Rent Control - Here We Go Again

Some may remember the days of rent control on Miami Beach; when property owners could not afford to maintain their buildings because rent control restrictions prevented them from setting rates to cover costs (taxes, insurance, maintenance, etc.).

Many property owners walked away from the losing proposition of having a real estate investment that would not make money, could not be sold, and was declining in value because all around them other property owners were in the same situation.

During the late 70's and early 80's Miami Beach was a den of urban blight. Many buildings were boarded up, businesses closed, investment moved elsewhere and the City was nearly bankrupt. Many "flop houses" opened, head shops lined Washington and Collins Avenues, and every Friday night Miami Vice was broadcasting our troubles around the world.

The City's current proposals to prohibit short term rentals is setting controls on rents which is strictly regulated by Florida State Statute 166.043. Click here to read an analysis by one of our members which draws the connection between rent control and the City's proposed ordinances.

Miami Herald reporter, Monica Hatcher, has recently written several articles focusing on the impact of foreclosures and efforts to combat the blight they cause.

Cities struggle to fight foreclosure blight
Condo bust draws scams and squatters
Mayors seek solutions to vacant-homes crisis

Proposed Code Changes - Miami Beach

The Miami Beach Commission has asked that two different tracks be drafted for changes to the Code regarding residential rentals .

One is meant to put into code the City Planning Director's interpretation of the current code - meaning, to prohibit rentals of less than 6 months.

The other is to change the code to allow "Seasonal Rentals" (less than 6 months but greater than 90 days) with great restrictions and regulation.

These ordinances pertain to the rental of properties in RS-1 thru RS-4 (single family homes), the drafts of Ordinances for condominiums and other multi-family, multi-unit properties have not yet been finalized by the City Attorney's office. They will be posted once they are made available by the City.

One of our members has written an item by item breakdown of flaws with the proposed Code. Click here to view the document.

Click on the links below to view the drafts.

Prohibition of Rentals Less Than 6 Months
Prohibition of Rentals Less Than 90 Days

Click the links to read the Staff Reports for the Codification to Prohibit Rentals Less Than Six Months and the Ordinance Regulating Rentals Less Than 90 Days.

Please read the staff recommendations carefully. Do you think the staff evaluations are myopic, incomplete, and one sided?

Does the City not see that these ordinances are bad public policy and bad economic policy?

Clearwater Attempts to Ban Short Term Rentals

In 2003, the City of Clearwater began enforcing a ban on short term rentals less than 31 days. The City of Clearwater codified an interpretation of the current code which prohibits short term rentals - one of the same tactics being used by the City of Miami Beach except they want to ban rentals less than 6 months.

Thirty-one property owners sued the City of Clearwater and won. The City appealed but a 3 judge panel of the 2nd District Court of Appeal upheld the original judgment. The property owners were considered "Grandfathered" and would be allowed to continue to rent for periods of less than 31 days, if they so choose.

This is important because 1) it demonstrates the power property owners have when they mobilize and unify to fight for their rights, 2) the ruling upheld the ban on short term rentals for property owners that were not "Grandfathered", and 3) property owners were prohibited by the City from renting short term for 4 years while the case was in court.

To view the judge's original decision, click here.

This is a brief article in the St. Petersburg Times

Landlords on beach win over panel of judges
By Times Staff Writer
Published December 11, 2007

It's okay for one group of homeowners on north Clearwater Beach to continue renting out their homes for less than a month. That's the unanimous ruling from a three-judge panel on the 2nd District Court of Appeal. Clearwater has contended it outlawed short-term rentals in residential neighborhoods decades ago. But the city began to enforce the ban in earnest about 2003, when the number of short-term rentals on the beach exploded. At that time, the city also revised its ordinance to ban any residential rentals shorter than 31 days. In May, Pinellas-Pasco Circuit Judge Nelly Khouzam sided with landlords of 31 properties who said they had been renting long before 2003 and said the city's enforcement had been lax. Khouzam did say the ban applied to any other property that started the practice after 2003.

Your ACTION is NEEDED

The City of Miami Beach Mayor and Commission are writing amendments to the City Code restricting the duration of rentals for non-commercial properties (including single family homes, condos, apartments, townhouses, etc.).

You need to act quickly to protect the rights of property owners. The Zoning and Planning Board is meeting 3:00 pm Tuesday June 24^th to make a recommendation to the Commission.

Instead of protecting the existing rights of property owners, this act by the Commission will strip rights away from property owners.

Presently, there are no restrictions in the Miami Beach City Code relating to the duration of rentals for non-commercial property; however, this has not stopped the City from issuing code violations (fines) and harassing tenants and property owners.

Here is what you can do:

1. Educate yourself - there is lots of great info at http://miamibeachpropertyrights.blogspot.com

2. Send emails and make phone calls to the Commissioners and Mayor, before Tuesday, to express your opposition to limiting the rights of property owners. Feel free to copy and paste the sample posted here into your email to the Mayor and Commissioners.

