Miami Beach takes a nearly $500K hit to settle lawsuit tied to short-term rental

Miami Beach is cutting its losses after a three-year legal battle with a boutique investment firm over the city’s short-term rental crackdown.

The result will cost city taxpayers nearly a half million dollars, including lost revenue from alleged violations of Miami Beach’s short-term rental ordinance by Safe Harbor Equity affiliate 3098 Alton Road, which owns a four-bedroom house at that address.

The Miami Beach city commission last week approved a settlement agreement with the property’s owner that includes a $250,000 payment to the company and the waiving of about $200,000 in fines the property accrued between 2017 and 2018. The owner was cited for allegedly operating a short-term rental in a neighborhood where they are not allowed.

A Miami Beach spokesperson did not respond to an email request for comment.

Rafael Serrano, property owner Safe Harbor’s managing director, said that he’s pleased the lawsuit has been resolved.

“The judicial system and the courts have spoken, and clearly the city acted in a manner not benefiting a city government,” Serrano said. “We didn’t want to pursue legal action, but felt it was our only remedy.”

In July, the Third District Court of Appeals denied the city’s petition to overturn a lower court’s ruling in favor of the owner of 3098 Alton Road, which filed a civil lawsuit against the city in 2018 challenging Miami Beach’s short-term rental ordinance and its exorbitant fines as unconstitutional.

Miami-Dade Circuit Court Judge Jennifer Bailey determined the city could not use the owner’s refusal to pay the short-term rental fines as a pretext for shutting off water services at the Alton Road property.

On Nov. 25, Bailey granted the owner full summary judgment, and the city once again petitioned the Third District of Appeals. On Feb. 25, the appellate court dismissed the city’s appeal because Miami Beach had missed the deadline to file its initial brief.

Short-term rentals have been a contentious issue in Miami Beach for years. Last year, Miami Beach was also forced to revise the amount of money the city fined illegal short-term rental operators.

The commission approved lowering fines from $20,000 for an initial violation to $1,000 a day for first-time offenses, putting the fines in line with state law. The move came after Miami Beach lost a court ruling in a separate lawsuit challenging the city’s short-term rental ordinance.

Before filing its lawsuit three years ago, the owner of 3098 Alton Road attempted to negotiate a reduction with the city, but Miami Beach officials were adamant in trying to force full payment of the six-figure fines, Serrano said.

“It’s unfortunate the city didn’t see the sensibility in trying to resolve this matter earlier,” he said. “At the very beginning, I offered to pay the city $20,000 to settle this. Now, they ended up costing their constituents $250,000.”