Door County judge grants relief to short-term rental owners in Sister Bay

In a case that could ultimately have ramifications for short-term rentals around the state, a Door County judge has issued a temporary injunction against the village of Sister Bay, allowing a short-term rental cottage to resume rentals while the owners of the cottage appeal a decision to deny them a license.

“This win for our clients allows them to continue to rent their property while they pursue an appeal to the village board,” Luke Berg, deputy counsel for the Wisconsin Institute for Law & Liberty (WILL), said. “As the judge noted, the village did not follow their own procedures or state law, which guarantees a right to review of a license denial. We hope the village board will correct the unlawful denial and grant the Whites their short-term-rental license.” 

WILL is representing Adam and Brigid White, the owners of Captains Cottage LLC, a short-term rental. The plaintiffs said the village unlawfully refused to issue Captains Cottage a permit, and, as a result, Captains Cottage was forced to cancel all its reservations starting July 1, causing a substantial loss of income. 

The injunction means rentals can resume while the case plays out.

In the lawsuit, WILL contends that Wisconsin law gives homeowners the right to rent their home on a short-term basis. 

“Property owners also have a right under Wisconsin law to continue a non-conforming use after a change to local zoning laws, preventing municipalities from retroactively applying zoning changes to existing properties,” WILL states. “The village of Sister Bay also violated the plain procedural rights of our clients by rejecting their attempt to appeal, allegedly for failing to pay a fee that didn’t exist. The judge has ordered the village to follow its appeal procedures and administrative review procedures under state law.”

According to the complaint, the village of Sister Bay, in what WILL calls an apparent attempt to drive short-term-rental owners out of business, took the position that, merely by applying for a short-term-rental license, properties lose the right to all of their vested, non-conforming uses.

That effectively means property owners must update their property every year to conform to whatever changes the village has made to its zoning code, WILL states.

“To make matters worse, in this particular case, when the plaintiffs attempted to appeal the village’s decision to deny them a short-term-rental license, the village prevented plaintiffs from appealing and further denied them any opportunity for a hearing on the license denial, again violating its own ordinances, state law, and procedural due process,“ the complaint said.

As a direct result of the violations, the plaintiffs were forced to cancel all of their rental reservations starting July 1, causing them to lose substantial income until their ability to rent their property is restored, the complaint alleged.

The case is important on due process grounds but also because it addresses whether changes to a zoning code can nullify grandfathering that allows property owners to continue a nonconforming use.

The background

On April 23, 2024, the Whites received an email from the village administrator, denying their request for a short-term-rental license, WILL recounts.

“The email raised a few questions and minor issues with respect to their application — all of which easily could be answered or resolved — but also raised one major concern about the driveway and parking at the home,” the complaint states. “The email described ‘the parking situation’ as the ‘most significant issue.’”

More specifically, the email stated that the Whites’ home must provide “at least 2, but not more than 4, legal parking stalls,” that each stall must be ‘10 x 20,’ asphalt, out of the right-of-way, and at least ten feet from the neighboring lot line,” and that “[t]he driveway must be at least 10’ wide but not more than 24’,” WILL observed.

Those requirements are found in the village’s zoning code, and WILL says the Whites adopted all but one of the requirements between 2004 and 2006. Then, WILL argues, the village adopted a major revision to its zoning code in 2004 and has amended it repeatedly since then. 

“The driveway width requirements, surfacing requirement (asphalt), and parking-stall size requirements were in the original 2004 zoning code, but not in the zoning code before 2004, as far as counsel have been able to determine,” the complaint states. “The ten-foot setback requirement was adopted in 2006. … The requirement to have at least two parking spaces was in place as early as 1995.”

However, WILL argues, the White’s property was built in 1919, and its current driveway/parking area has been in place long before the village added those parking requirements to its zoning code.

“Indeed, the village has never taken issue with the driveway/parking on the Whites’ property until this year,” the complaint states. “Thus, pursuant to both the village’s own ordinances and state law, … despite the Whites’ existing driveway’s nonconformance with the current zoning code, the Whites have a vested right to continue their use and that right is protected from retroactive application of the village’s changes to its zoning code.”

Nothing in the village’s ordinances related to short-term-rentals provides that the mere application for a short-term-rental license invalidates any grandfathered, non-conforming aspect of a property, WILL contends.

“To the extent that the village claims that its ordinances do have such an effect, they violate and/or are preempted by state law, and/or are unconstitutional,” the complaint states.

On April 29, 2024, counsel for the Whites responded to the denial email explaining that their existing driveway/parking area is a vested nonconforming use and asked the village to reconsider that reason for the license denial, WILL recounted in the complaint.

The town refused, so the Whites wanted to appeal, given that, according to the complaint, the village’s short-term-rental ordinance provides that, if a license is denied, a property owner “may appeal the decision to the Board of Trustees upon filing an Appeal Form within fourteen (14) days of the written decision and paying the required appeal fee.”

The ordinance further provides that, upon the filing of an appeal, “[t]he Board shall hold a hearing as soon as possible and determine whether the decision should be upheld or reversed.” the complaint continued.

The Whites replied two hours after receiving the refusal to reconsider granting the license, WILL observed, indicating that they intended to appeal the denial of their license and asked for the form to appeal.

The request was never answered, WILL asserts.

“The Village does not have any ‘appeal form’ for the denial of a short-term-rental license,” the complaint states. “The village’s ‘Forms’ page on its website does not contain any such form. And, as just noted, [the village administrator] chose not to respond when the Whites’ counsel asked for the form.”

The Village also never established any “appeal fee” for an appeal from the denial of a short-term-rental license, WILL contends.

“Indeed, the village’s fee schedule does not contain any such fee,” the complaint states. “And, after the Whites’ counsel called attention to the lack of any fee, the village board, during its board meeting on May 19, 2024, admitted on the record that it had not established a fee.”

The board did vote to add a fee, but it wasn’t to be in effect until July 1, WILL observed.

“Because the village had not created an ‘appeal form’ or set any appeal fee, making it impossible for the Whites to appeal under the process set forth in village ordinance, the Whites’ counsel submitted a request for review pursuant to Wis. Stat. § 68.08,” the complaint states.

The WILL complaint further noted that the Whites would “pay any lawfully required appeal fee upon notice of such hearing and reference of such village resolution or ordinance establishing such appeal fee for appeals to the village board of trustees.”

Still, the village would not budge.

Richard Moore is the author of “Dark State” and may be reached at richardd3d.substack.com.