With about 270 unpermitted short-term vacation rentals still operating in Chattanooga, officials will begin hearing cases Nov. 15 under a new legal process that will allow them to levy fines of up to $500 per day.
In June, the Chattanooga City Council appointed attorney Mike Mallen to serve as the city's administrative hearing officer, a job officials expect will play an important role in bolstering the city's ability to enforce its new short-term vacation rental rules. In City Court, fines are at max $50 per day, but the administrative hearing officer allows Chattanooga to enforce heavier penalties if necessary. The new officer will also oversee rules about litter and excessive noise.
Because Mallen is dealing with some temporary family health issues, city officials intend to bring on Jim Exum, an attorney with Chambliss, Bahner & Stophel, to serve as the city's second administrative hearing officer, said Chris Anderson, the senior adviser for legislative initiatives. Exum already serves as the administrative hearing officer for Soddy-Daisy, Red Bank and Collegedale.
"We were setting up a restaurant from scratch, and then a franchise walked in with everything already figured out," Anderson told members of the City Council during a meeting Tuesday, referring to Exum.
The administrative hearing officers will hear about 30 cases per week. At that pace, officials expect the existing backlog of short-term vacation rental violations would likely be complete by the end of January. The city will mail the first 30 notices of violation to owners and operators of unlicensed rentals Tuesday. Owners must receive 30 days' notice before the city can hold a hearing.
Exum told council members he's hopeful the number of unpermitted vacation rentals will drop dramatically once people start receiving letters from the city.
"I hope we're not hearing 30 (cases) a week, because generally in my experience, when the letters go out, 70-75% of those cases resolve themselves — people go ahead and fix the violations," he said. "That's the intent of the statute — to encourage compliance, not penalizing folks."
Anderson said it is a process that has never existed in Chattanooga, which has involved creating forms and establishing a means for collecting fines.
"It's not a quick process," he said in an interview. "The locations of the hearings has been a challenge as well. We still have unanswered legal questions about the separation of the (administrative hearing officer) and the City Court judge that have been raised."
The Tennessee Constitution says any municipal court can fine up to $50 per offense per day. That number is not adjusted for inflation, and it has remained $50 for many years, Anderson said.
"It's not a deterrent, which is really the point," he said. "The fines from city government are not intended to boost revenue. They're intended to deter ... illegal activity."
In order to accelerate the timetable, the hearings will occur in a room at the Development Resource Center, and the city will temporarily rely on outside administrative staff from Chambliss Law to support the operations of the office, Anderson said. Council members questioned why the city is holding the hearings in the Development Resource Center rather than space the city already leases at the Hamilton County-Chattanooga Courts Building.
Council Member Darrin Ledford, of East Brainerd, said he understands the city has hit a snag, but members of the panel promised to put an administrative hearing officer in place.
"I think we have a backlog," he said at Tuesday's meeting. "I'm looking for a fast track to get this administrative hearing officer on the job, and if we need to massage something or work it out down the road, I'm willing to look at that ... but I think it's been long enough."
Vice Chair Jenny Hill, of North Chattanooga, said she wants the city to move away from paying private support staff as quickly as possible. Chattanooga already has employees in City Court who can complete the work.
"We did not do this to create a budgetary black hole," Hill said.
After imposing a yearlong pause on permits for certain short-term vacation rentals, the City Council recently approved new set of rules for the properties.
Those restrict absentee rentals, units where the property owner doesn't live on-site, to the 11 commercial zoning designations that permit hotels.
Homestay rentals, those where the owner does live on-site, are allowed in those same commercial zones. The city also permits them in residential areas in a preexisting district called the overlay, which includes much of the central and southwestern portions of the city.
The city has received 269 applications since the moratorium ended in July. Of that, 201 have been approved, 13 have been denied and 55 are in progress.
"There's no question that the demand for (short-term vacation rentals) both in Chattanooga and nationwide is dropping," Anderson told council members Tuesday. "It's pretty clearly a function of the market that perhaps some were overbuilt."