8/28/2017 1:32 PM Velva L. Price District Clerk Travis ... · INDEX OF AUTHORITIES ... Griswold v. Connecticut, 381 U.S. 479 (1965) ... Tex. State Employees Union v. Tex. Dept. of

CAUSE NO. D-1-GN-16-002620 AHMAD ZAATARI, MARWA § IN THE DISTTRICT COURT ZAATARI, JENNIFER GIBSON § HEBERT, JOSEPH “MIKE” HEBERT, § LINDSAY REDWINE, RAS REDWINE § VI, AND TIM KLITCH § Plaintiffs, § § V. § TRAVIS COUNTY, TEXAS § CITY OF AUSTIN, TEXAS AND § STEVE ADLER, MAYOR § OF THE CITY OF AUSTIN § Defendants. § 53RD JUDICIAL DISTRICT

PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT

8/28/2017 1:32 PM Velva L. Price District Clerk Travis County

D-1-GN-16-002620Terri Juarez

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TABLE OF CONTENTS

INDEX OF AUTHORITIES............................................................................................................v I. INTRODUCTION ...............................................................................................................1 II. STATEMENT OF FACTS ..................................................................................................2

A. BACKGROUND .................................................................................................................2

B. THE STR ORDINANCE RESTRICTS PLAINTIFFS’ RIGHTS .......................................4

1. The Challenged Provisions ............................................................................................5 2. Enforcement ...................................................................................................................7

C. THE STR ORDINANCE INJURES PLAINTIFFS .............................................................8

1. Ahmad and Marwa Zaatari ............................................................................................8 2. Jennifer Gibson Hebert and Mike Hebert ......................................................................9 3. Lindsay and Ras Redwine ............................................................................................11 4. Tim Klitch ....................................................................................................................12

D. STRs DO NOT GENERATE SUFFICIENT PUBLIC DISTURBANCES TO JUSTIFY THE STR ORDINANCE ...........................................................................14

1. 311 Complaints ............................................................................................................15 2. Staff Reports ................................................................................................................18 3. Transcripts....................................................................................................................20 4. Less Burdensome Alternatives ....................................................................................21

III. STANDARD FOR REVIEW ............................................................................................23

IV. SUMMARY OF THE ARGUMENT ................................................................................23

V. ARGUMENT AND AUTHORITIES ................................................................................27

A. PLAINTIFFS HAVE STANDING TO CHALLENGE THE STR ORDINANCE ...........27 1. Plaintiffs have standing to challenge the ban on Type 2 STRs ....................................28

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2. Plaintiffs have standing to challenge the use, presence, assembly, and search requirements placed on all STRs ......................................................................29

3. Plaintiffs have standing to challenge the STR Ordinance’s restrictions

on STR Tenants/guests ................................................................................................29 4. The City may not evade this Court’s jurisdiction by claiming that it does

not enforce the STR Ordinance ....................................................................................31

B. THE STR ORDINANCE RESTRICTS PLAINTIFFS’ LIBERTY IN VIOLATION OF THE TEXAS CONSTITUTION ..........................................................33

1. The Freedom of Assembly ...........................................................................................34 2. The Right to Privacy ....................................................................................................35 3. The Freedom of Movement .........................................................................................37

4. Private Property ...........................................................................................................39

a. Plaintiffs have a right to use their homes as STRs.................................................39 b. The STR Ordinance infringes on Plaintiffs property rights ...................................41

C. THE STR ORDINANCE DOES NOT ADVANCE A COMPELLING OR

EVEN LEGITIMATE GOVERNMENT INTEREST .......................................................43 1. Under both strict scrutiny and the Texas version of rational-basis

scrutiny for Due Course of Law claims, courts must examine the actual evidence of public harm that the Ordinance targets .....................................................44

2. There is no evidence that STRs are harmful to the public ...........................................45 3. Neighborhood opposition to STRs is not sufficient to establish a

legitimate government interest absent evidence of actual harm ..................................46 4. The City’s refusal to enforce nuisance based restrictions against STRs

shows that alleged nuisances caused by STRs do not rise to the level of a legitimate government interest ..................................................................................48

5. The STR Ordinance does not target or reduce public disturbances .............................49

D. THE STR ORDINANCE FAILS STRICT SCRUTINY BECAUSE THERE ARE LESS BURDENSOME ALTERNATIVES TO ADDRESS ALLEGED PROBLEMS CAUSED BY STRs..................................................................50

