Dividing Two Houses on One Lot

I've got a property that has two houses built on one lot in Tullahoma TN. Its apparently been that way since the 40s. I've asked the city about subdividing into to lots and they said its a no go. It would require 4 variances based off minimum lot size, set backs, etc. I'll still probably try, but assuming he's correct and that it would get voted down, is there a way to still sell these properties individually. Can I make them condos or something without involving the city and sell them that way? Would I need an HOA to do that. They have a shared driveway, but that's it. Any suggestions?