Chattanooga may establish special district for short-term vacation rentals

Chattanooga may establish special district for short-term vacation rentals

March 29th, 2017 by Paul Leach in Politics Local

Councilman Chip Henderson

Photo by Contributed Photo /Times Free Press.

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The Chattanooga City Council may take another crack at new regulations for short-term vacation rentals in April.

Last fall, the council grappled with proposed short-stay regulations for two months until it torpedoed the new rules in October. Members conducted several public hearings at which opponents of short-term rentals said they didn't want mini- hotels in their neighborhoods and proponents argued they had the right to use their properties to make some money.

The revised version of the legislation, distributed to council members Tuesday, still calls for enacting a certification process for approving residential properties to offer short-stay room rentals, increasingly booked through internet sites such as Airbnb. The new twist is the permit process will be easier for owner-occupied short-stay operations within Chattanooga's urban boundaries. As before, the legislation does not override neighborhood bylaws prohibiting short-term vacation rentals within their jurisdictions.

"What I was trying to do was hit a balance," Councilman Chip Henderson said.

Henderson, who pushed for revisiting the legislation with Councilman Chris Anderson, noted a number of people who spoke against the permitting process came from suburban and rural parts of the city, while the council heard just the opposite from residents within Chattanooga's urban areas.

He said he believed a number of opponents did not understand that neighborhood covenants could prevent short-term operations.

"If you live in a subdivision where you're concerned about this, I would offer a suggestion that you get a homeowner's association bylaws together and just prohibit short-term vacation rentals," Henderson said. "That will offer you all the protection in the world."

City Attorney Wade Hinton said the special short-term rental district would encompass Chattanooga's Urban Overlay Zone. The area extends from Missionary Ridge in the east to the base of Lookout Mountain in the west, and from the North Shore to the Georgia state line, according to the city code.

Owner-occupied short-term properties within the district still have to meet all health, safety and nuisance regulations, but do not have to undergo a potential neighborhood review and hearing to be approved. They would pay a $75 application fee, a $50 break from the normal $125 application fee.

Non-owner-occupied rental properties within the district have to abide by the same rules for properties outside the short-term vacation rental district: they pay a higher application fee and may have to seek council approval if neighbors voice opposition.

Another legislative tweak calls for limiting the number of units within a condominium or apartment complex that could be used for short-term rental operations by a non-occupying owner, Hinton said.

For instance, no more than two units could be used for short-term rentals in a condominium community of 10 units, he said. The point is to prevent condominiums from turning into hotels, Hinton said.

Henderson said he felt confident the proposed Chattanooga short-term regulations would meet the requirements of legislation under consideration by state lawmakers should the Tennessee Assembly enact any bills working their way through committees. A key feature of the state legislation prevents local governments from banning short-term vacation rentals outright.

If Chattanooga adopts the proposed certification process, it will do away with requiring short-term rental operators from going through the zoning process to have their residential properties designated as R3 or R4 zones. Once a property is zoned R3 or R4, it can be used for apartments or offices.

That has been a long-standing issue, played out from time to time before the city council during zoning hearings. Sometimes people don't care if a neighbor sets up shop as a short-term vacation rental, but they may hate the idea that the property can later be used as a multi-family dwelling or a business office.

Proposed short-term rental certifications do not change a property's zoning, nor do they transfer to a new property owner. A short-term vacation rental permit does not travel with the owner to a new piece of property, either.

"We've got to get rid of short-term vacation rentals through zoning," Henderson said. "It's just a bad tool."

The council is expected to review the new legislation on April 18, after the new council members are sworn in.

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