REGULAR AGENDA: OLD BUSINESS  7.

COMMITTEE MEMORANDUM

HISTORY:

The City of Miami Beach Commission, at their March 9, 2016 meeting, adopted Ordinance 2016-4001 and Ordinance 2016-4002 which amended Chapter 142-905B and 142-1111 of the City Code respectively.  The two Ordinances established the following fine structure for illegal short term violators:

A.      If the violation is the first violation: $20,000.00.

B.      If the violation is the second violation within the preceding 18 months: $40,000.00.

C.      If the violation is the third violation within the preceding 18 months: $60,000.00.

D.      If the violation is the fourth violation within the preceding 18 months: $80,000.00.

E.    If the violation is the fifth or greater violation within the preceding 18 months:  $100,000.00.

Additionally, at its March 9, 2016 meeting, the Commission established a procedure requiring the Director of the Code Compliance Department to remit a letter to the Miami-Dade Property Appraiser and the Miami-Dade Tax Collector, together with a copy of the Special Master Order adjudicating the violation, notifying these governmental agencies that a single-family residential property was used for transient rental or occupancy.  This action may result in a homesteaded property owner losing their tax exemption status.

At the October 31, 2017 City of Miami Beach Commission meeting, a discussion item regarding the tracking of total short term rental violations imposed against property owners was referred to the Finance and Citywide Projects Committee for discussion.

The Finance and Citywide Projects Committee heard this item at their December 15, 2017 meeting.  The Committee instructed Administration to report back in six months with an update.

ANALYSIS:

Since the implementation of the City’s new fine structure for violators of the Short Term Rental Ordinance in March 2016, the City’s Code Compliance Department has issued a total of 403 violations which equates to a total of $12.3 million in initial fines assessed. The violations are summarized below:

Short Term Rental Violations

The City Attorney’s Office resolved 34 of the 403 violations via Agreed Orders. These 34 violations had fines totaling $785,000 and were settled for $107,750.  Additionally, 77 violations have been administratively closed out for the following reasons:

·         62 – Nolle Prosequi

·         12 – Special Master Dismissed

·         2 – Closed by Action Memorandums

·         1 – Issued in Error

The remaining 326 violations equate to approximately $9.4 million dollars, which is summarized below:

Short Term Rental Fines

The City has collected $194,000 of the $9,419,500 in fines assessed. It is estimated that approximately $7.4 million in fines issued to Property Owners may be recovered over time as a result of City liens issued and recorded against the subject properties engaged in short term rentals. These fines appear on lien statements (estoppel letters) as an amount shown owed to the City and are recovered at the time of sale or refinancing. Of the 106 cases in “fine owed” status, 66 were issued to owners which the City has the ability to lien.

The Code Compliance Department now handles recording liens associated with code violations. As of January 1, 2018, 40 violations have had the owner notified of intent to lien, which equates to the total amount of $1,562,000. In addition, the City has recorded liens on fourteen properties, which equates to a total of $729,500. Of the remaining 26 owners with violations in “fine owed” status, 13 were adjudicated by the Special Master and given longer pay back periods. Staff continues to work diligently to initiate liens on the remaining violations.

Fines issued to Property Owners are likely to be recovered over time as a result of City liens issued and recorded against the subject properties engaged in short term rentals.  These fines appear on lien statements (estoppel letters) as an amount owed to the City and are recovered at the time of sale or refinancing.

Additionally, Code Compliance worked with the Information Technology Department and Commissioner Aleman to develop a web-based tenant search that landlords can utilize when selecting a long term tenant to occupy their home. This platform allows users to search by name or company. The site is now live and can be found here: https://secure.miamibeachfl.gov/strviolations/violations .