Case Studies for Melanie M. Hesano

Plaintiffs were a group of property owners who sought to use their properties as short-term rentals (“STRs”). However, they did not register their properties as STRs rentals under the City’s STR permitting ordinance before the City adopted a moratorium on STR approvals pending development of new zoning regulations for STRs. Nor did most of them apply (or qualify for) an exception to the moratorium, but rather merely submitted their permit applications during the moratorium. The new zoning regulations ultimately capped STRs in residential districts at the number that existed at the time of the moratorium, with the result that the Plaintiffs whose properties were in residential districts were barred from lawfully establishing their properties as STRs. The Plaintiffs challenged the moratorium and new zoning regulations, seeking damages and equitable relief under theories including a taking, due process and equal protection violations, and a claim of a vested lawful nonconforming use of their properties as STRs. Affirming a published opinion of the Western District of Michigan granting summary judgment to the City regarding the substantive majority of Plaintiffs’ claims, the Sixth Circuit Court of Appeals held that Plaintiffs lacked a protected property interest in STRs for their due process claims, and lacked a vested property interest for their takings and Zoning Enabling Act claims. Because the Zoning Ordinance did not expressly permit STRs and provided that uses not expressly permitted are prohibited, and Plaintiffs waited to apply until the moratorium was in place, they had no legitimate claim of entitlement to STRs permits, and therefore no protected or vested property right in the use of their properties as STRs.