3. Forward this email to friends, renters, colleagues and associates who can express their concern.

4. Attend the meeting on Tuesday at 3:00 in the Commission Chamber.

Planning Director's Interpretation of the Code in 2000

Click here to see a copy of the Planning Director's "Administrative Interpretation" of the City Code, regarding minimum rental duration for a single famly home. Following the photo is a list of reasons why this interpretation is incorrect.

Despite the illegal and invalid interpretation of the code, the Code Enforcement Department has been and continues to issue violations to property owners for renting property for less than 6 months.

___________________________________

Question: Is the Planning Department Director’s interpretation correct?

Answer: No. The Director’s interpretation is incorrect.

The city code DOES NOT require the payment of resort tax for rentals of less than six months, unless the rental is a “room” in a hotel, motel, rooming house, or apartment house in the City of Miami Beach.

The City Code states:

Sec. 102-306. Definitions.

Room means
any room of any kind, in any part or portion of a hotel, motel, rooming house or
apartment house available for or let out for use or possession for any purpose
other than a place of public assembly.

Sec. 102-307.
Imposition of tax; rate.

(a) There is hereby
levied and there shall be paid a tax of three percent on the rent of every
occupancy of a room or rooms in any hotel, motel, rooming-house, or apartment
house in the city, and two percent upon the total sales price of all items of
food, beverages, alcoholic beverages or wine sold at retail of any
restaurant.

The City Code relating to Resort Tax DOES NOT apply to single family homes. City Code Section 102 does not define or make any reference to single family homes, and the requirement to pay resort tax.*

Therefore, single family homes rented for less than 6 months are NOT REQUIRED to pay resort tax to the City, and do not meet Section 102 definitions for hotels, apartment houses, rooming-houses, etc…

There are no City Codes limiting the duration of rentals of single family homes within the City of Miami Beach.

The rental of a single family home for less than six months is NOT a commercial activity.

Tenancy-at-will rentals (weekly, monthly, quarterly, etc.) of single family homes are thus legally allowed within the City of Miami Beach in RS 1-4 districts.

*Note: Since there are no clear codes regulating the duration of rentals in RS 1-4, the property rights of single family homeowners are protected by State Law. For example, The Fourth District Court of Appeal in City of Hallandale v Prospect Hall College, Inc., 414 So.2d 239, 240 (Fla. 4th DCA 1982) found that: “Since zoning regulations are in derogation of private ownership rights, general zoning law provides that zoning ordinances are to be construed broadly in favor of the property owner absent clear intent to the contrary. 7 Fla.Jur.2d Building, Zoning and Land Controls §59 (1978).” The premise espoused by the Fourth District Court of Appeal in City of Hallandale was followed by the court in Ocean’s Edge Development Corp. v. Town of Juno Beach, 430 So.2d 472: “Government cannot function in such after-the-fact fashion; property owners are entitled to rely upon the clear and unequivocal language of municipal ordinances. This principle is not innovative, nor does it originate with this court.”

Venice Beach, FL - Judge Rules Rental Ban Illegal

When the Venice Beach City Commission tried to ban short term rentals, property owners took the City to court and the judge ruled that the ban was illegal.

To see a copy of the Judge's decision click here.

Below are excerpts from an Herald Tribune article. To read the full article, click here.

Venice Ruling Could Apply To Other Areas

A circuit judge’s ruling that Venice acted illegally when it banned short-term rentals may have implications for other communities trying to regulate [vacation] rentals in neighborhoods of single-family homes...

On Thursday, city officials and the landlord at the center of the Venice case, Steve Milo, were still weighing the impact of the judge’s March 14, 2008 ruling. But it could be far-reaching.

More investors and homeowners in Florida are turning to vacation
rentals to earn money from properties they cannot sell.

Property owners have to get a state license to rent... frequently and
must pay taxes. Venice argued that... the license meant Milo was operating a commercial enterprise that is not allowed in neighborhoods of single-family homes.

“The city went way beyond their power,” said Valerie Fernandez, managing partner of the Pacific Legal Foundation... “They tried to take away existing property rights by using an unrelated state statute.”

Milo is not ready to crack the champagne yet, he said.

Whether the city accepts the ruling or appeals and loses, it faces steep legal fees at a time when the city’s budget is being cut to meet voter-mandated property tax cut requirements.

“I’ve spent several hundred thousand dollars,” Milo said. “And there
are other damages that our legal team is working to put full figures on.”

The city spent at least $46,000 in legal fees from October until
January, the most recent figures available.

Even if the city drafts an ordinance banning short-term rentals... it will be difficult to regulate existing rentals.

In its second precedent-setting short-term rental case in Brevard County, the Pacific Legal Foundation is fighting on behalf of a woman who claims her economic rights were violated when the county passed a ban on rentals for less than 90 days in 2005.

Instead of allowing people who were already renting to continue... Brevard phased out the practice, telling the woman she could no longer rent short-term after six months. That case is pending, but a judge has refused three times to dismiss it...

“It’s not enough for Venice to pass something,” Gieseler said. “There
needs to be substantive effort to make sure constitutional rights
are respected.”

