New Hampshire Supreme Court Mostly Affirms Enforcement of Ordinance That Prohibits Short-Term Rentals of Properties Unless Owner Occupied and Operated
The New Hampshire Supreme Court (“Supreme Court”) recently addressed an appeal of a local ordinance that prohibited short-term rentals of residential properties unless they were owner occupied and operated. In effect, the decision upholds local authority to restrict vacation-home rentals through such popular services as Airbnb and VRBO, or Vacation Rental By Owner.
In Andrews v. Kearsarge Lighting Precinct, No. 2021-0543 (N.H. Aug. 31, 2023) (non-precedential), the Supreme Court upheld most of a Superior Court decision that affirmed enforcement of the ordinance. The Supreme Court reversed as to one finding that the plaintiffs lacked standing to challenge the ordinance as ultra vires, or exceeding the authority of the town to regulate such matters.
Christopher and Kelly Andrews (“Plaintiffs”) resided in Massachusetts but owned two properties in the Kearsarge Lighting Precinct (“KLP”) in Conaway and Bartlett, New Hampshire, which they used for short-term vacation rentals.
In September 2017, the KLP Board of Commissioners (“BOC”) held a public hearing on vacation property rentals, including the two owned by Plaintiffs. At the hearing, residents questioned whether short-term vacation rentals were permitted under the zoning ordinance that required residential-property rentals to be owner occupied and operated. After the hearing, the BOC approved and issued citations to the Plaintiffs and another property owner, Stephen Gleason, for violating the ordinance.
Gleason and Plaintiffs appealed to the Zoning Board Adjustment (“ZBA”), which held hearings and upheld the BOC’s citations. In its letter decision, the ZBA argued the ordinance demonstrated intent to maintain a quiet neighborhood of residents by requiring owners to be onsite to check guest behavior.
The Plaintiffs filed a motion for rehearing, which the ZBA reviewed and denied. The Plaintiffs then appealed to the trial court under RSA 677:4 (2016). After a hearing, the trial court affirmed the ZBA. It also denied the Plaintiffs’ motion for reconsideration.
On appeal, the Supreme Court of New Hampshire (the “Supreme Court”) addressed several arguments, ultimately affirming in part, reversing in part, and remanding the matter. The Supreme Court began by noting that its review was limited to determining whether the trial court’s decision was supported by reasonable evidence and not legally erroneous.
First, the Plaintiffs argued the trial court had erred in assessing their procedural due process claim, by which they alleged the ZBA was biased because one of its members’ sons had complained at the BOC public meeting and the member had discussed the case with the son outside of a public meeting. The Supreme Court found that issue was not preserved for appellate review because the Plaintiffs failed to raise it at the earliest opportunity below.
Additionally, the Supreme Court was not convinced by the Plaintiffs’ arguments that emails produced in discovery showed bias of the ZBA member. Although the emails were not provided in the appeal, the trial court had found the emails showed the member discussed the KLP matter with his son and other family members, but they showed no prejudgment or bias against the Plaintiffs’ appeal.
Further, the Supreme Court rejected Plaintiffs’ arguments that the ZBA improperly considered information beyond the record, concluding the ZBA could reach decisions based on personal knowledge, experience and observations, and the record did not show any fundamental unfairness from such information. Accordingly, the Plaintiffs failed to show the lower court’s decision on due process was unsupported or legally erroneous.
Next, the Plaintiffs argued error based on substantive due process in that the ordinance required residential property rentals to be owner occupied but placed no similar limit on apartment houses. The trial court had concluded the KLP could rationally choose to regulate longer-term apartment-house rentals differently from short-term residential-property rentals. Because Plaintiffs reframed the issue to challenge whether the regulation of a hospitality business in a single home was rationally related to a legitimate government interest, the Supreme Court found the issue was not preserved for appellate review.
Then, the Plaintiffs contended that the trial court erred in evaluating their equal protection claims by conflating a selective enforcement claim based on estoppel, rather than assessing it under intermediate scrutiny. The Supreme Court agreed with the ZBA and BOC that the Plaintiffs failed to challenge any classification inherent in the ordinance.
Because the issue involved the substantive right to use and enjoy property, it was subject to intermediate scrutiny. The Supreme Court held that the Superior Court did not err by applying a selective enforcement analysis. While the Plaintiffs argued the KLP sought to enforce the ordinance against only non-residents, it did not argue the ordinance had a state-created classification and they also did not provide an intermediate scrutiny analysis at the trial court or on appeal.
The Supreme Court did agree with the Plaintiffs that the trial court erred in finding the Plaintiffs lacked standing and then not addressing their ultra vires claim on the merits. The lower court had concluded the plaintiffs lacked standing to challenge the KLP’s enforcement of the ordinance based on it being a restriction of affordable housing. Specifically, the court had found they lacked standing to challenge the effect on long-term rentals because they did not engage in such rentals. The Supreme Court held the Plaintiffs had standing to challenge the ordinance as to short-term rentals and thus were not barred from arguing it was ultra vires simply because it may affect other types of rentals. Accordingly, the Supreme Court reversed and remanded on that issue.
Further, the Plaintiffs argued the trial court erred in finding no evidence that the KLP had a de facto policy of nonenforcement, thus undermining their claims of estoppel, waiver, selective enforcement, and administrative gloss. The Supreme Court held the Plaintiffs failed to show the KLP represented the ordinance as allowing short-term rentals and thus induced them to rely upon that. Moreover, the Supreme Court declined to hold the historic failure to enforce as a ratification of non-enforcement. Additionally, the Supreme Court found no evidence to support the Plaintiffs’ claim of administrative gloss, by which the municipality interpreted an ambiguous clause in a consistent way over time to similarly situated people without the legislature getting involved.
Lastly, the Supreme Court agreed with the ZBA and BOC that the Plaintiffs’ takings claim failed because they cited no authority to support the proposition that invalidity of an ordinance or its application results in a taking. The Plaintiffs argued that the trial court erred in deciding that a takings claim under the New Hampshire Constitution meant that one could obtain damages only and not invalidation of a zoning decision, but the Supreme Court disagreed and distinguished the case relied upon by the Plaintiffs.
Justice Marconi concurred with the majority decision that administrative gloss guides the interpretation of an ambiguous zoning rule. However, he dissented with respect to applicability of the doctrine requiring an active decision not to enforce the ordinance against a similarly-situated property. He cited record evidence suggesting the ordinance had not been interpreted to prohibit short-term rentals and stated that fair notice should have required a zoning amendment rather than a change in enforcement policy. He also would have required the lower court to determine on remand whether the ordinance was ambiguous, which the trial court had previously assumed without deciding.
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