Moskovic v. City of New Buffalo
| Decision Date | 31 October 2022 |
| Docket Number | 1:21-cv-144,1:21-cv-674 |
| Parties | JOANNE MOSKOVIC, et al., Plaintiffs, v. CITY OF NEW BUFFALO, Defendant. 218 S BRONSON LLC, et al., Plaintiffs, v. CITY OF NEW BUFFALO, Defendant. |
| Court | U.S. District Court — Western District of Michigan |
Plaintiffs in this consolidated action own homes in the City of New Buffalo, Michigan, that they have used, or intend to use, as short-term rental properties. In 2019, the City passed an ordinance requiring homeowners in the City to obtain a permit before using their homes as shortterm rentals. In 2020, the City adopted a resolution that suspended the issuance of such permits. Plaintiffs brought this action against the City to challenge the validity of that resolution under state and federal law. Before the Court is Plaintiffs' motion for partial summary judgment (ECF No. 116)[1] on Counts V and VII of the amended complaint. Also before the Court is the City's motion for summary judgment (ECF No. 117). For the reasons herein, the Court will grant Plaintiffs' motion in part and grant the City's motion in part. The Court will grant summary judgment in favor of 218 S Bronson LLC on the equal protection claim. The Court will dismiss all other claims.
The City of New Buffalo is located on the Lake Michigan shoreline near the Indiana border. It is a popular destination for tourists from Michigan, Indiana, and Illinois, especially during the summertime. Plaintiffs purchased homes in the City with the intent to rent them to visitors on a short-term basis, i.e., for terms of less than a month at a time.
In April 2019, after some members of the City Council became concerned about the impacts of short-term rentals on the character of the community, the City passed Ordinance 237, which required homeowners to apply for and obtain a permit from the City in order to use their homes as short-term rentals. (Ordinance 237, ECF No. 13-2.) To qualify for a permit, applicants had to provide their contact information and the contact information for a local agent. Also, they had to provide information about their home, certify that they had working smoke alarms and fire extinguishers, consent to inspections upon request, and create a brochure for guests providing their contact information. (Id., PageID.311-312.) Finally, they had to submit to an annual inspection “for compliance with applicable codes and ordinances,” including “zoning, construction, fire, and property maintenance codes[.]” (Id., PageID.313.) Failure to “satisfactorily complete an inspection” could be grounds for withholding a permit or deeming it void. (Id., PageID.312.) The ordinance also put a limit on the number of people that could occupy a dwelling. (Id., PageID.315.) There was no cap on the number of permits that the City would issue.
On May 18, 2020, the City Council adopted Resolution 2020-11, which imposed an eightmonth moratorium (“Moratorium”) on all permit applications for, and registrations of, short-term rental units in the City. (Resolution 2020-11, ECF No. 61-3.) The City Council indicated that it was “concerned that further increases in short-term rentals in certain areas of the City could undermine the character and stability of neighborhoods in certain districts” by, among other things, decreasing the number of long-term residents, decreasing enrollment in schools, decreasing the availability of long-term housing, permitting significant numbers of vacant homes during winter months, and increasing noise levels, traffic, and on-street parking during summer months. (Id., PageID.2362.) The City Council also indicated that it was considering “appropriate ordinance amendments to address this concern relating to the City's existing-short term rental ordinance[.]” (Id.)
On May 22, 2020, the City Clerk accidentally distributed a draft copy of Resolution 202011 that contained exceptions that were not part of the final version. (Fidler Dep., ECF No. 117-2, PageID.3564.)
A few weeks later, on June 15, 2020, the City Council adopted Resolution 2020-16, which carved out exceptions to the Moratorium for certain property owners with “investment-backed expectations” in their property, including those who had made “substantial investments in prospective rental properties” before the Moratorium. (Resolution 2020-16, ECF No. 61-6.) It allowed the City to process applications received during the next 30 days, where: (1) the property was already registered as a short-term rental and was conveyed to new owner before June 15, 2020; (2) the applicant took title to the property between March 1, 2020 and May 18, 2020, with the intent to use it as a short-term rental; (3) the applicant recently completed construction or renovations with intent to use the property as a short term rental and was issued a certificate of occupancy after March 1, 2020; (4) the applicant entered into a contract to purchase the property on or before May 18, 2020, with intent to use it as a short-term rental; or (5) the applicant had a valid building permit for construction or renovation of a dwelling as of May 18, 2020, with intent to render it suitable for use as a short-term rental. (Id.)
In November 2020, three new members were elected to the City Council, including the City's Mayor, John Humphrey. (11/16/2020 City Council Minutes, ECF No. 121-7.)
By December 2020, the City Council's review of proposed regulations for short-term rentals was not complete. The Interim City Manager reported that “additional research needs to be done” and that “enforcement of the ordinance needs [to be] addressed.” (Manager's Rep., ECF No. 13-10.) The review had been complicated by the fact that the City Manager had fallen ill with COVID-19 before Thanksgiving and passed away in early December. The Interim City Manager recommended extending the Moratorium for an additional eight months. The City Council did so on December 21, 2020.
On March 17, 2021, the City Council and the City's Planning Commission held a joint meeting to review a draft amendment to Ordinance 237 and a draft amendment to the City's Zoning Ordinance that addressed short-term rentals. (3/17/2021 Meeting Agenda, ECF No. 121-8.) The proposed zoning ordinance amendment would cap the number of short-term rentals in the R-1 residential district at the “existing level” of 65. (Proposed Ordinance, ECF No. 121-8, PageID.5452-5453.)
The Planning Commission held a public hearing on the proposed amendment to the zoning ordinance on April 13, 2021, after which it tabled the amendment for further discussion. (4/13/2021 Planning Comm'n Minutes, ECF No. 121-9, PageID.5465.) At its next meeting a week later, the Planning Commission recommended that the City Council make a few small changes to the proposed zoning ordinance amendment. (4/20/2021 Planning Comm'n Minutes, ECF No. 12110, PageID.5470.)
On May 17, 2021, the City Council adopted Ordinance 248, which amended Ordinance 237 by adding additional requirements for obtaining, maintaining, and transferring a short-term rental permit. (See Ordinance 248, ECF No. 41-7.) The Moratorium continued.
(8/31/2021 Mem. from City Manager to Mayor, ECF No. 121-12.) He recommended an extension of the Moratorium “to facilitate the review and updating of the city's Zoning Ordinance.” (Id.)
On September 16, 2021, the Planning Commission held a public hearing on the two alternative proposed zoning ordinance amendments. (9/16/2021 Planning Comm'n Minutes, ECF No. 118-35.) The Planning Commission tabled the matter until its next meeting on September 21.
On September 20, 2021, the City Council adopted a resolution directing the Planning Commission to make a recommendation on the two zoning amendments at the September 21 meeting “so that the Council can commence its deliberations on the proposed amendment in October, before the moratorium expires.” (Resolution 2021-22.a, ECF No. 121-14.)
At its meeting on September 21, 2021, the Planning Commission recommended against both of the proposed amendments. (9/21/2021 Planning Comm'n Minutes, ECF No. 118-38.) Part of the meeting was held in a closed session to discuss an “attorney-client privileged memorandum.” (Id., PageID.4655.)
Because the Planning...
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