Appeals court rules Miami Beach cannot shut off water for nonpayment of short-term rental fines

Miami Beach cannot strong-arm short-term rental violators into paying excessive fines by cutting off water and sewer connections to their properties, according to a recent ruling by the Third District Court of Appeals.

The court loss comes just as Miami Beach ordered all short-term rentals to cease operations on Wednesday in response to the rising surge of coronavirus cases in Florida.

The three-judge appellate panel on Wednesday rejected the city’s petition to overturn a lower court’s decision in favor of 3098 Alton Road LLC, an entity that owns a four-bedroom house at the same address as its name. In a pending Miami-Dade civil lawsuit, 3098 Alton Road is challenging Miami Beach’s short-term rental ordinance and its exorbitant fines as unconstitutional.

As part of its 2018 complaint, the owner of 3098 Alton Road sought to force the city to turn water services back on after Miami Beach officials ordered the utility be cut off. The shutoff came after the property owner had refused to pay hundreds of thousands of dollars in fines for allegedly allowing short-term rentals in the home, despite being located in an area where such rentals are prohibited. According to Florida corporate records, 3098 Alton is owned by Safe Harbor Equity, a Miami-based private equity firm that is raising more than $200 million to fund the purchase of distressed commercial real estate.

Miami-Dade Circuit Court Judge Jennifer Bailey sided with the owner of 3098 Alton Road, twice ruling the city had to turn the water back on. So Miami Beach turned to the Third DCA for relief. It didn’t work.

“The fines accrued by the property owner, although linked to the same property
receiving the water service, were for violations of ordinances unrelated and collateral to the utility,” the Third DCA opinion states. “Because the city’s disconnection or refusal to resume the service based on such fines was arbitrary, we do not conclude that the lower court abused its discretion in issuing the writ.”

Rafael Serrano, Safe Harbor’s managing director, said justice prevailed. “The city overstepped its bounds,” Serrano said. “The judiciary felt differently and put them in their place. It’s a significant win.”

Chris Spuches, the attorney for 3098 Alton Road, said the Third DCA’s ruling will have a major impact on Miami Beach’s ability to enforce its short-term rental regulations in a heavy-handed manner.

“Miami Beach has tried to use denial of utilities as a weapon against homeowners and enforce its short-term rental ordinance,” Spuches said. “This ruling deprives the city of that weapon. If they haven’t gotten the message, the Third DCA gave it to them loud and clear.”

Aleksandr Boksner, Miami Beach’s chief deputy city attorney, said the city is disappointed with the appeal court’s ruling.

“The opinion unintentionally expands the powers of the trial court by usurping the discretionary functions and powers of the city government,” Boksner said in a statement. “The city will be thoroughly reviewing and evaluating the Third District Court’s opinion in this matter, and will determine its next legal course of action surrounding the appeal and the continued defense of its interests in the pending lawsuit.”