Chattanooga Sued Over Short-Term Rental Regulations

Chattanooga Faces Backlash Over New Rules for Short-Term Rentals

The city of Chattanooga is facing a legal battle over its recent regulations on short-term vacation rentals. A Greater Chattanooga Coalition for Private Property Rights lawsuit alleges the city's policies violate constitutional rights to equal protection and due process. At issue is the city's distinction between homestay and absentee rental owners, with higher permit fees and zoning restrictions placed on absentee owners who don't live on-site. As the city starts enforcement this month, the controversial rules have property owners upset over their limited options.

After a year of deliberation, Chattanooga City Council passed an ordinance to regulate short-term rentals often rented through services like Airbnb and Vrbo. The city created two categories: homestays, where the owner lives on the property, and absentee rentals owned by off-site landlords. Annual permit fees are $250 for homestays but double at $500 for absentees. Homestays can operate in residential areas, while absentees are restricted to commercial zones that allow hotels.

The property rights group alleges this unequal treatment violates constitutional protections. Their attorney argues owners should be able to use their property as desired. The city contends the regulations are reasonable and non-discriminatory. But owners claim the zoning process makes absentee renting nearly impossible, equating to a de facto ban.

Why Owners Prefer Short-Term Rentals

Owners like Nathan Brown argue new construction shouldn’t be restricted, as it doesn’t reduce existing housing inventory. They say short-term rentals are more profitable, with income often twice as much as long-term residential. Limiting short-term options thus hits owners' wallets hard. Owners also cite less risk and liability with vacationers versus tenants. Long-term renters have greater rights and can stop paying rent without quick recourse, while short-term guests leave promptly.

Housing Shortage and Public Policy Issues

However, Chattanooga faces an affordable housing shortage. Short-term rentals can reduce available housing stock, so the city aimed to limit their spread. However, the stricter absentee rules go too far for many owners. The city contends the regulations strike a balance. But owners say they're left in limbo, unable to use properties as desired and lacking clear options under the ordinance.

Chattanooga attempted to enact ground rules amenable to all, including landlords. But the rules have instead bred confusion and frustration. Owners see their constitutional property rights violated by heavy-handed government overreach. They argue they deserve equal treatment whether living on-site or not. Homestays and absentees provide the same service, short-term lodging, so owners say they should face the same rules.

Path Forward Remains Uncertain

With the lawsuit pending and violation hearings approaching, Chattanooga's short-term rental regulations face an uncertain future. The court may strike down parts of the ordinance as unconstitutional. The city could also face pressure to modify the rules and provide clearer avenues for absentee owners. Other cities looking to regulate short-term rentals will be watching the case closely.

For now, Chattanooga homeowners are left in limbo and limited in how they can use their properties. The city aimed to balance the rights of owners with public policy goals. But their attempt faces allegations of overreach. Chattanooga tried to find a compromise but still wound up in court. The situation shows how difficult crafting public policy can be when competing interests collide. The court battle may force a more straightforward resolution to balance policy goals with property rights.