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E. THE STR ORDINANCE FAILS UNDER TEXAS’ HEIGHTENED FORM OF RATIONAL BASIS SCRUTINY BECAUSE IT IS UNDULY HARSH AND BURDENSOME GIVEN THE LACK OF EVIDENCE THAT STRs ARE HARMFUL ...............................................................................................................51

F. THE STR ORDINANCE VIOLATES THE EQUAL PROTECTION CLAUSE OF THE TEXAS CONSTITUTION .................................................................55 1. The Texas Equal Protection clause requires, at a minimum, that unequal

treatment be based on a real and substantial difference having relationship to the subject of the particular enactment ................................................55

2. There is no real and substantial difference between Type 1 and Type 2

STRs that can justify the prohibition of Type 2 STRs .................................................56 3. There is no real and substantial difference between STR tenants and

tenants of long-term residential housing that can justify the restrictions placed on STR tenants by Sections 25-2-795 and 1301 of the STR Ordinance .....................................................................................................................58

G. SECTION 1301 OF THE STR ORDINANCE VIOLATES ARTICLE 1

SECTION 9 OF THE TEXAS CONSTITUTION BY MANDATING THAT PLAINTIFFS SUBMIT TO UNREASONABLE SEARCHES.............................61

VI. CONCLUSION ..................................................................................................................65 CERTIFICATE OF SERVICE ......................................................................................................67

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INDEX OF AUTHORITIES

CASES: Adust Video v. Nueces County, 996 S.W.2d 245 (Tex. App.—Corpus Christi 1999, no pet.) ............................................63 Aitch v. State, 879 S.W.2d 167 (Tex. App.—Houston [14th Dist.] 1994 pet’n ref’d) ....................61 Barr v. City of Sinton, 295 S.W.3d 287 (Tex. 2009) ...............................................................45, 56 Barrows v. Jackson, 346 U.S. 249 (1953) .....................................................................................30 Benner v. Tribbitt, 57 A.2d 346 (1948) .........................................................................................48 Brown v. Entm’t Merchs. Ass’n, 131 S.Ct. 2729 (2011) ................................................................50 Brown v. Johnson, 12 S.W.2d 543 (Tex. 1929) .............................................................................43 Brown v. Todd, 53 S.W.3d (Tex. 2001) .........................................................................................27 Bykofsky v. Borough of Middletown, 97 S.Ct. 394 (1976) .......................................................37, 38 Cal. Democratic Party v. Jones, 530 U.S. 567 (2000) ..................................................................50 Carey v. Population Services Int’l, 431 U.S. 678 (1977) ..............................................................30 Casarez v. State, 913 S.W.2d 468 (Tex. Crim. App. 1994), on reh’g (Dec. 13, 1995) .................37 Church of the Lukumi Babalu Aye, Inc. v. Hialeah, 508 U.S. 520 (1993) ....................................50 City of Los Angeles, Calif. v. Patel, 135 S.Ct. 2443 (2015) ....................................................63, 64 City of Pharr v. Tippitt, 616 S.W.2d 173 (Tex. 1981) .............................................................33, 44 City of Sherman v. Simms, 143 Tex. 115, 183 S.W.2d 415 (1944) ...............................................43 City of W. U. Place v. Ellis, 134 S.W.2d 1038 (Tex. 1940) ....................................................33, 52 Clayton v. Richards, 47 S.W.3d 149 (Tex. App.—Texarkana 2001, pet. denied) ........................35 Coates v. City of Cincinnati, 402 U.S. 611 (1971) ........................................................................34 Collins v. Collins, 904 S.W.2d 792 (Tex. App.—Hous. [1st Dist.] 1995, writ denied) .................35 Craig v. Boren, 429 U.S. 190 (1976) .......................................................................................30, 31

