Texas couple suing Fayetteville in federal court over ‘unconstitutional’ short-term rental rules

FAYETTEVILLE, Ark. (KNWA/KFTA) — A Texas couple is suing the city of Fayetteville claiming the city’s short-term rental rules are “unconstitutional,” according to court documents.

Shelley and Stephen Hause, from Round Rock, Texas, own a home in Fayetteville and intend to use it as a short-term rental. Their daughter is attending the University of Arkansas and has health issues that require frequent care.

The couple said they have to make frequent trips from their Texas home to Fayetteville and purchasing a home in Fayetteville would best meet their needs.

According to the lawsuit filed in the U.S. District Court for the Western District of Arkansas in Fayetteville on July 12, the couple said they wanted to lease the home to guests for fewer than 30 days at a time to offset the cost of their second home.

The city filed a motion to dismiss the case on July 17, claiming the couple had already filed the suit in Washington County Circuit Court.

Regulations for short-term rentals in Fayetteville were first adopted in 2021.

The city has two short-term rental types. Type 1 says for the residence to remain a full-time residence, the occupant or owner must occupy it for at least nine months out of the year and have proof of Homestead Tax Credit or long-term lease agreement. There is typically a room in the residence that can be rented out.

Type 2 is a short-term rental that is not occupied by a permanent resident.

“The owner lists this property full-time as a short-term rental and has no intention of having permanent residents living in the property,” the city of Fayetteville’s website said.

Type 2 rental owners have to take the extra step of getting a conditional use permit from the Fayetteville Planning Commission.

In July 2023, the Fayetteville City Council adopted an amendment regulating short-term rental operations in the city by restricting the number of Type 2 short-term rentals to 475. By December , the city hit that cap.

The couple claims they checked to see if the city had hit its cap before applying for a permit with the planning commission.

The commission denied their permit application in October saying there were already too many short-term rentals in their neighborhood.

The lawsuit said at least three city council members were needed to sponsor an appeal to the commission’s denial, but all declined to do so.

The couple claims that the city’s ordinance is “unconstitutionally vague” and said the planning commission can factor in the concentration of nearby short-term rentals when considering an application but does not define the density limitations or what the city considers “nearby.”

The lawsuit also says the ordinance gave different privileges to residents compared to nonresidents, violating a clause in the constitution.

The lawsuit says the city’s short-term rental regulations violate the Fourth Amendment, which protects people from unreasonable search and seizure by the government.

“The [short-term rental] ordinance requires owners of short-term rentals to maintain a registry of
guests who have stayed at the property and hand over such registry ‘to the city upon request,'” the lawsuit said.

It claims the ordinance also discriminates against short-time renters by restricting their right to travel, and the couple has the right to invite a stranger into their home.

The case was first filed in Washington County District Court in December 2023 and the city argued it should have been dismissed because the couple filed the complaint 44 days after the commission’s denial instead of the required 30 days. The decision is still pending in that court.

The city’s motion in federal court said the couple filing the case in both state and federal court is placing a burden on the city and judicial system and could raise the possibility of conflicting rulings between the courts.

The city also said the couple is asking the federal court to appeal the planning commission’s decision and says that is a job for the Washington County Circuit Court.

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