Crime Pays in Key West, Especially When you Get Caught
August 26, 2016
by Arnaud and Naja Girard…….
Prominent businessman Ed Swift got caught again illegally renting to tourists. The Conch Train owner and, ironically, advocate for affordable housing, was reported this week by The Keynoter as having been set up, again, by code enforcement officials who went undercover and rented two of his condo units at Key Cove Landing for 6 nights for roughly $600 a night. That was, apparently, the third time in a little over a year. Swift certainly made a mistake. Or did he?
Officially, the City is cracking down on illegal transient rentals. It’s all about protecting those desperately needed long-term residential units. But, in fact, The Blue Paper found a list in Planning Department files tied to over 150 illegal transient units operated by savvy property owners and protected by a scandalous loophole.
The little secret’s code name is LUD [Lawful Unit Determination]. Adopted by the City Commission in 2013, it has become an amnesty program for cheaters. Having been caught and fined by the code enforcement is actually one of the best ways to establish a right to transform residential housing into lucrative vacation rentals.
At first glance, the documented confessions provided by LUD applicants describe an unabashed exercise in cheating. Take for instance the history of “The Equator”, a successful guesthouse on Fleming Street. Initially, there were only 8 legal transient units at 818 Fleming. In the 90’s, the transformation of a residence at 822 Fleming added 11 transient units – all admitted illegal in a 1998 confidential survey. Another 11 illegal transient rental units were added with the purchase of two more homes behind 822 along Sheppens Lane. Before consolidating into one large compound, 818 Fleming had captured 816 Fleming, adding another 6 illegal transient units. By 2012, the whole compound had been taken over by Rockwell Properties operating as the Equator Resort. Last year, in their LUD application, Equator’s new owners admit that nearly 2/3 of their units are still illegal transient rentals.
Another applicant, The Alligator and the Mermaid, a guesthouse on Truman Avenue, had provided the planning department with a copy of a sales contract conditioned upon LUD approval. On March 16, 2016, the City Commission legalized the conversion of the manager’s apartment into a transient unit. The “Alligator” had also captured the house next door at 916 Windsor Lane: 3 illegal transient units at that location were also legalized. The complex then sold for 3.5 million.
The legalization of transient units are a windfall for property owners. In a previous interview with The Blue Paper, developer Pritam Singh explained that the value of a transient unit in the Keys is about six times the value of a long-term residential unit. To date, there are over 120 illegal transient rental units still waiting to be legalized in the LUD pipeline.
The law abiding landlord struggling with his mortgage or the local resident unable to find an apartment may wonder why City officials ever dreamed up this LUD ordinance. It all began with good intentions. Years after the State of Florida decided to limit development in the Keys and the right to build became something you had to compete for, it was discovered that some existing housing units had not been counted. In 2009, the City adopted an LUD ordinance to allow owners of so-called “ghost units” a mechanism for proving their units had been created lawfully, prior to the original Rate of Growth Ordinance [ROGO].
In 2013, the City amended the LUD ordinance, in effect opening the flood gates for the reassignment of residential housing to transient use. Don Craig was the City’s Planning Director at the time. His proposed amendment appeared insignificant. He changed only one little thing in the LUD ordinance: the date triggering the right to LUD approval was no longer April 1, 1990 [pre-ROGO] but was now April 1, 2010. The difference is considerable. The initial ordinance grandfathered proven LAWFUL units while Don Craig’s amendment rewarded those who had been creating new transient units out of thin air long after it had become clearly illegal to do so. Renting un-permitted transient units is actually a crime and is punishable by up to 60 days in jail under the City’s municipal code.
The 2013 LUD ordinance passed unanimously. Four of those Commissioners are still sitting on the dais today. It was hidden in the middle of a 109-page proposed amendment of the City’s Land Development Code – mostly about incentives for green construction and other environmental niceties. The introduction to the legislation made no mention of the substance of the LUD amendment. No one noticed who was not supposed to. People on the inside track however began filling out applications as soon as the law took effect in March of 2014.
The LUD approvals are granted at the discretion of the Planning Director or on appeal by the City Commission. One of the most bizarre twists is that some property owners present the very citations received from code enforcement officials to prove that they were indeed breaking the law prior to April 1, 2010. Code Compliance Director, Jim Young, told The Blue Paper that any pending prosecutions are stalled until the LUD approval process is complete. Applications, we were told, are back-logged for years.
“I was brought up to think that crime doesn’t pay,” says local community advocate Christine Russel who owns long-term rental property in Key West,“ and here are people who break the law making a fortune renting illegally to tourists and our local government officials find nothing better to do than legalizing the whole thing? That’s disgraceful.”
