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Miami Beach has the country's highest short-term rental fines. It just got sued.

An Airbnb host at a City of Miami commission meeting. The city of Miami Beach was sued this week for imposing  $20,000 fines on residents caught renting short-term.
An Airbnb host at a City of Miami commission meeting. The city of Miami Beach was sued this week for imposing $20,000 fines on residents caught renting short-term. cguerrero@miamiherald.com

After more than two years of imposing the country's highest short-term rental fines, Miami Beach is being sued.

Miami Beach resident Natalie Nichols, who has managed short-term rentals for more than a decade, sued the city Wednesday seeking a permanent injunction to stop Miami Beach from handing out $20,000 fines to residents found renting their properties on home-sharing platforms like Airbnb and HomeAway. It is the first lawsuit against the city regarding its short-term rental fines, Miami Beach confirmed.

The suit, filed in circuit court in Miami-Dade County, alleges that Miami Beach's fines are "excessive punishments" under the Florida Constitution. It also maintains that the fines are preempted by Florida law and violate the state constitution's equal protection provision because they are not imposed on residents in an area of North Beach.

Nichols owns two properties on Miami Beach, a home at 1531 Stillwater Drive, which she purchased in 2004, and a four-plex at 807 86th St. that she's had since 2006. At times she has both lived in and rented both properties short- and long-term, including through the recession. The rentals helped her stay afloat when she lost her 14-year sales job at a pharmaceutical company in 2008, Nichols said in an interview.

But in 2010, Miami Beach banned short-term rentals in most areas of the city and Nichols was fined about $3,000 for her properties. Still, because her rentals were her primary source of income, Nichols kept renting her properties. She kept them well-maintained, she said, and they were not subject to any nuisance enforcement action.

"I just sort of had to make sure that I had nice groups of people that weren’t disturbing the neighbors, and for the most part it worked out," she said.

That is, until March 2016, when Miami Beach passed a new ordinance raising the first violation fine for a resident caught renting short-term to $20,000. Each subsequent fine increases by another $20,000 and can be as high as $100,000. By contrast, Nichols used to make about $14,000 a month from short-term rentals, she said.

Since March 2016, Miami Beach has issued $12.1 million in fines, but only $174,000 have been paid, according to city records. Nichols stopped renting short-term when the fines increased, she said, and her properties have not been fined the higher penalty.

But Miami Beach created an exception in October 2016, when it made it legal for short-term rentals to be conducted in historic buildings that front Harding Avenue, a move preservationists and developers supported in the hopes it would encourage property owners to improve the aging buildings.

That exception, Nichols alleges in her suit, is discriminatory and "not rationally related to any legitimate government interest." At the time the ordinance was passed, Miami Beach said that the buildings where short-term rentals are now allowed are considered as "contributing" to the architectural character of the North Shore National Register Historic District.

Ross Milroy, a Miami Beach real estate expert who runs an advocacy group in support of rental reform, said the lifting of the ban in North Beach is actually proof that short-term rentals are lucrative businesses for residents — and the city.

"These properties now bring tourists, tourist dollars, and jobs to the local community and taxes to the city," said Milroy. He worked for more than a year with the Goldwater Institute, a national nonprofit civil rights organization, to bring the lawsuit against Miami Beach.

Nichols also alleges in the suit that the fines are "so great as to shock the conscience of reasonable people and are patently and unreasonably harsh and oppressive."

"Of all the laws I have ever seen a political body pass, this has been the most hurtful for me and other people," she said. "... In the 10 houses around me, I know three of them have been fined $20,000. People who haven't been caught yet don't even want to sign a petition because they don't want to be targeted."

Miami Beach has heavily policed short-term rentals in the past two years in an attempt to stop tourists from overrunning residential neighborhoods and causing disturbances. The city's fines are the highest in the country, higher even than other cities like San Francisco and New York City, where some of the most contentious battles against short-term rentals have been waged.

Nichols believes the fines are already preempted by state law, which limits the fines the Beach's zoning board can impose to $1,000 per day for the first violation and $5,000 per day for the repeat violation. "Per day" refers to each day after the initial fine is imposed that the illegal activity continues, said Matthew Miller, senior attorney at the Goldwater Institute, who is representing Nichols. The Institute also filed short-term rental lawsuits against Seattle, Washington, and Pacific Grove, California.

"[In Miami Beach], it's immediately $20,000," Miller said. "That's enough to ruin most property owners."

But Miami Beach spokeswoman Melissa Berthier said in an email that Miami Beach is authorized to "create an alternative code enforcement system (which it has done so) and thus, is not obligated to comport to those monetary limitations set forth in Chapter 162 of the Florida Statute." The city declined to comment more generally on the lawsuit.

Nichols is asking a judge to overturn the city's policy.

Nichols believes there are solutions to the issue of problematic short-term rentals other than banning the practice outright. Police should be called when there are instances of loud tenants and disturbances, she said, and homeowners will typically cooperate because most don't want parties in their homes.

"There are all kinds of ways to control parties and crowds and noise that don't involve length of stay," she said. "I'm generating a lot of extra revenue for the city as are all the other investors and they are showing us no respect for the investment we’ve made and the contributions we’ve made."

Chabeli Herrera: 305-376-3730, @ChabeliH
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