be subject to audit only by the commissioner at the commissioner's sole discretion and removes the provision whereby the services rendered by an online short-term rental unit marketplace would have been excluded from classification as a taxable service under the business tax.

AMENDMENT #3 corrects an internal cross-reference in this bill.

ON MAY 8, 2017, THE HOUSE FURTHER CONSIDERED HOUSE BILL 1020, AS AMENDED, ADOPTED AMENDMENT #10, AND PASSED HOUSE BILL 1020, AS AMENDED.

AMENDMENT #10 rewrites this bill; creates the Short Term Rental Unit Act; and revises other provisions regarding short term rentals, as discussed below.

SHORT TERM RENTAL ACT (applicable only to Metropolitan Nashville/Davidson County, but not to those cities excluded from the metropolitan government)

This amendment prohibits Davidson County, from taking any action that would:

(1) Prohibit or limit the use of owner-occupied property as a short-term rental unit unless the prohibition or limitation was a local law enacted prior to January 1, 2017;
(2) Effectively prohibit the use of owner-occupied property as a short-term rental unit unless the effective prohibition was a local law enacted prior to January 1, 2017; or
(3) Amend a local law described in item (1) or (2) if the amendment would have the effect of expanding the prohibition, limitation, or effective prohibition, including, but not limited to, amendments that would reclassify the property's occupancy designation, reduce the number of short-term rental unit permits available to owner-occupied property owners in all or a portion of the local governing body's jurisdiction, or reduce the number of permits available to an owner-occupied property owner.

From the effective date of this bill until April 1, 2019, this amendment also prohibits Davidson County, for purposes of property used as a residential dwelling that is not owner-occupied property, from April 1, 2017, through March 31, 2019, from taking any action that would:

(1) Prohibit or limit the use of property as a short-term rental unit unless the prohibition or limitation was a local law enacted prior to April 1, 2017;
(2) Effectively prohibit the use of property as a short-term rental unit unless the effective prohibition was a local law enacted prior to April 1, 2017; or
(3) Amend a local law described in item(1) or (2) if the amendment would have the effect of expanding the prohibition, limitation, or effective prohibition, including, but not limited to, amendments that would reclassify the property's occupancy designation, reduce by more than 0.5 percent the total number of short-term rental unit permits in all or a portion of the local governing body's jurisdiction, or reduce the number of permits available to a property owner.

This amendment specifies that the renting of a residential dwelling will not be considered a commercial activity, regardless of the term of the rental agreement, for purposes of determining land use or utility rates, when determining whether an owner-occupied property conforms to the requirements of a residential zone or residential use. This provision will not apply when determining classification of real property for property taxation purposes. This amendment also specifies that the above provisions do not prohibit Davidson County from regulating property used as a short-term rental unit if the regulation does not prohibit, limit, or effectively prohibit the use of owner-occupied property as a short-term rental unit.

This amendment requires the department of tourist development, within existing resources and as part of its duty to encourage and coordinate the efforts of organizations to promote tourism, to complete a review of the economic impact of short-term rental units on the tourism industry and the overall economy of Tennessee. On or before July 1, 2018, the department must submit a written report of its findings and recommendations made pursuant to this amendment to the speakers of the house and senate.

This amendment specifies that it does not prohibit a condominium, co-op, homeowners association, or other similar entity from prohibiting or otherwise restricting an owner of property within the jurisdiction of the condominium, co-op, association, or other similar entity from using the owner's property as a short-term rental unit.

OTHER PROVISIONS

This amendment authorizes the department of revenue enter a written agreement with an online short-term rental unit marketplace whereby the online short-term rental unit marketplace agrees to register with the department for the collection and remittance of the sales and use tax on the sales price of a short-term rental unit.

This amendment contains the same provisions as those described above in the summary of the introduced bill under the SAFETY OF SHORT-TERM RENTAL UNITS, in regard to smoke alarms and carbon monoxide alarms.


ON APRIL 5, 2018, THE SENATE SUBSTITUTED HOUSE BILL 1020 FOR SENATE BILL 1086, ADOPTED AMENDMENTS #2, 3, 7, AND 9, AND PASSED HOUSE BILL 1020, AS AMENDED.

AMENDMENT #2 rewrites this bill to enact various provisions regarding short term-rental units.

For purposes of this amendment, "short term rental unit" means a residential dwelling that is rented wholly or partially for a fee for a period of less than 30 continuous days and does not include a hotel or a bed and breakfast establishment or a bed and breakfast homestay.

This amendment specifies that any ordinance, resolution, regulation, rule, or other requirement of any type that prohibits, effectively prohibits, or otherwise regulates the use of property as a short-term rental unit will not apply to property if the property was being lawfully used as a short-term rental unit by the owner of the property prior to the enactment of the ordinance, resolution, regulation, rule, or other requirement by a local governing body.

This amendment further specifies that the ordinance, resolution, regulation, rule, or other requirement in effect at the time the property began being lawfully used as a short-term rental unit is the law that governs the use of the property as a short-term rental unit until the property ceases being used as a short-term rental unit for a period of 30 continuous months.

This amendment includes an exemption to the above-described provisions that allows any ordinance, resolution, regulation, rule, or other requirement of any type enacted prior to January 1, 2014, that prohibits or effectively prohibits the use of property as a short-term rental unit, to apply to any property within a local governing body's jurisdiction, regardless of the property's existing use. The exemption is meant to grandfather the ordinances, resolutions, regulations, rules, or other requirements that provided notice to property owners that renting a residential dwelling unit under a specified period of time was unlawful prior to a substantial number of property owners using their property as short-term rental units. However, the exemption:

(1) Only applies to ordinances, resolutions, regulations, rules, or other requirements that expressly limit the period of time a residential dwelling may be rented; and
(2) Does not apply to ordinances, resolutions, regulations, rules, or other requirements that generally prohibit commercial activity or the renting of residential dwellings to transients.