Miami Beach Home Owner Files Suit Over Violation

This article in Miami Today outlines why one home owner is suing the City for issuing a code violation using the Planning Director's loose interpretation of the zoning law. To read the full article click here.

Lawsuit Challenges Barring Short-Term Beach House Rentals

Miami Beach zoning officials are using loose interpretations of city
ordinances to unlawfully prevent single-family homeowners from renting out homes
for less than six months, says a New York lawyer who is suing the city.

Attorney Richard Freeman filed suit last week... after the [rental agency] and homeowner were cited by city officials for advertising the home as a short-term rental on the company's Web site...

According to the lawsuit, city zoning officials consider home rentals
of less than six months in single-family-zoned neighborhoods tantamount to
running an illegal commercial business on residential property. Using that
stance, the city applies the local noise and off-street parking ordinances and
"quality of life" laws as reasons to prohibit short-term home rentals...

Allowing seasonal home rentals would put Miami Beach on par with major
US vacation destinations such as The Hamptons in New York, Aspen, CO., and
Tucson, AZ., which have no restrictions on single-family home rentals, Mr.
Freeman said. Some beach homeowners are "snowbirds" or seasonal residents who
only spend a few months in the city each year... Single-family homeowners look to rent homes to help offset ownership costs...

While the city's interpretation initially focused on preventing
homeowners from renting Miami Beach homes for large parties, he said, part-time
residents who want to rent homes for short periods have been unfairly lumped
into the same group. "Like most well-intentioned laws," Mr. Freeman said, "the
broad dragnet of the prohibition has entangled many otherwise law-abiding
homeowners who are now unable to rent their homes on a short-term basis because
of the bawdy and uncivilized behavior of a handful of inconsiderate
citizens."

An article in The South Florida Business Journal, makes additional points which either invalidate or argue against the City's claim of prohibition. To read the full article, click here.

Plaintiff's attorney John Shubin said city planning director Jorge Gomez authored the "administrative interpretation" as a reaction to complaints from disgruntled neighbors about fly-by-night renters, their "party houses" and "obnoxious behavior."...

"This is like saying 'because some people drive recklessly, then we will ban all driving."...

In the last decade, Miami has become a chic location for internationally televised events like the Latin Grammys, the MTV Video Music Awards, and the Super Bowl. Post-event parties held in waterfront mansions have gotten as much press as the events themselves...

Short-term rentals are a hot topic in vacation destinations such as Key West and Miami Beach, with local officials claiming they spur crime and drive up traffic in residential neighborhoods. The issue has taken on national prominence as property rights organizations, such as the Sacramento, Calif.-based Pacific Legal Foundation, have filed lawsuits against governments across the country - including Brevard County, which challenged prohibitions on vacation rentals...

Short Term Rentals - History

In 2000, the Director of Planning and Zoning was asked to interpret the City's zoning code pertaining to rentals of non-commercial property. He interpreted the code to state that rentals for periods of less than 6 months are prohibited (click here to see a copy of the interpretation).

The Zoning Code can be found in Chapter 142 of the City Code at http://www.municode.com/resources/gateway.asp?pid=13097&sid=9.

In the City's attempt to banish so-called "party houses", the City passed an ordinance in February prohibiting the "commercial use" of residential zones (R-1 through R-4).

The City's next step is to codify the prohibited rental of residential property for less than six months. This will further prevent party promoters from renting houses and having gatherings.

However, it will also prohibit anyone (seasonal workers, new residents shopping for a permanent home, tourists, convention goers, visiting families, etc.) from renting short-term.

Please click here to read the "Party Ordinance" to understand the background surrounding the short-term rental ban.

Recently, some property owners have received code violations for renting non-commercial units (single family homes, apartments, condos, etc.) for less than 6 months. These include furnished and unfurnished rentals. Additionally, some property owners have been issued violations even though they have resort licenses and pay the City's resort tax. This prompts the question "Why does the City issue licenses and collect tax for rentals they say are prohibited by the code?"

The City's resort tax is listed in Chapter 102 Article IV of the City Code which can be found at http://www.municode.com/resources/gateway.asp?pid=13097

Now, the Mayor and City Commission have asked Planning and Zoning to draft new ordinances to give the Commission two options:

1. Prohibit rentals of less than 6 months in duration, or
   
2. Allow short term rentals but not less than 90 days and no more than 3 rentals total in a 12 month period. There are many other restrictions that are worth reading (number of renters, local representatives, licensing, etc.).
   

The Planning and Zoning Committee will be meeting on 6/24/2008 to discuss these code changes. Contact the Mayor and City Commissioners before this meeting to let them know how you feel.

Miami Beach Commission To End Vacation Rentals

The Miami Beach Mayor and Commission is drafting new City Ordinances to end (or greatly restrict) rentals for periods of less than 6 months.

What you can do...

1. Read other items on this blog and the internet to educate yourself,
2. Write your comments on this blog to express your view,
3. Contact the City Mayor and Commissioners with your opinion, and
4. Let others know what is happening, bring the public's attention to this issue.