Thankfully, the only "Tiki Island" we have in Hawaii is a miniature golf course. Because the name "tiki" should be reserved for such things, or for kitschy bars, or Trader Vic-knockoffs.
And please, honest-to-goodness real municipalities should never be named Tiki Island. No matter how nice they appear to be. Just no.
(Martin Denny, by the way, gets a pass - rock on, Mr. Denny.)
But there it is, the Village of Tiki Island, Texas, population 968, "a waterfront community in Galveston County consisting of about 960 homes, with approximately 40% full-time occupants, and 60% part-time occupants."
Something tells us that TI, TX's smallish population and the resident-to-part-timers ratio had something to do with the fact that in 2014, the Village adopted an ordinance prohibiting the short-term rental of residences, an activity that apparently had been ongoing for some time prior. Homes which had been renting before 2011 were "grandfathered," and the ordinance only applied to those who started renting after that date, and as you might expect, this resulted in a lawsuit by homeowners who were subject to the new prohibition who asserted that it was a taking, among other things.
They filed suit in a Texas court to enjoin the ordinance. The trial court agreed, and temporarily enjoined enforcement of the ordinance with respect to the plaintiffs who were actually renting their properties.
The Village appealed, and in Village of Tiki Island v. Ronquille, No. 01-14-00823-CV (Mar. 12, 2015), the Texas Court of Appeals affirmed. It's a very long opinion (53 pages), and unless you want the details about whether the correct parties were named in the appeal, the timing of the appeal, and the like, you need not read all of it. Short version: the Village missed the deadlines for an accelerated appeal from an interlocutory order with respect to all but one of the plaintiffs, so the court of appeals lacked jurisdiction over those appeals, and considered the takings issue only as to one homeowner.
The interesting part begins on page 24 of the slip opinion, the court's analysis of the Village's argument that the homeowner didn't properly plead or prove a regulatory taking. The court concluded that her complaint adequately alleged that her prior and current use of the property (and not just future uses):
Hill pleaded that (1) she researched the permissible uses of her house before committing to buy it, ascertaining that short-term rentals were permissible, (2) she relied upon Village officials assurances that short-term rentals were permitted, (3) the ability to rent short term was a major part of her decision to purchase her house, (4) she engaged in short-term rentals before Ordinance No. 05-14-02 was passed, (5) she is contractually obligated for future short-term rentals, (6) the ability to rent short-term enhances the value of her property, and (7) the prohibition on short-term rental decreases the value of her property. In other words, unlike in Mayhew, Hill challenges the Village’s interference with her prior and current existing use of her property, not just proposed future uses.
Slip op. at 28-29.
The court also concluded (starting on page 30) that the homeowner introduced enough evidence supporting her takings claim to obtain the injunction. The key legal factors were the economic impact of the short-term rental prohibition on the homeowner, and her investment-backed expectations, and the court held that she "presented evidence that the enactment of Ordinance No. 05-14-02 had an economic impact on the value of her property, and that she had a reasonable, investment-backed expectation that she could engage in short-term rentals." Slip op. at 40.
The court rejected the Village's argument that her home was worth more than when she bought it (therefore the ordinance did not impact her adversely), and that her expectations were only that the home could be used for what it can be used for post-ordinance: a residence (and not a rental property). The homeowner introduced evidence that renting was legal when she bought the property, that the demand for short-term rentals is strong, that she made substantial improvements to the home to make it rentable, and that in the first nine months of 2014, she earned $25,000 in rental income. And even though the homeowner did not introduce evidence about the use of the house prior to her purchase, "the record does reflect that short-term rentals have long been done in Tiki Island, and that [the plaintiff] was doing short-term rentals for seven years before Ordinance 05-14-02 was passed." Slip op. at 36.
Hill has been renting her Tiki Island home short-term since 2007. She bought it as an investment for the purpose of rentals, and made substantial improvements to the property. Tiki Island’s 2014 ordinance banning short-term rentals grandfathered certain identified properties that were already engaged in short-term rentals as of 2011. It is not evident from the record why Hill’s use of her home for short-term rentals was not grandfathered, as she was engaged in short-term rentals before the 2011 grandfathering cut-off. The Village’s excluding Hill from this grandfathered status, however, foreclosed Hill’s existing investment use of her property without an avenue for recoupment. We thus hold that she has identified a vested right for purposes of conferring the trial court with jurisdiction to enter a temporary injunction in her favor.
Slip op. at 52.
Bottom line: no appellate jurisdiction over most of the appellees so the injunction remains in place for them, and injunction affirmed for the other homeowner. Overall a good result for them. We'll see if the court rules the same way when the permanent injunction hearing comes up.
Village of Tiki Island v. Ronquille, No. 01-14-00823-CV (Tex. App. Mar. 12, 2015)
