The owners of a Scott Street house have agreed to pay the city $57,260 to settle a lawsuit claiming that the house operated as an unpermitted short-term rental.
The sum includes unpaid transient occupancy taxes, interest, penalties and reimbursement for the $29,143 in legal fees the city spent on the lawsuit, which was filed in May.
Defendants John Mourraille and Pao Lien Hung also agreed to abide by an injunction barring them from using the house at 1655 Scott St. as a short-term rental without a permit from the city.
“The city is pleased with this settlement,” City Manager Jennifer Phillips said in a statement issued Friday. “It ends a serious violation of the city’s short-term rental ordinance, requires payment of applicable taxes, interest and stiff penalties, and reimburses the city’s taxpayers for the costs of bringing the violation to an end.
“We hope the settlement sends a strong message to the community that the city does not tolerate such commercial violations of the city’s laws.”
The city’s lawsuit claimed that the house was rented out for short-term stays of less than 30 days “on numerous occasions,” including in March, July, August and September of 2014.
An online listing that was deleted a few days after the city filed its lawsuit offered the house for $850 to $1,050 per night.
Neighbors complained about noise, parking problems and frequent activity at the house as early as 2012. The city responded by sending a cease-and-desist letter to the owners, who claimed that Constellation Brands was renting the house under a one-year lease to provide free accommodations for its employees.
Constellation was not named in the subsequent lawsuit.
This is at least the third time the city has filed lawsuits involving short-term rentals. The city reached a $60,000 settlement for the illegal rental of a Crane Avenue house in 2006, and won a $91,000 judgment in a case involving illegal rentals and various planning and building code violations at a winery on Pratt Avenue in 2005.
The settlement involving the Scott Street house comes as the city considers revisions to its 3-year-old short-term rental ordinance, which allows up to 25 short-term rental permits. Three of those 25 permits are currently available.