Rental Suit

Complicated by a lawsuit and conflicting views, the problem of short-term rentals in Miami Beach continues

By Ben Torter

This house at 10 Palm Ave., Miami Beach is the subject of a lawsuit against the city. Photo by Angie Hargot

If you don’t know what the rules are for renting your Miami Beach house, you’re not alone. City officials aren’t sure either.

The sun-drenched city of Miami Beach has long been a tourist destination where homes have been rented out to snowbirds, both wealthy and of lesser means, coming for a break from bitter northern winters. Many people who don’t live in their homes year-round rent them out to help pay the high cost of insurance and property taxes. And with the faltering real estate market, homes are being rented as a means of staving off foreclosure.

In February of 2000, Planning Director Jorge Gomez made an administrative interpretation of a city code, stating that single-family homes couldn’t be rented for a period of less than six months. Since then, the city has been loosely enforcing the six-month rule. Last year, code enforcement agents issued 23 short-term rental violations, and have written 35 code violations related to the rentals since January, according to Miami Beach city spokesperson Nannette Rodriguez.

The fact is there is no clear code governing the rental of single-family homes; however, 2008 is shaping up to be the year that Miami Beach city government sets laws specifying what people can and can’t do with their houses.

Earlier in the year, the commission created the so-called “party house” ordinance, which bans the lease of single-family homes for for-profit events, such as advertised parties where tickets are sold and homes are transformed into virtual clubs.

Now the city’s planning board has been tasked with coming up with a set of rules for rentals, but intense pressure from a lawsuit, as well as people on all sides of the issue, is making the process difficult for them. Gomez and Assistant Planning Director Richard Lorber continue to recommend banning rentals of less than six months, but board members are considering more liberal regulations.

One proposal would allow three-month rentals a maximum of three times per year.

Another would permit single-family homes to be rented for seven days, but not more than four times in a calendar year, and no more than once per month.

The board spent more than three hours listening to the differing views of residents and business owners who packed the commission chamber at City Hall for the July 29 meeting. Instead of making a recommendation, members voted 4 to 3 to continue the item until its Aug. 26 meeting.

Dissenting board members Gary Appel, Richard Kuper and Randy Weisburd wanted to resolve the issue that day.

“I just wanted to hear it,” Appel said, who argued passionately against liberalizing the rental rules. “Whenever the public shows up, it’s a burden from them to have to come back.”

However, a source who wished to remain anonymous saw a conflict of interest for Appel, an attorney who specializes in reducing property taxes. Theoretically, the more homes that are rented on a short-term basis, the less demand there will be for hotel rooms. Appel helped reduce the taxable value of the Loews hotel by $35.8 million for a tax savings of $715,000, according to a November 2007 article in the St. Petersburg Times.

When asked about the alleged conflict, Appel said he doesn’t see one, or any reason to recuse himself from further discussion of the issue. First Assistant City Attorney Gary Held agrees.

“It’s a citywide ordinance, so it wouldn’t affect more than 1 percent of any property owner,” Held said. “It would not be a special private gain or loss.”

The ordinance seeks to codify rules for renting single-family homes, and excludes condominiums. Short-term rentals in condominiums are perfectly legal, and the city currently has no plans to change those rules.

“We’re not trying to say no rentals in the tourist and condo districts,” Appel said from the dais.

Complicating the quest for a clear ordinance, and perhaps even driving it, is a lawsuit jointly filed against the city in September 2007 by Palm 10, LLC, and Villazo, LLC. Palm 10 owns a home at 10 Palm Ave. on Palm Island, which is rented out on a short-term basis. Villazo is a company that specializes in renting out other homes. The two companies list the same registered agent, Attorney Richard Freeman, and the same manager, Christian Jagodzinski.

“Despite its failure to have codified this administrative interpretation,” states the pending suit filed by attorney Jeffrey Bass, “the city continues to enforce it, and give it full legal force and effect, which has direct and immediate impact on 10 Palm’s ability to lease its single-family home and Villazzo’s ability to assist its clients in the leasing of their single-family homes in Miami Beach.”

Gomez derived his interpretation, at least in part, from Section 142-02 of the city’s land development regulations, writing that “hotels, or other type of transient usages, are not permitted uses in single-family zoning districts.” Gomez concluded that in a single-family zoning district, rentals of less than six months would be required to pay resort taxes.

“For zoning purposes, a short-term rental of this nature, and the resulting payment of the applicable resort tax, would be construed as a type of hotel use, or transient use, and not be considered a permitted use in the city’s single-family zoning districts,” Gomez wrote in the interpretation being challenged by the suit.

During its drawn-out July 29 discussion, planning board members were pulled in both directions by impassioned opinions.

“There needs to be regulation, but the homeowners’ rights need to be preserved,” said Jonathan Fryd, a planning board member and local developer. “Although we are a bedroom community, we are also a tourist destination. We have to respect the desires of not just one element of the population — we have to respect the desires of all the elements of the community.”

On one side were the representatives of Villazo and residents who cried out for the rights of property owners to rent without restriction. On the other side were activists such as Frank Del Vecchio who argued that single-family districts are designed to protect the character and “human-scale” of single-family neighborhoods.

“Neighborhood character is an integral part of zoning law upheld for over 50 years,” said Del Vecchio, a retired attorney in the field of city planning.

Lorber talked about extensive research he had done of how other cities regulate the short-term rental of single-family homes.

“Primarily we find that it’s most prevalent in locations that do not otherwise have extensive hotel infrastructure,” Lorber said. He mentioned ski resorts like Aspen, Colo., that he said don’t have enough hotel rooms to meet the demand.

Fryd accused Lorber of presenting a one-sided argument that backed Gomez’s six-month minimum rental period and not other views.

“It sounds like the city is presenting one side of the argument,” Fryd said.

Bass made two public records requests in the hopes of probing Lorber’s research, the second of which the city wasn’t able to complete in time for the July 29 meeting. That inquiry appeared to be the pressure that tipped the balance toward a continuance: On July 21 Bass requested copies of all complaints by residents against short-term rentals in single-family districts.

“We’ve got to go through hundreds, or perhaps thousands, of e-mails and other documents,” Held said. “So it’s going to take a while.”

The discussion will be resumed at the Aug. 26 Planning Board meeting at Miami Beach City Hall.

Comments? E-mail ben@miamisunpost.com