Property managers, owners sue over city's short-term rental rules

Lawsuit claims lodging limits are unconstitutional

Tom Sharpe | The New Mexican

3/5/2008 - 3/6/08

Two property-management firms and a dozen out-of-towners who lease their Santa Fe homes to vacationers want a judge to nullify the city's new short-term rental rules.

An ordinance approved by the City Council on Jan. 30 sets new regulations on leases of fewer than 30 days in residential neighborhoods, beginning March 29.

But a complaint filed in state District Court last week by lawyer Tom Simons asks the court to stay that deadline and to declare the new law unconstitutional.

Charlie Goodman of Kokopelli Property Management said the law hurts a significant part of the tourism industry. "The city is spending a million dollars on an advertising campaign to attract tourists to this town, and they're trying to drive them away, at least one portion of them, by doing this," he said. "And I just don't think they're tuned into it."

Goodman and Janet Rousselot of The Management Co. are the two plaintiffs representing property-management firms. Rousselot, who has been managing short-term rentals for 30 years, declined comment other than to say the complaint expresses her problems with the new ordinance.

The secondary homeowners who have joined the lawsuit are Christopher Dingle, Richard and Shirley Bradley, Brett Bachman and Elisbeth Challener, Carol Janice Friedlander and Cynthia Gail Kristensen, John and Tracey Bodhaine, and Gary Logan Swanson and Jane Swanson, from Albuquerque, Texas, California and Canada.

Simons' complaint maintains that:

• Short-term rental of residential property is "not a commercial activity" so it is "beyond the power of a zoning authority."

• Putting limits on leasing for short periods, with no equivalent limits on long-term leasing, is "arbitrary and capricious."

• Not allowing homeowners grandfathered-in under the current ordinance to transfer the right to rent short-term when they sell their property is an improper condition on the rights of ownership.

• The city's "cap" of 350 short-term units under the new law is arbitrary and not the result of a detailed study.

• The $1,000 annual permit fee for short-term rentals is unreasonable compared to the city's annual $35 business-license fee.

Councilor Rebecca Wurzburger, who helped write the new law, said she couldn't comment on the pending litigation.

City zoning laws already ban leasing for fewer than 30 days in residential zones. But city officials haven't enforced the law because they feared it would not hold up in court. In the meantime, the city collected gross-receipts taxes and lodgers taxes from some short-term rentals and posted ads for short-term rentals on its Web site.

About seven years ago, some east-side homeowners began complaining that short-term rentals were turning their neighborhoods into tourist attractions. Three years ago, after the Wall Street Journal reported that 300 Santa Fe homes were being rented short-term for up to $1,500 a night, the City Council formed a task force to look into the issue.

"The City Council wasted untold hours of volunteer time of people who served on committees and so forth to make recommendations," said Goodman. "That's probably the most distasteful thing. ... They put this to committee, and then they do as they damn well please."

Contact Tom Sharpe at 986-3080 or tsharpe@sfnewmexican.com.