The Chattanooga City Council discusses new short-term vacation rental legislation.

The Chattanooga City Council plans to hash out the boundaries of a proposed special district for short-term vacation rentals on Tuesday.

In October, the council torpedoed a citywide proposal to allow short-term rental operators to get into business through a certification process. Council members grappled with the issue for two months and held several public hearings, where supporters argued they had a right to make a little money with their homes and opponents voiced fears over mini-hotels in their neighborhoods.

Councilman Chip Henderson, who sponsors the district concept, broke it down for his colleagues in a strategic planning session last week.

"There are parts of this city where I know they do want it," Henderson said. "What I want is to task us to carve out a district where we think we can all agree that this should go."

The proposed short-term vacation rental district uses the Chattanooga Urban Overlay Zone as a baseline, he said.

The overlay zone runs from Missionary Ridge in the east to Lookout Mountain in the west, and from the Georgia state line to the North Shore.

John Bridger, executive director of the Chattanooga-Hamilton County Regional Planning Agency, said the urban overlay makes a good starting point.

"It basically defines an area that's more urbanized because it has grid street patterns and smaller lots," Bridger said. "That was the intent behind the creation of that boundary."

Councilwoman Demetrus Coonrod said residents had problems with putting Highland Park or portions of Glass Street in the district.

Henderson said that's what the members need to figure out.

"What I wanted to give each council person an opportunity to do is expand on that district as you see fit, or, if you need to, shrink it in some instances," Henderson said, adding he plans to add Lookout Valley to the district.

Homeowner associations can still trump short-term vacation rental applicants, Henderson said.

"This legislation cannot supersede any homeowner association agreement, even within the short-term rental district," Henderson said.

The proposed legislation will forbid vacation rental operations outside the district except in cases where property owners have already zoned their properties as R-3 or R-4, the only way to legally do short-term vacation rentals now.

Henderson said he has looked for an alternative to using zoning as a tool for short-term vacation rentals for three years because it "has led to spot zoning in many cases throughout our city."

While people might approve of a short-term rental operating in their neighborhood, they sometimes do not want the required R-3 or R-4 zoning, which opens the door for uses such as offices or apartments, he said.

The ordinance takes advantage of changes in proposed state-level legislation that will give local governments some ability to prohibit short-term vacation rentals.

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