UPDATE: Subsequent to The Blue Paper’s expose [above] the Commission passed the following amendment to the City’s LUD code:
“Applications received after May 2, 2017, must demonstrate that the unit sought to be established hereunder is or has been legally permissible under the current or any former zoning requirements of the applicable district in which the unit is located.”
[Does this mean that an illegal transient rental can still be legitimized through this LUD law as long as at some point in history the zoning district did not prohibit transient rentals? Even if at the time it was established it was NOT legal? Shouldn’t the law require that the unit must have been LEGALLY established? Apparently the City Commission doesn’t think so. Former Planning Director, Thaddeus Cohen, pointed out to the Commission during an appeal of his denial on the Alligator and the Mermaid application [to change a longterm unit used for the manager of the guesthouse into a transient unit] that the LUD law was supposed to recognize “ghost units” – units that had never been recognized by the City. He said it shouldn’t be used to transform existing longterm units to transient rentals. The City Commission let them do it anyway.
10 thoughts on “Crime Pays in Key West, Especially When you Get Caught”
Well done! Stay with the story. I suspect there is a lot more to be revealed.
Ok, this could be great! You mean to tell me that there is a backdoor way to get a transient license. Wow!
Are they still accepting applications? If so where to I get one? I want to get on that list as well.
I would love to know who the owners are for every one of the properties on that list. I’m willing to bet it will be a listing of only the best connected names that we will all recognize.
I knew about this opportunity to essentially change ROGOs, from my own experience as a landlord, but didn’t ever see this invidious implication for transient licenses. Remarkable research and deduction AGAIN, Arnauds!
ps–Check what Pritam said about value. I think transient rental licenses have been valued between $65,000–$140,000 in my time here.
Pritam didn’t mean cost of license – I believe he was referring to the difference in return on investment.
” No one noticed who was not supposed to.” ?
Well the story is interesting, but lacks the names and other info.
Of course we know who the commissioners are , but let’s get their comments too please. One of them might be running for office- huh?
Thanks for the expose’..
T’was worth the wait ’till this afternoon.
Exquisite. Get violated by Code Enforcement for transient rental, turn in your citation and get your transient rental made legal. I ain’t buying this is an unintended consequence.
I’m betting it was contrived. I can’t wait to see who on the City Commission makes a resolution to amend the City Code, LDRs and Comp Plan, to put an end to this RICO party.
How about also, instead of the current procedure Jim Young and his overworked, undermanned, underpaid, up against the bubba wall hardworking code enforcement troops are using to stop illegal transient rentals …
How about city police haul Ed Swift and all other transient rental violators handcuffed in the back of police cruisers straight to the county jail on Stock Island, without passing Go, where they get …
Their mug shot taken
Put on a ward with other real criminals
Their mug shots appear the next day on the Sheriff’s who got arrested and jailed lately photo gallery, the most visited web page in the Florida Keys.
Every time Swift and other transient rental violators get arrested, that happens to them, and iit gets reported in the Key West Citizen and the Keynoter, with their mug shots, names and the charges against them.
That just might put the blue paper out of business.
And it just might reduce illegal transient rentals.
Sloan Bashinsky, write-in mayor candidate, Nov ballot
I have no words. Naja and Arnaud are amazing. GO GET ‘UM !
Ahh! They give so much lip service to worker housing while allowing this to happen, then Simonton Street development displacing all those people, Peary Court , a sham, Sunset Marina ,OOPS! great job Planning Department . And what really ticks me off is the conversion of family homes . And don’t forget that Cates says he never discussed the impending sale of Peary Court with the others, if you believe that. WE should have gotten that and lowered the rents with that 12.5 million they gave to the new owners. Hardly affordable now.
So now we’re talking ” micro units”? Given the lack of oversight by the city and the housing authority, how long will they remain AFFORDABLE and not converted into transient units. But we don’t have that 12.5 million to do that anymore do we?
No net gain .
Moving forward? ?
NO trust left.
Naja and Arnaud, The link to the list of 150 pending LUD applications seems to only have “page 1” with 50 properties. Any chance you have scans of the remaining 100 applications? I was looking for 3029 North Roosevelt (I believe this is Key Cove Landing’s street address)…. did not find it on the list so far… perhaps it’s in the remaining 100?
That is the entire list. The list is current as of April 2016. There were 50 APPLICANTS on the list. Applicants often request multiple units be recognized as legal thru the LUD process. Some of those are for transient [approx 150], others are for permanent housing [for example someone just built an addition or a little house in the backyard, or split existing residential space into multiple apartments without getting a rogo [bpas] or building permits] and have been renting as long-term rentals [not transient]. Before we wrote the story I read every file. There were approx. 195 units total. It is interesting that transient rentals in zones where it is prohibited even though it is a crime punishable by a fine and/or jail time has been determined ok.