This amendment states that this bill as amended does not prevent a local governing body from prohibiting, effectively prohibiting, or otherwise regulating the continued use of property as a short-term rental unit if, as a direct result of the operation of the short-term rental unit:

(1) The unit has been in violation of a generally applicable local law related to noise, parking, or habitability standards three or more separate times within a 12-month period; and
(2) The provider has no appeal rights remaining for any of the three violations.

"Provider" means any person engaged in renting a short term rental unit.

This amendment allows local governing bodies to authorize short-term rental units through a permitting process, as long as the permitting process does not prohibit, effectively prohibit, or otherwise regulate the use of property as a short-term rental unit.

This amendment specifies that if a local governing body prohibits, effectively prohibits, or otherwise regulates the use of property as a short-term rental unit, the provider has the right to appeal the prohibition or limitation to the local board of zoning appeals. A decision of the local board of zoning appeals is appealable by the provider. The circuit or chancery court has jurisdiction of any appeal instituted by a provider and review is de novo. Any suspension or revocation of a right to operate a short-term rental unit by a local governing body must not exceed 12 continuous months

This amendment further specifies that any person injured as a result of a local governing body violating this bill may bring an action in the circuit or chancery court having jurisdiction over the property upon which the short-term rental unit is located. The court may award actual damages to a plaintiff that prevails in such an action, including costs and reasonable attorney fees.

This amendment does not prohibit:

(1) A condominium, co-op, homeowners association, or other similar entity from prohibiting or otherwise restricting an owner of property within the jurisdiction of the condominium, co-op, association, or other similar entity from using the owner's property as a short-term rental unit as provided for in the entity's governing documents;
(2) A lessor, through the terms of a lease agreement, from restricting the use of the leased property as a short-term rental unit; or
(3) A property owner from placing a restrictive covenant or easement on the property that restricts the future use of the property as a short-term rental unit as authorized under existing law.

This amendment clarifies that a local governing body or municipal utility will not consider the leasing of a residential dwelling as a short-term rental unit as commercial activity for purposes of determining land use or utility rates. This amendment also clarifies that a short-term rental unit is not considered a "hotel" under the Hotel and Public Swimming Pool Inspection Act.

AMENDMENT #3 changes the effective date of this bill to July 1, 2018, for purposes of allowing any person injured as a result of a local governing body violating this bill to bring an action in circuit or chancery court. This amendment specifies that this bill will apply to actions that accrue on or after that date. For all other purposes, this bill will take effect upon becoming a law.

AMENDMENT #7 corrects a cross reference.

AMENDMENT #9 incorporates the changes made by Senate Amendment #7. This amendment also incorporates the changes made by Senate Amendment #2 with the following changes:

(1) Revises the definition of "lawfully used as a short-term rental unit" for purposes of determining which short-term rental units would be eligible for grandfathering to mean the property was permitted or expressly authorized to operate as a short-term rental unit pursuant to a properly adopted ordinance;
(2) Adds to the definition of "provider" an owner of a residential unit that is made available through a vacation lodging service. Under present law, a "vacation lodging service" means any person that engages in the business of providing the services of management, marketing, booking and rental of residential units owned by others as sleeping accommodations furnished for pay to transients or travelers staying no more than 14 days. Vacation lodging services must have a vacation lodging service firm license;
(3) Adds "cabins" to the definition of "residential dwelling", clarifying that a cabin may be used as a short term rental unit;
(4) Adds that a property will no longer be exempt from an ordinance, resolution, regulation, rule, or other requirement of any type that prohibits, effectively prohibits, or otherwise regulates the use of property as a short-term rental unit if the property is sold or transferred;
(5) Revises the provisions authorizing local governments to prohibit the continued use of property as a short-term rental unit based on three violations of generally applicable local laws by removing the requirement that the three violations must occur with a 12-month period and allowing the local government action to be based on any three violations rather than three violations specifically related to noise, parking, or habitability standards. This amendment clarifies that a local government could prohibit, but not effectively prohibit or otherwise regulate, the continued use of property as short term rental based on three violations of generally applicable local laws;
(6) Removes the 12-month limit on suspensions of revocations of a right to operate a short-term rental unit by a local government;
(7) Directs appeals by providers to chancery or circuit court instead of the board of zoning appeals;
(8) Removes the cause of action for a person injured as a result of a local government violating this bill; and
(9) Removes the prohibition against local governments considering the leasing of a residential dwelling as a short-term rental unit as commercial activity for purposes of determining land use or utility rates.

This amendment replaces the changes to the effective date made by Senate Amendment #3 and makes all provisions of this bill effective upon becoming a law.

ON APRIL 9, 2018, THE HOUSE NON-CONCURRED IN SENATE AMENDMENTS #2, 3, 7, AND 9.

ON APRIL 12, 2018, THE SENATE REFUSED TO RECEDE IN ITS ACTIONS IN ADOPTING AMENDMENTS #2, 3, 7, AND 9.

ON APRIL 16, 2018, THE HOUSE REFUSED TO RECEDE IN ITS NONCONCURRENCE OF SENATE AMENDMENTS #2, 3, 7, AND 9 AND APPOINTED A CONFERENCE COMMITTEE.

ON APRIL 17, 2018, THE SENATE APPOINTED A CONFERENCE COMMITTEE.

ON APRIL 24, 2018, THE HOUSE ADOPTED THE CONFERENCE COMMITTEE REPORT AND MADE IT THE ACTION OF THE HOUSE.

ON APRIL 24, 2018, THE SENATE ADOPTED THE CONFERENCE COMMITTEE REPORT AND MADE IT THE ACTION OF THE SENATE.