Feb. 11, 2015 – A state appeals court has ruled that the City of Cedarburg cannot prevent short-term rentals in a single-family residential district, concluding that Cedarburg’s ordinances did not clearly restrict such rentals in that zoning area.
As an investment, two homeowners remodeled their homes and were marketing and renting them to tourists through a vacation website. The homes were available by the day, week, or longer. One homeowner obtained a permit to rent, the other did not.
In 2012, the city’s building inspector sent them letters indicating the city’s zoning code did not permit “tourist rooming houses” in that residential district. The homeowners unsuccessfully appealed to the board of appeals, prompting review in the circuit court.
Consolidating the cases, the circuit court ruled that the city could not prohibit the short-term rentals. And, in Heff Realty and Investments LLP v. City of Cedarburg, 2014AP62 (Feb. 4, 2015), a three-judge panel for the District II Court of Appealed affirmed.
“The Board interpreted the Ordinance to preclude short-term rental of a single-family dwelling in a single-family residential district even though the Ordinance did not clearly and unambiguously prohibit this use,” wrote Judge Lisa Neubauer wrote for the panel. “In doing so, the Board did not act according to law.”
The zoning ordinance permitted “single-family dwellings” in the district, meaning any building that was used exclusively as a residence. The city argued that a short-term vacation rental house was not “designed or used exclusively as a residence.”
“The areas zoned single-family residential are meant to be just that – single family residences i.e., dwellings in which a family establishes residency – not commercial properties or other buildings designed exclusively as a residence but used for entirely different purposes,” the city’s attorney wrote in the appellate brief.
The city noted that under the city’s zoning code, bed and breakfast operations require a conditional use permit, and that is a situation in which the homeowner still resides there. “[C]ertainly renting one’s property to tourists and transients where the owner does not reside in the property should also not be a permitted use,” the city argued.
However, the appeals court explained that the ordinance did not include time restrictions. “We must construe the Ordinance in favor of the free use of property and cannot impose time/occupancy restrictions or requirements that are not in the zoning scheme,” wrote Judge Neubauer, noting the panel was bound by precedent.
In Stat ex rel. Harding v. Door Cnty. Bd. Of Adjustment, 125 Wis.2d 269, 371 (Ct. App. 1985), the court ruled that the county could not prohibit a time-share arrangement in which 13 families owned a vacation home and each would use it four weeks per year.
Although the area was zoned for single-family residential, the appeals court noted that only one family would occupy the dwelling at once, and the ordinance did not require occupancy over a period of time. It ruled that the county could not restrict the property.
“Harding’s conclusion is clear: we look at the language of the ordinance, which is about the use of the property, not the duration of that use,” Judge Neubauer wrote.