Chattanooga City Council Pauses Non-Owner Occupied Short-Term Vacation Rentals

Chattanooga real estate agent Sarah Brogdon two weeks ago purchased a newly built $220,000 condominium on Fagan Street off Main Street with the intention of using the unit as a a room like an Airbnb or other short-term vacation rental home for those visiting Chattanooga.

Brogdon has obtained its business license and applied for the required permit from the city for its first short-term rentals. Before she can begin her new business venture, however, the Chattanooga City Council voted on Tuesday to immediately ban such non-owner-occupied short-term rentals — at least until January — while the city studies the matter. .

After voting 7-2 to reject an amendment providing for an extra month for permits to be issued to those like Brogdon who had already invested in such housing, council unanimously approved a moratorium for the rest of the year on issuing additional permits for Airbnb or other term vacation rental units in homes where the owner does not live in the home.

“I just think it’s unfair to retroactively limit how you can use your property,” Brogdon said after Tuesday’s council meeting.

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But Lookout Valley Council Chairman Chip Henderson said Wednesday he believed a temporary ban was needed to grant more permits to absentee owners of short-term vacation rentals after council members heard concerns about more homes in the local neighborhoods of Highland Park, North Chattanooga, and the Southside being turned into visitor accommodation facilities rather than being used to house residents and community members.

“There is concern that these neighborhoods will change due to the transient population that is occurring in these short-term, non-owner occupied vacation rentals,” Henderson said in a telephone interview Wednesday. “I just felt like we had reached a point of urgency to address those concerns and make sure we had the right approach.”

Henderson and other council members want to study changes to the city’s licensing and zoning rules for short-term vacation rentals this year to help promote better neighborhoods with affordable housing for local residents. .

“I believe, and I think the economy will prove it, that thriving mixed-use neighborhoods are economically resilient while neighborhoods that rely solely on tourist accommodation are economically fragile,” said council member Jenny Hill of North Chattanooga at Tuesday’s council meeting. “We want to make sure people who live in Chattanooga can stay in Chattanooga.”

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After council approved the moratorium on Tuesday night without much discussion, half a dozen Chattanoogans who operate short-term rental homes outside of their own residences spoke out against the new moratorium during the public comment session. at the end of the board meeting.

“We’ve always had community input in the past, but not this time,” Lisa Brown, a management broker for Crye-Leike Realty who owns a few short-term vacation rentals, said at the meeting. of Tuesday.

Brown said the current licensing process ensures short-term vacation rentals operate within city noise and other regulations, but she said too many short-term rentals operate outside the licensing process. authorization from the city and do not pay the taxes due. Brown estimates that more than 400 short-term vacation rentals in Chattanooga are not properly licensed. Brown said vacation websites identify 936 short-term vacation rental sites available in Chattanooga, but only 405 permits have been granted by the city so far.

“The problem seems to be in the enforcement of the rules that you have,” Brown said. “Last year, $3.5 million came to our city from Airbnb alone, not including all the money those visitors spend in our community. But it could be so much more.”

Brad Wardlaw, another real estate agent who operates short-term vacation rental homes, said the number of Airbnbs and other short-term rentals isn’t large enough to affect the overall housing market. in Chattanooga, but such accommodation is important in promoting Chattanooga’s $1.1 billion. -one year tourism industry.

“If we’re going to continue to be called the scenic town, we need to have homes where a lot of people want to stay rather than hotels when they travel,” Wardlaw said at Tuesday’s meeting. “If we don’t have these [short-term vacation rentals]we’re going to lose the conventions and the tourists who come to our city.”

Joe Riley, an Army veteran who served in Afghanistan, said he started a short-term vacation rental business while in the military to help provide short-term housing in military towns.

“When I got out of the military, I came back to Chattanooga with the intention of starting my business here, and now I’m being told I can’t do it,” Riley told the board Tuesday night. “I’m not from California, I’m not from New York, and I’m not driving up property values.”

Riley asked the city to continue issuing permits to local residents who purchase properties for short-term vacation rentals.

“The properties we purchased, we tried to improve, and to my knowledge we had no complaints or issues with our homes,” he said. “If there are complaints, there are already plenty of orders to address residents’ concerns. I don’t think the operators responsible should be penalized, and I don’t think it’s fair to make this change retroactive for those who already have business plans for their properties.”

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But some neighborhood leaders applauded the city’s moratorium.

Emerson Burch, president of the Highland Park Neighborhood Association, said when homes become short-term rental accommodation, the local neighborhood loses residents, voting rights and a sense of community.

“As a traveler, I think Airbnbs are a good thing, but as a resident, I think that type of accommodation can be a very difficult thing,” Burch said in an interview Wednesday. “We have a block in Highland Park where there are three or four Airbnbs, and as a resident you suddenly have no neighbors and you don’t know who to expect in those homes.”

Burch said the city needs to set better boundaries to prevent certain areas from becoming entirely vacation home neighborhoods.

Ken Hays, a former property developer, chairman of River City Co. and top aide to former mayor Jon Kinsey, who ran unsuccessfully for council last year, said the city needs to review its rental policy short-term vacation rentals to prevent some condominium complexes from becoming like hotels.

On Mitchell Avenue in the Fort Negley neighborhood where Hays lives, four units of a nine-unit condo immediately became short-term vacation rentals, and several units of another 19-unit condo complex are also used for short term rentals.

“We’re not against Airbnbs in any way, but we do believe there should be density restrictions to help protect neighborhoods from being flooded by too many of these short-term vacation rentals,” he said. Hays said in an interview Wednesday.

The city has regulated the operation of short-term vacation rentals in one form or another since 2009.

Under current municipal regulations for short-term vacation rentals, neighbors around any proposed Airbnb or similar development in a residential area are notified and have 30 days to object to the permit and receive a review. of the permit by the entire municipal council. So far, in the seven cases in which four or more such letters have been filed against a short-term vacation rental proposal, council has voted to reject the permit.

Contact Dave Flessner at [email protected] or 423-757-6340. Follow him on Twitter @dflessner1.

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