Fed. Dist. Court in IL Finds No Due Process or Fourth Amendment Violations in Ordinance Regulating Short Term Rentals of Villas

This post was authored by Matthew Loescher, Esq.

In 2004, Grand Bear Lodge, LLC purchased land near North Utica to develop a hotel, which North Utica then annexed. According to the plaintiff, the annexation agreements between the village and the property owner granted special use zoning classification for the development of a hotel and a number of buildings that each would include multiple vacation villas. The villas were to be individually owned. The village ordinances approving the annexation agreements incorporated “declarations of covenants,” which provided that no owner would be prohibited from renting his or her unit and that this right would run with the land and would inure to subsequent owners. In February 2020, the village adopted an ordinance regulating short term rentals of villas. Stone River Lodge, LLC and the nine other plaintiffs in this case that all owned vacation villas and cabins in the Village of North Utica, sued to enjoin enforcement of the ordinances and for damages.

Plaintiffs first claimed that the adoption of the ordinance impaired their ability to rent their villas and therefore violated their due process rights. Here, the annexation agreements specifically provided that the village retained the right to enact zoning changes. The court noted that the ordinance in question qualified as a zoning change within the meaning of the annexation agreements, even if it did not include the term “zoning” in its title or text. Furthermore, the ordinance represented a legitimate exercise of the village’s police power, and it was readily apparent that its requirements were rationally related to the village’s stated interest.  As such, there was no violation of procedural due process arising from the village’s adoption of the ordinance.

Next, the plaintiffs challenged the village ordinance’s provision stating that every vacation rental unit “shall be subject to inspection” by the village’s police department, zoning enforcement officer, and fire protection district, as well as the LaSalle County Health Department. The plaintiffs further challenged the ordinance’s requirement that vacation rental unit operators maintain a register of guests and make this “freely accessible” to the village. The record reflected that the police chief came to the front doors of one or more villas, knocked, and asked a few questions. There were no allegations in the complaint that the chief or any other village employee stayed within the curtilage of the property of any of the plaintiffs any longer than a brief period, and no allegation that they made an entry into any dwelling. Accordingly, the Fourth Amendment claim was dismissed.

Lastly, plaintiffs claimed that they, as villa owners, had been precluded from obtaining licenses unless they agreed to join a “rental pool” administered by the Grand Bear Lodge. In so doing, the plaintiffs alleged they were being treated differently from others in the village who might want to rent out their property on a short-term basis. At this stage, the court could not determine as a matter of law that this claimed differential treatment was rationally related to a legitimate state interest. Because of this, defendants’ motion to dismiss was denied as to plaintiffs’ as-applied equal protection claim.

Stone River Lodge, LLC v Village of North Utica, 2020 WL 6717729 (ND IL 11/15/2020)