Lake Geneva’s annual short-term rental license fee has been reduced for the second time in about two years because of pending litigation.
Members of the city council narrowly approved, Jan. 10, to reduce Lake Geneva’s short-term rental license fee from $750 a year to $400 a year. The reduced fee was approved by a 4-3 vote with aldermen Tim Dunn, Mary Jo Fesenmaier and Cindy Flower voting “no.”
City Attorney Dan Draper said the reason for reducing the fee is because of pending litigation regarding the previous $750 annual fee.
Representatives from the nonprofit law firm Wisconsin Institute for Law & Liberty had filed a petition in July 2021 with the Wisconsin Tax Appeals Commission claiming that Lake Geneva’s short-term rental license fee is too high compared to other municipalities in Wisconsin.
The petition was filed on behalf of short-term rental property owners Mary Black, Todd Huemann and Erin Huemann.
Draper announced in August 2021 that the city had planned to contest the challenge.
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Lake Geneva officials have based the city’s short-term rental license fee on the cost to administer the licenses and enforce local rules and regulations regarding short-term rental properties.
“We were involved in some litigation and based on that litigation, we found our fees are probably high based on what is a reasonable fee for the services that we provide,” Draper said. “In speaking with our legal counsel in lowering our fee to $400 and reimbursing the few plaintiffs for the overage that they paid last year, that will settle the lawsuit.”
Attorney Luke Berg, deputy counsel for the Wisconsin Institute for Law & Liberty, said he is pleased that the city has reduced its short-term rental license fee, and that the challenge now will most likely be dropped after he meets with his clients.
“We view this as a win,” Berg said. “The city told us they were planning to lower the fee in response to our challenge. The case was put on hold pending the change and the change has happened, so we’re now working with the city’s attorney to settle the case.”
Berg said the challenge was only filed with the Wisconsin Tax Appeals Commission and not in court. He said the challenge was only related to the short-term rental license fee and not any other rules or regulations regrading the city’s short-term rental properties.
“It was a lawsuit, but it was filed with the tax appeals commission. It was not filed in court,” Berg said. “You have to start with the tax appeals commission, so we filed that this summer.”
Alderwoman Cindy Flower questioned whether Lake Geneva’s short-term rental license fee is now too low and if city officials are keeping track of the number of short-term rental properties in the community.
“I think we’re short-sighting ourselves with this fee and many others by the fact that we don’t dig into it a little deeper,” Flower said.
Alderwoman Mary Jo Fesenmaier said she also feels the city needs to conduct a more in-depth study regarding the number of short-term rental properties in the City of Lake Geneva before reducing the fee.
“We’ve had bids from a company that would help us do that, to have that added value, to justify the higher fee,” Fesenmaier said. “I think we’re doing it too quickly.”
Berg said he feels the $400 annual license fee is fair and will most likely prevent any further litigation against the city.
“I think, most likely, it will resolve the case,” Berg said.
Draper said part of the reason the Wisconsin Institute for Law & Liberty filed the challenge is because they feel since the number of short-term rental properties has increased in the City of Lake Geneva, the license fee should decrease.
He said he is not certain if the fee will continue to decrease if the number of short-term rental properties continues to increase.
“I’m not sure where the diminishing returns ends,” Draper said. “I’m not sure if there’s more rentals if the amount of work that will need to be done by the building and zoning department will increase.”
Representatives from the Wisconsin Institute for Law & Liberty had filed a similar lawsuit against the city in 2020 claiming that its short-term rental license fee was too high.
The lawsuit was dropped in July 2020 when the city council approved to decrease the fee from $2,000 a year to $750 a year. The $2,000 fee was implemented in 2018.
Draper said the city now plans to review its short-term rental license fee each year.
“I would suggest we do that unless we want to continue to go through a lawsuit,” Draper said.
Wisconsin lawmakers approved a measure in 2017, which was signed by former Gov. Scott Walker, requiring municipalities to allow homeowners to use their properties as short-term rentals for tourists.
Members of the Lake Geneva City Council adopted an ordinance in 2018 to make sure short-term rental properties are properly managed and do not become a nuisance in city neighborhoods.
Lake Geneva reduces short-term rental license fee again because of pending litigation - Lake Geneva Regional News
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