Owner-Occupation Requirements in Local Zoning Ordinance Can Limit Impact of Short-Term Rentals on Local Real Estate Market

Christopher Andrews & Kelly Andrews v. Kearsarge Lighting Precinct
New Hampshire Superior Court Case No. 212-2018-CV-00049
Tuesday, September 14, 2021

The plaintiffs own two properties in the Kearsarge Lighting Precinct (KLP) that they use as short-term vacation rentals and have dumpsters outside. In September 2017, the Board of Commissioners held a public hearing on vacation property rentals and dumpster violations. KLP has a zoning ordinance provision requiring owner-occupation of residential properties that offer sleeping accommodations (Guest Provision), and a provision requiring that dumpsters meet setback requirements and be enclosed by a privacy fence (Dumpster Provision). Letters regarding the violations were sent to the owners of four subject properties, including the plaintiffs.

On appeal to the superior court, the plaintiff made a large number of arguments as to why either the underlying process had been unfair or the wrong result had been reached upon appeal to the Zoning Board of Adjustment (ZBA).

In the Superior Court, the plaintiffs made four arguments relating to procedural due process: (1) the ZBA members prejudged their appeal; (2) the ZBA violated their procedural due process rights by “rubber stamp[ing]” a draft opinion prepared by the ZBA’s attorney on a matter with similar facts; (3) ZBA members acted outside the forum of a public hearing to decide the result of the appeal before the public deliberations; (4) ZBA failed to provide them a fair hearing on a motion for rehearing. The Court rejected all these arguments, finding that the plaintiffs failed to raise the issue of bias prior to the appeal to the Superior Court (thus waiving the claims) and finding that the ZBA stated on its record that it had reviewed the facts and applied them to the pertinent law during a public meeting (and not outside of it).

After rejecting the plaintiffs’ procedural due process arguments, the Court turned to their substantive due process arguments. It determined that the plaintiffs were claiming that the Guest Provision was unconstitutional as applied to their situation, meaning the Court would apply the rational basis test. KLP would need to have a legitimate governmental purpose in barring short-term rentals in order for the Provision to be constitutional. The Court found that the articulated purpose of the Guest Provision is to preserve residential character of neighborhood, including seeing the neighborhood made up of residents rather than transients, and that the requirement that owners live in the properties would serve as check on guest behavior. Further, KLP could rationally choose to regulate apartment houses for longer-term tenants differently from short-term rentals of residential properties. Thus, the Court rejected the plaintiffs’ substantive due process arguments.

The Court next turned to the plaintiffs’ argument that the KLP zoning ordinance did not allow any rentals whatsoever unless owner occupied, meaning that long-term rentals would be barred, restricting the availability of affordable housing. In examining this argument, the Court found that the plaintiffs – representing short-term rental owners – lacked standing to bring this argument.

The Court then addressed the plaintiffs’ arguments pertaining to “administrative gloss.” “Administrative gloss” is placed upon a clause when those responsible for its implementation interpret the clause in a consistent manner and apply it to similarly situated applicants over a period of years without legislative interference. This requires more than a knowing failure to enforce a provision. A plaintiff must show that the municipality failed to enforce a provision against certain uses because it interpreted the provision as inapplicable to those uses. The Court found that, in this case, the plaintiffs did not show that KLP’s Commissioners established a de facto policy of non-enforcement, but merely did not address or attempt to enforce the provisions until the instant action.

Similarly, the Court rejected the plaintiffs’ claim of municipal waiver. Waiver requires an intention expressed in explicit language to forego a right or upon conduct under the circumstances justifying an interference of a relinquishment of it. Generally, municipalities do not waive their rights to enforce ordinance because they failed to enforce those ordinances in the past. And, in this case, the municipality had simply not addressed or attempted to enforce the provisions until the instant action.

Nearly the same reasoning underlaid the Court’s assessment of the plaintiffs’ equal protection/selective enforcement arguments. To show that the town’s enforcement was discriminatory, the plaintiffs had to demonstrate that the enforcement was arbitrary or without some reasonable justification, not just that it was historically lax. The Court found that there was no evidence that the KLP Commissioners had ever enforced the Guest Provision in the past. As such, there was ample evidence of widespread failure to enforce, but not failure to enforce against a particular class of property owners.

The Court also briefly addressed an argument on municipal estoppel, finding that no official from KLP made any representations to the plaintiffs regarding enforcement of the Guest Provision, thus precluding that claim. And, the Court addressed a prior non-conforming use claim and rejected it, finding that there was no evidence that there was prior non-conforming use on the record.

Last, the Court turned its attention to the plaintiffs’ arguments about the Dumpster Provision. The plaintiffs alleged and KLP did not contest that they had dumpsters in place before the Dumpster Provision went into effect. However, the Court found that there was no evidence on the record that the dumpsters were used in the same manner at that time as they were for the short-term rentals, thus the plaintiffs had failed to establish that the dumpsters were protected under prior nonconforming use.


Additional Information: 

Practice Pointer:  It is good practice for municipal governing bodies to review local zoning ordinances regularly and ensure that consistent, non-discriminatory code enforcement actions are taking place on a routine basis.