Case Study

How Rutherford County, TN is Taking Proactive Steps to Monitor Short-Term Rentals

There’s always been this question of whether to classify STRs as residential or commercial, but not all STRs fall into the same category. Properties that are, in fact, being used for commercial purposes are in direct competition with hotels and motels, and not under the same scrutiny of regulatory requirements or taxation. While required to pay certain taxes, STR owners still have the economic advantage of not having to pay a commercial classification on their property.

With this bulletin, we are charged with locating STRs to enable owners to opt out of being classified as commercial if they meet certain criteria. This law is right in that it seeks to provide equity of treatment in assessments and taxation.

 The biggest challenge for our office was determining how to best accomplish the directive without any additional money allocated at the local level. In our case, it was a matter of finding something that was affordable, easy to implement, and that could be incorporated into our normal workflow.

Our particular pain points were the identification and location of STRs, and GovOS has provided a great solution for that. We were able to modify a format that’s being used in other jurisdictions across the nation to what best works for us, given the time constraints and the number of people in our office.

The internet and technology in general have given individuals tools to monetize their property, and government is often slow to the game. Some larger jurisdictions, like Davidson County, have a robust process for locating and requiring permits for STRs but most counties in Tennessee do not.

GovOS has helped us be more adept at capturing the market trends and being current in the application so we’re not using a rotary dial phone to go through the phonebook and find these places; we’re using 21st-century technology to track 21st-century businesses.

You were the most cost-efficient and provided the best bang for the buck. We could get more out of GovOS than we could from the competitors we checked out. Locating properties was proving very challenging and we needed a way to do it quickly, easily and efficiently. We did our background checks and vetting. You guys came out on top and I’m glad you did.

The staff loves the platform. Besides me, there are five other employees who regularly access it and use it for tracking. All of us were excited to have a platform that houses all this information. You don’t think of Rutherford County as an STR hotspot—and it’s not when compared to some other counties—but we did not realize we have as many STRs as we do and not having that information meant a potential loss in revenue.

I love the format that GovOS provides with proof someone is operating a rental. We can follow up with them and create a paper trail to show exactly why we did what we did. We had no way of doing that before and we’re so grateful to have the tool.

Long term I would like to have a completely automated service where citizens can log on to the platform and fill out their applications online. For now, we need to have our hands on a lot of the tasks as we work to define the process. The more we can turn over to GovOS to automate the process for us going forward, the better. If we hire a new employee, it’s going to cost the county $75K a year in salary and benefits so it’s worth it to use the software where we can. We want to be good stewards of taxpayer money and it’s definitely more cost-effective.

Absolutely. I like to keep the county commissioners apprised of what’s going on in their neighborhoods and this gives me the ability to generate lists so I can tell them how many STRs are in their district. In jurisdictions with no prohibited zoning, someone might decide they can make more money renting rooms in a property than renting it out as a single unit, and there would be nothing to indicate what was going on, except maybe additional traffic in the area.

This system makes everybody in the community a little more responsive to what’s happening so if any kind of legislation is needed to address it, they’ve got the metrics and hard data to back up the decisions they make. That’s what’s so great about your platform.

Tennessee is growing like crazy. With the challenges local governments face, they’re always looking for opportunities to generate revenue but it’s important to be proactive rather than reactive. Jurisdictions that were unable to see the data or have the metrics to recognize STR trends had no way to do anything about it except be reactive. With this tool, we have the data necessary to make good decisions as a community and plan for the future.

Low compliance rates can mean a significant amount of revenue left on the table and without having an accurate understanding of your rental landscape, it’s difficult to properly assess properties to ensure they’re registered and compliant with local regulations.

GovOS partners with hundreds of communities across the nation to help identify STRs and open communication channels with STR operators. To learn more, visit govos.com/products/short-term-rental/