The Save Our Street group fighting two-way streets for McCallie and MLK/Bailey said it will fight on.
"We are bloody, but unbowed," said Bob Elmore.
Mr. Elmore said the group is in a fundraising campaign before starting over on the petition drive.
The group will now have to collect over 14,000 names in a 75-day period. Mr. Elmore said, "We wouldn't have a campaign if we didn't think we could do it."
Attorneys earlier ruled that the group's last petition was invalid because it was based on the city charter rather than a stricter state law that overrides the city charter.
Mr. Elmore said the group first got 5,000 names, "and we really thought that would cause the city to stop the project."
He said they later gathered 9,000 names on a petition calling for a referendum on the issue.
Mr. Elmore, who was formerly the longtime director of the Chattanooga Convention and Visitors Bureau, said, "But the city keeps on spending a lot of money for something that is not wanted, not needed, and not safe."
The city has hired a contractor that is well into the conversion project.
Mr. Elmore said, "Even though the mayor says we are in a shortfall and next year's budget is also bleak, the city keeps spending money on stuff like this."