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Real estate agents slapped with $35,000 fine for breaking Clearwater’s short-term rental law

By Tracey McManus
The Clearwater Municipal Code Enforcement Board has fined Chris and Nicole Dufala $35,000 for illegally using their home at 3439 Northridge Drive, in Clearwater, as a short-term rental since at least August. . DOUGLAS R. CLIFFORD | Times

CLEARWATER ó In April, Nicole Dufala stood before the Municipal Code Enforcement Board and said she "honestly didnít know" it was against city law to rent out her Countryside home by the night.

Neighbor and homeowner association president Walter Johnson had counted 15 renters rotating through the house over four months, staying three to 14 nights each. Code enforcement inspector Julie Phillips also went on HomeAway.com and was able to reserve the house on Northridge Drive for a three-week stay at $5,987.

The board found Dufala and her husband Chris, both Keller Williams real estate agents, in violation but let them go with a warning: City code prohibits rentals less than one-calendar month, and their website listings cannot offer shorter stays.

But the renters kept coming, neighbors reported. And this time, when the case returned to the code enforcement board last week, the Dufalas could not claim ignorance.

The real estate agents were slapped with a $35,000 fine ó $500 a day for website listings Aug. 11 to Oct. 19. Itís the second largest fine for city short-term-rental violations, which the Dufalas said they plan to appeal.

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"They all play dumb and we give them one get out of jail free card" said board chair Mike Riordan. "Itís a cash-cow, revenue-generating proposition. Most of them make more money than they think they could possibly be fined, so itís like a calculated risk."

Code Compliance Manager Terry Teunis said the brazenness of homeowners illegally renting properties has continued despite several years of heightened enforcement and outreach. There have been 13 violators found guilty so far this year, 11 in 2016 and 27 in 2015.

With Phillips being the sole inspector tasked with responding to complaints, the city hired a private investigator in 2015 to help collect evidence on violators, although he is now used infrequently.

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In the Dufala case, Phillips photographed tenants with Texas license plates at the home Aug. 10. She then posed as "Sarah" and emailed Nicole Dufala Aug. 11 through the HomeAway.com ad to book Aug. 29 through Sept. 5 for a wedding.

Dufala responded and pre-approved "Sarah" for those dates, emails show.

"She knew exactly what she was doing," Phillips said.

Dufala provided the Tampa Bay Times with an email she sent to "Sarah" saying the property "will be blocked for 30 days for your stay if you choose to stay longer" as evidence she does not have multiple tenants in the house each month.

But Phillips said "this is a cover." She intentionally reserved her fictional stay to begin on Aug. 29 to show that Dufala clearly did not block out the entire month for the Texas tenants there on Aug. 10 and would rent to multiple people in the same 30-day period.

Phillips posted a notice of violation on the door Aug. 29. On Sept. 18, Phillips was able to book a three-night stay for Sept. 26 to 29 for what would have been $1,377 through airbnb.com.

Over the next month, Phillips documented being able to book the home for seven more short periods while the website advertised a "three-night minimum stay." On Oct. 13, Phillips posted a notice for the Dufalaís Oct. 25 code enforcement board hearing. By the day of the hearing, the website had been changed to require a one-month minimum stay.

The Dufalas lived in the home, valued by the Pinellas property appraiser at $265,000, for 15 years before moving and renting it out in 2016. They say they are being harassed by the city and their neighbors. Nicole Dufala said she only rents to tenants for at least 30-day periods, but she did not provide leases to the Times to demonstrate that.

Dufala said the cityís investigative techniques are flawed because Phillips only reserved the house for short stays and never completed the booking with payment. If Phillips had entered a credit card, it would not have allowed her to stay less than 30 days, Dufala said.

That canít be true, according to Phillips, since she reserved the short stays with the websiteís "instant book" function, which allows tenants to complete the transaction automatically without waiting for a response from the homeowner. On the day of the Oct. 25 hearing, this function was disabled.

The majority of the cityís short-term rental violators are on Clearwater Beach, where tourists pay thousands for beachfront stays. Code enforcementís investigations are often prompted by frustrated neighbors who complain tourists come to party and disturb residential areas with different visitors every week.

The short-term rental law applies to all but about 30 homes on North Beach that were grandfathered-in after an appeals court in 2007 sided with beach landlords who called the cityís law too loose and a breach of their property rights. The court decided the ban applied to any property that started the practice after 2003, when the city began to enforce the law in earnest.

Neighbors admitted renters in the Dufala house do not make noise or throw loud parties on the suburban street, but its still an element they donít want in the neighborhood.

"Itís been disruptive to the entire area," said neighbor Richard Stachnik. "Itís a revolving door type atmosphere with people who treat it like a hotel or a motel."

Dufala said many of the new faces seen staying on various weekends are friends, family and business associates, not paying customers.

Hard to believe, said Teunis. And even advertising a home as a short-term rental is against city law and subject to the fines, evidence the city has spent months collecting on the Dufala house and others.

"A lot of these folks, they like to play games," Teunis said. "They come into compliance and within two weeks they are not compliant any longer. They are just hoping (Phillips) will not go onto the website."

Contact Tracey McManus at [email protected] or (727) 445-4151. Follow @TroMcManus.