Miami Beach cut off his water to get him to pay Airbnb fines, but now the city owes him $250,000

Three years after Miami Beach turned off a homeowner’s water and electricity to try to force him to pay fines for illegally renting the property, it’s the city that must pay up.

In a settlement finalized Tuesday, Miami Beach agreed to pay $250,000 to Ralph Serrano and his lawyers. Serrano, 50, owner of the four-bedroom, four-bathroom house at 3098 Alton Road, first sued the city in 2018 after it turned off his water and electricity to try to get him to pay around $200,000 in fines.

Serrano’s tenant was renting the house out on Airbnb in 2017, in violation of Miami Beach’s short term rental ordirestore nance. At the time, Miami Beach had the steepest fines in the country for illegal short-term renting: $20,000 for the first violation, $40,000 for the second, $60,000 for the third, $80,000 for the fourth, and $100,000 for each additional violation.

Serrano was fined $20,000 for the first short-term rental offense at the Alton Road house in March 2017, the lawsuit said, and quickly incurred $200,000 in fines under the city’s former penalty structure. In 2018, the city cut off water and electricity. A few months later, the city turned the electricity back on but kept the water off until Serrano agreed to pay up. In December 2018, Miami-Dade District Judge Jennifer Bailey ruled that Miami Beach had to immediately the water service. The city appealed, and the appeals court again ruled against the city.

At a February hearing, Bailey criticized the city for dragging out the case for years.

“I could go through here with a fine-tooth comb in all the ways, from inception, with regard to how fundamentally abusive the City Attorneys Office conducted this case,” she said.

Courts have ruled the fine structure, and the city’s decision to cut off Serrano’s utilities, to be illegal. Florida law prohibits local governments from fining residents more than $1,000 a day for code violations.

In a statement, city spokesperson Melissa Berthier said via email that the city will continue to aggressively enforce its ban on short term rentals in residential areas.

“The City’s residents have demanded that these illegal activities are immediately terminated in order to prevent the negative and adverse impacts on their quality of life by maintaining the aesthetics, character and tranquility of its residential neighborhoods,” she said. “The City recognizes that single and multi-family residences that are illegally used on a transient basis, creates excessive numbers of guests, vehicles and noise, and causes inappropriate and adverse consequences on these surrounding residences and residential neighborhoods.”

The settlement agreement, signed by Mayor Dan Gelber on April 7, says the city will pay Serrano and his lawyers $250,000 and remove the liens on the property. Serrano will get $90,000, and his lawyers will get the rest.

“We’re very pleased to put this past us and pleased at the outcome,” said Serrano in an interview. “It’s unfortunate that we had to go through this protracted litigation to reach this outcome. We’re fortunate we have the resources and the skill to be able to do this.” Serrano owns private equity firm Safe Harbor Equity, which purchases distressed debt and does litigation financing.

Miami Beach prohibits rentals of six months or less in most residential areas, but allows them in a few sections of the city such as a stretch of Harding and Collins Avenues. Hosts are required to obtain a business license and resort-tax registration certificate.