Miami Beach racks up another court loss over short-term rental enforcement

For the second time in a week, Miami Beach struck out before the Third District Court of Appeals in the city’s quest to keep its hard-nosed short-term rental regulations intact.

The appeals court on Wednesday rejected Miami Beach’s petition to overturn a Miami-Dade judge’s ruling that determined that the city’s exorbitant fines for short-term rental violators ran afoul of state law. Seven days earlier, the Third DCA dismissed the city’s appeal of another, separate lower court decision that found Miami Beach could not arbitrarily shut off water and sewer services to a house whose owner refused to pay short-term rental fines.

In the most recent appeal, Miami Beach attorneys sought to overturn an October 2019 ruling by Miami-Dade Circuit Court Judge Michael Hanzman in favor of Natalie Nichols, a real estate investor who sued the city alleging exorbitant short-term rental fines levied by Miami Beach are unconstitutional and violate state law.

Hanzman invalidated the city’s fine structure after determining the regulations conflict with state law that caps violation fines between $1,000 and $5,000. Miami Beach’s short-term rental fines start at $20,000 for the first offense.

Matt Miller, an attorney with the non-profit Goldwater Institute representing Nichols, said his client is pleased with the appellate court’s decision. “Now, more than ever, people need the extra income that short-term rentals can generate,” Miller said. “Ms. Nichols looks forward to resuming her rentals as soon as possible.”

In addition to Nichols, Miami Beach has waged legal battles with short-term rental online company Airbnb and other property owners renting homes on a short-term basis. Recently, the city temporarily stopped short-term rentals in all of Miami Beach to help slow down a surge in coronavirus cases since Miami-Dade County reopened in late May.

Miami Beach attorneys argued the state legislature vested local governments with the right to adopt penalties exceeding the limits set by Florida law, but the Third DCA disagreed, according to its July 22 order. “Accordingly, in choosing to pursue administrative enforcement of its ordinance, the City is duty bound to adhere to the statutorily prescribed caps on fines,” the Third DCA opinion states.

Miami Beach City Attorney Raul Aguila said the city intends to pursue any legal remedies at the appellate level, including a motion for a rehearing. But he left open the possibility Miami Beach may lower its fines.

“The city maintains that its short-term rental fines comply with all applicable laws,” Aguila said in a statement. “In the meantime, the City’s short term rental laws remain in full force and effect. I have, additionally, not ruled out going forward with an amendment to the penalty and fines provisions of the city’s short term rental laws, lowering the fine schedule, per the lower and appellate court’s orders. At this time, all options are on the table.”

It was the second time this month Miami Beach struck out with the Third DCA. On July 16, the appeals court rejected the city’s petition to overturn a Miami-Dade judge’s ruling in favor of 3098 Alton Road LLC, an entity for an investment property owned by private equity firm Safe Harbor Equity. That order determined the city didn’t have the authority to shut off water and sewer connections to a property whose owner owed hundreds of thousands of dollars in short-term rental violations.

Chris Spuches, 3098 Alton Road’s attorney, said the Third DCA’s opinion in the Nichols case has a very significant impact on his client’s pending lawsuit against the city. 3098 Alton Road is also challenging the Miami Beach short-term rental ordinance as unconstitutional on the basis it violated the state’s cap on excessive fines.

“The appeals court just affirmed that the ordinance is preempted by state law,” Spuches said. “So, on the preemption issue, the impact is this: we win. With the issue of the short-term rental ordinance’s enforceability out of the way, we can now focus on the damages our client incurred as a result of Miami Beach’s illegal actions.”