Miami Beach Loses Appeal on Short-Term Rental Fines

Susan Askew
Susan Askew

Miami Beach Loses Appeal on Short-Term Rental Fines:

What that means for the future of short-term rentals in the City is still disputed

UPDATED 7-22, 3:00 pm with additional commentary from the City

A Florida Appeals Court has ruled against the City of Miami Beach in a case centered around the fines structure of the City’s ordinance prohibiting short-term rentals. What that means for the future of short-term rentals here, though, is still in dispute. The plaintiffs say short-term rentals are now legal citywide. The City says, “This is not over yet” and that it will continue to enforce its ban.

In October 2019, Miami-Dade Circuit Court Judge Michael Hanzman struck down the City’s ban on short-term rentals writing they “are in jarring conflict with [State law] and are therefore illegal and unenforceable.” In that ruling, the Court did not rule the policy illegal but that the City’s fines – ranging from $20,000 for a first offense up to $100,000 for a fifth and subsequent offense – were improper. State law caps fines for code violations at $1,000 per day for the first infraction and $5,000 per day for repeat violations. Citing previous case law, Hanzman wrote it has been established that “[m]unicipal ordinances are inferior to laws of the state” and that a municipality “may not legislate ‘in conflict with state law.’” 

Today, the Third District Court of Appeals affirmed the earlier ruling “concluding the City is bound to impose fines within the statutorily prescribed limits.”

The larger issue, however, is a footnote in Hanzman’s October ruling in which he declined to sever the penalty provisions from the ordinance which, had the effect of striking down the ban on short-term rentals. The State pre-empted cities from regulating short-term rentals in 2011 but grandfathered in those municipalities that already had regulations in place. Miami Beach's regulations went into effect in 2010 but the judge's ruling invalidated the ordinances. 

Hanzman indicated “[T]he City is free to enact replacements so long as they are constitutional and do not conflict with state statutory law.” And therein lies the rub. The City cannot replicate the current law banning STRs because it conflicts with State law which allows them and the grandfather status is moot. 

The Goldwater Institute filed the lawsuit on behalf of Natalie Nichols in June of 2018. Nichols, who owns two properties that she previously rented out on a short-term basis, sued to have the ban overturned on the basis that short-term rentals are legal in some areas of the City (though in a small number of places), treating her properties differently from “similarly situated properties.” Nichols owns a single-family home on Sillwater Drive that she purchased in 2004 and is in process of selling and a four-plex on 86th Street that she acquired in 2006. Short-term rentals are described as less than six months and a day.

Matthew Miller, Senior Attorney with the Goldwater Institute, reacted to today’s ruling: “This decision affirms the trial court, both in holding that the fines are illegal under Florida law, and in declining to rewrite the ordinance for the City. The effect is to make short-term rentals legal again in Miami Beach. Hopefully this can serve as a light at the end of the tunnel for local property owners, who have been pummeled by the City’s restrictions, as well as the current pandemic, which saw the governor shutter short-term rentals while hotels in the state remained open.”

In a text messasge, Nichols said she hopes this is the end of it. “I hope the commission will change their ways and try to restore integrity, fairness, and constitutional protections to the way they make and direct the enforcement of ordinances. If there was any doubt - 4 judges have now told them that what they did was wrong. I’d like to see them try to make amends and do the right thing instead of double down on doing what’s wrong.”

In a statement provided to RE:MiamiBeach, City Attorney Raul Aguila said, not so fast. “The City is disappointed by the court's ruling, and respectfully believes that it is mistaken. The City maintains that its short term rental fines comply with all applicable laws, and intends to seek further review of the decision as permitted by the Court's rules.  In the meantime, the City’s short term rental laws remain in full force and effect. This is not over yet!”

The ruling on the fines can be appealed further as could the question of the severability of the fines. Was the judge’s ruling to not allow the fines portion of the ordinance to be separated from the overall law proper? If not, then the City can simply adjust its fines and its ordinances banning short-term rentals will remain in effect. But, if the original ruling stands as is and the ordinances are thrown out in their entirety, the City cannot enact a new law banning STRs as that would conflict with State law and short-term rentals would then be legal on Miami Beach.  

UPDATE: In an email to the Mayor and City Commissioners, Aguila noted, "There is also the same troubling ambiguity in it that we faced with the lower court’s order as well; that is, it is arguable that both orders speak to the fines as being in excess of what State law allows.  I am not clear, nor am I ready to concede, that the 3rd DCA void[s] our underlying STR ordinance."

Aguila said he has instructed outside counsel to seek an immediate rehearing and to request a stay of the trial court order pending the outcome of a review.

"Finally, as we continue to study the order, I will be providing you with a legal opinion with regard to what I consider to be the most critical issue... that is, whether we proceed to amend our existing fine schedule to conform with State law (which I think we should) and whether, having done so, we have therefore complied with the courts’ orders, and our STR ord. — as amended— remains in  effect."


Photo: Shutterstock.com
 

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