Friday, April 17, 2009

Broward's Wilton Manors and Dade's Miami Beach to Face Lawsuits for Short-term Rental Bans

Posted on Daily Business Review

Wilton Manors
Recent ban on short-term rentals invites lawsuit by 14 homeowners
April 02, 2009 By: Terry Sheridan

The house on Northwest Second Avenue in Wilton Manors looks like any other lushly landscaped single-family home with a pool in a pleasant community.

But owners Louis Heidel and James Lang don’t use their house like most of their neighbors do. In ads on http://www.altraverse.com/, Heidel and Lang invite vacationers to “enter, exhale, escape” and rent the house.

Now they and 12 other owners of vacation-rental homes face city citations of $500 per day for code enforcement violations after Wilton Manors voted recently to ban short-term rentals in residential areas.

The 14 owners are suing the city, saying officials misinterpreted their own zoning law. Their lawsuit in Broward Circuit Court is one of several similar actions across the state as property owners take on municipalities eager to eliminate “businesses” operating in residential areas.

The property owners named in the lawsuit individually or as companies — including Heidel, Lang, Jeffery Hill, William Williams, Money Tree 1 and 2 LLC, 2016 Mid Century House LLC and Pleas’D in Lauderdale LLC — filed a seven-count suit last week. They claim the city’s decision to change its short-term rental law denied them due process and is an inverse condemnation of their properties. An inverse condemnation claim alleges a government action has taken or diminished property value, and owners typically seek to be paid for that loss.

The owners want the city’s action overturned.

None of the owners could be reached for comment.

The city has not responded to the suit.

City Attorney Kerry Ezrol of Goren Cherof Doody & Ezrol in Fort Lauderdale did not return a phone call.

Mayor Gary Resnick, an attorney in the Fort Lauderdale office of GrayRobinson, declined to comment on the lawsuit.

“It’s my understanding that these people bought these houses knowing they weren’t zoned for short-term rentals,” he said.

The City Commission voted Feb. 24 that single-family homes rented out more than three times per year or for less than 30 days at a time should be considered businesses or transient housing. Transient housing isn’t allowed in the residential zoning district where the properties are located, so the city issued code enforcement citations to the owners.

Click play to listen to Rick Rumrell

City officials voted incorrectly, said the owners’ attorney, Richard Rumrell of Rumrell Costabel Warrington & Brock in St. Augustine. Not only does the zoning allow rental housing in the neighborhood where the houses are located, but the code doesn’t specify the duration and frequency of rentals, he said.

“Municipalities are not allowed to enforce zoning codes the way they would like those codes to read; they must enforce the codes based on how they actually read,” Rumrell said.

The owners, who have public lodging and occupational licenses, purchased the properties “with the reasonable investment-backed expectation that they could rent ... without restriction on duration of rental,” according to the lawsuit.

The owners’ complaint could lead to a Bert J. Harris Private Property Rights Protection Act claim against the city “if damages continue against the owners’ private property rights,” Rumrell said.

The 1995 state law allows property owners to seek damages from public agencies if they show new regulations diminish property values.

Wilton Manors took zoning action after a complaint last year about parties and loud music from an unidentified neighbor of one of the properties.

In January, the city’s Planning & Zoning Board offered city officials three options on how to handle short-term rentals. All were rejected in favor of the outright ban, although the owners worked with city planners to craft an alternative policy over the last year.

Rumrell also represents 11 property owners in Venice, near Sarasota, in a pending vacation rental case almost identical to the one in Wilton Manors.

In 2006, the Venice zoning director restricted single-family rentals within a residential district to either one month or three rentals of less than 30 days per year, whichever amounts to the least number of days.

Property owners challenged the restriction, and last year Sarasota Circuit Judge Robert Bennett Jr. ruled against the city restriction.

Bennett concluded that unlimited temporary rentals are permitted in an area zoned for residential use.

“Zoning regulations [should be] construed broadly in favor of property owners absent a clear intent to the contrary,” he wrote.

The owners’ claim for damages, which could include the loss of rental income, still is pending.

Rumrell said he also has been contacted by Miami Beach property owners who are considering a lawsuit in the wake of a new city ordinance banning short-term rentals.


He declined to identify the owners because he has not yet been retained.

Miami Beach city commissioners in late February banned short-term rentals of less than six months in single-family neighborhoods. The ordinance took effect March 7.

The action came after years of debate and stemmed from a 2000 interpretation by Planning Director Jorge Gomez.

The new law is expected to spur action on a pending lawsuit by hospitality services company Villazzo LLC against the city, said Gary Held, the first assistant city attorney.

Villazzo offers short-term rentals of luxury homes worldwide to celebrities, sports figures and others who want to avoid the publicity resulting from a hotel stay.

Villazzo and the owner of a mansion at 10 Palm Ave. sued the city in 2007 after the company was cited for advertising the house as a short-term rental.

The suit was filed after Miami Beach officials approved a sweeping ban on all commercial uses of single-family homes early last year.

But the new short-term rental ban also applies.

The suit “was on hold for over a year due to mediation, but it has not been resolved because of the ordinance adopted, and we’ll be back in litigation shortly,” Held said.

Richard Freeman, Villazzo’s former attorney, referred calls to John Shubin of Shubin & Bass in Miami. He did not return a phone call seeking comment.

Jupiter Inlet Colony, a Palm Beach County community of about 250 single-family homes just south of Jupiter Island, sued the owners of three properties late last year for advertising their houses for short-term rentals.

The town bans businesses but does not prohibit short-term rentals, said Geoff Jones of Jeck Harris Raynor & Jones of Juno Beach, the owners’ attorney.

The town now is considering an ordinance that would ban vacation rentals. The case is pending.
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The Issue

The attorney for 14 homeowners suing Wilton Manors over a ban on short-term rentals says the case could evolve into a Bert Harris claim if the city pursues alleged damages against the owners’ property rights. According to the suit, the owners had “reasonable investment-based expectations” when they bought their properties that they would be able to rent their houses without restrictions.

Here’s what that means:
  • The Bert J. Harris Private Property Rights Protection Act of 1995 protects owners when government action like rezoning significantly affects an expected property use or value, decreasing its “investment-backed expectation.”

  • If successful in their Bert Harris claim, property owners could expect payment for the loss to the site’s fair market value.

Terry Sheridan can be reached at (954) 468-2614.
2109 NW 2nd Ave. photo by Melanie Bell

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