Chattanooga City Council shoots down short-term vacation rental rules

Converted from an attached garage at her family's Chattanooga house, Missy Luce's rental unit includes a kitchen, bathroom, seating area and a bed.

The Chattanooga City Council shot down proposed new rules for short-term vacation rental operations and pushed back a vote on an ordinance dealing with beer sales in movie theaters.

The move to nix the short-term regulations came as a surprise to some council members, who have requested changes to the proposed legislation and held two public hearings on the issue. The new regulations called for implementing a certification process for approving residential properties to offer short-stay room rentals, such as those found on websites like Airbnb. Currently, property owners must have their properties designated as R3 or R4 zones, which also allow apartments or offices, if they wish to use them for short-stay rentals.

On Tuesday evening, the council voted 6-2 in favor of Councilman Russell Gilbert's motion to deny passage of the proposed legislation. Councilman Chris Anderson was absent due to illness, according to Council Chairman Moses Freeman. Councilmen Chip Henderson and Jerry Mitchell opposed Gilbert's motion.

"I think a community has the right to say whether they want a business next to them or not," Gilbert said after the meeting, citing the wishes of his constituents.

In an earlier meeting, he told his colleagues around 40 people voiced opposition to the new rules in a community meeting he attended.

"They all said they didn't want it," Gilbert said.

No council members announced any intention to kill the legislation prior to the meeting, although several still questioned the city's ability to enforce its new regulations.

Henderson said the motion to deny came unexpectedly.

"I think it's a little shortsighted on the council's part, but I do feel like this issue will be back," Henderson said. "It's not going away. It's something we're going to have to deal with at some point in time."

Henderson speculated the council would not return to the matter before the City Council elections in March.

Once denied, the matter cannot come before the council for six months, unless a majority of the council votes to bring it back earlier, City Attorney Wade Hinton said.

"My thought is the council feels this is a complicated issue that has a lot of moving parts, and we don't want to go forward with a piece of legislation that we'd have to tweak very often," Councilman Yusuf Hakeem said.

Hakeem, who is chairman of the council's Planning and Zoning Committee, said he expected the body will wait to see how short-term regulation plays out in other cities, especially in light of a recent ruling against Metro Nashville's short-term rental rules.

Ezra Harris, president of the Woodmore Neighborhood Association, applauded the council's vote. His neighbors are worried a home offering short-term rental stays in their community will drive down their property values.

In other business, Councilman Larry Grohn asked for a three-week deferral for an ordinance governing movie theater beer sales, describing the proposed legislation as "a Band-Aid."

As proposed, the ordinance would essentially square the city's beer regulations with state laws allowing wine and alcohol sales in movie theaters, Assistant City Attorney Keith Reisman said.

Under a decades-old ordinance, Chattanooga has not allowed movie theaters to sell beer if they show films containing nudity, Reisman said, which he generally equated with most any R-rated feature. However, those same theaters can already sell wine and alcohol, no matter what kind of film they show if they have permits to do so.

"Hard liquor and wine can be sold now, and that's the state's decision," Hinton said. "Beer is for the city to regulate. So this is where this ordinance comes into play. We're trying to make the beer regulations consistent with wine and liquor laws the state has passed."

The council also deferred a vote to approve a 41-year tax break for a development intended to rehabilitate senior living units at the 45-year-old downtown Jaycee Tower.

Contact staff writer Paul Leach at 423-757-6481 or Follow on Twitter @pleach_tfp.