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Crawford Chevrolet, Inc. v. McLarty, 519 S.W.2d 656 (Tex. Civ. App. 1975) ......................55, 56 Crossman v. City of Galveston, 112 Tex. 303, 247 S.W. 810 (1923) ......................................47, 58 De Leon v. Creely, 972 S.W.2d 808 (Tex. App.—Corpus 1998) ..................................................42 Eggemeyer v Eggemeyer, 554 S.W.2d 137 (Tex. 1977) ................................................................40 Eubank v. City of Richmond, 226 U.S. 137, 33 S.Ct. 76, 57 L.Ed. 156 (1912) .............................48 French v. Chevron U.S.A. Inc., 896 S.W.2d 795 (Tex. 1995) .......................................................39 Gangemi v. Zoning Bd. of Appeals of Town of Fairfield, 763 A.2d 1011 (2001) ........................................................................................................39 Geissler v. Coussoulis, 424 S.W.2d 709 (Tex. Civ. App.—San Antonio 1967m writ ref’d n.r.e.) ...................................................34 Griffin v. California, 380 U.S. 609 (1965) ....................................................................................65 Griswold v. Connecticut, 381 U.S. 479 (1965) ........................................................................35, 36 Harris Cty. Flood Control Dist. V. Kerr, 499 S.W.3d 793 (Tex. 2016), reh’g denied (Oct. 21, 2016) ..............................................................................................44 Heitman v. State, 815 S.W.2d 681 (Tex. Crim. App. 1991) ..........................................................61 Hereford v. State, 339 S.W.3d 111 (Tex. Crim. App. 2011) .............................................24, 62, 63 Humble Oil & Ref. Co. v. City of Georgetown, 428 S.W.2d 405 (Tex. Civ. App.—Austin 1968) ..............................................................44 Hunt v. City of San Antonio, 462 S.W.2d 536 (Tex. 1971) ...............................................23, 56, 57 Johnson v. State, 912 S.W.2d 227 (Tex. Crim, App. 1995) ..........................................................61 Lawrence v. Tex., 539 U.S. 558 (2003) .........................................................................................35 Lefkowitz v. Cunningham, 431 U.S. 801 (1977) ............................................................................65 Lombardo v. City of Dallas, 124 Tex. 1 (1934) .......................................................................47, 63 Lowden v. Bosley, 395 Md. 58 A.2d 261 (2006) .......................................................................4, 43 Mayhew v. Town of Sunnyvale, 964 S.W.2d 922 (Tex. 1998) .................................................23, 44

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Mugler v. Kansas, 123 U.S. 623 (1887) ........................................................................................66 Mullin v. Silvercreek Condominium, Owner’s Ass’n, 195 S.W.3d 484 (Mo. Ct. App. 2006) ............................................................................4, 43 Nelson v. Clements, 831 S.W.2d 587 (Tex. App. Austin—1992), writ denied (Oct. 21, 1992) ................................................................................................23 Ocean Cty. Bd. of Realtors v. Twp. of Long Beach, 599 A.2d 1309 (1991) ..................................59 Olvera v. State, 806 S.W.2d 546 (Tex. Crim. App. 1991) .............................................................34 Patel v. Texas Dept. of Licensing and Reg., 469 S.W.3d 69 (Tex. 2015) ........... 23, 24, 28, passim Pierce v. Society of Sisters, 268 U.S. 510 (1925) ..........................................................................30 Plyler v. Doe, 457 U.S. 202, 102 S.Ct. 2382, 72 L.Ed.2d 786 (1982) ...........................................55 Richards v. League of United Latin Am. Citizens (LULAC), 868 S.W.3d 306 (Tex. 1993) ..................................................................................24, 55, 56 Robinson v. Crown Cork & Seal Co., 335 S.W.3d 126 (Tex. 2010) .......................................23, 24 Ross v. City of Yorba Linda, 1 Cal.App.4th 954 (Cal. App. 1991) .................................................48 R.R. Comm’n of Texas v. Miller, 434 S.W.2d 670 (Tex. 1968) ...............................................55, 56 R.R. Comm’n of Texas v. Waste Mgmt. of Texas, Inc., 880 S.W.2d 835 (Tex. App. 1994) .....................................................................................39 Satterfield v. Crown Cork & Seal Co., 268 S.W.3d 190 (Tex. App.—Austin 2008) ............................................ 33, 44, 52, passim Sheffield Dev. Co., Inc. v. City of Glenn Heights, 140 S.W.3d 660 (Tex. 2004) ...........................44 Simmons v. United States, 390 U.S. 377 (1968) ............................................................................65 Slaby v. Mountain River Estates Residential Ass’n, Inc., 100 So.3d 569 (Ala. Civ. App. 2012) ......................................................................4, 43, 60 Southampton Civic Club v. Couch, 322 S.W.2d 516 (Tex. 1958) .................................................59 Spann v. City of Dallas, 111 Tex. 350, 235 S.W. 513 (1921) ............................. 39, 47, 58, passim State v. Morales, 826 S.W.2d 201 (Tex. App. Austin 1992), writ granted (Sept. 9, 1992), rev’d on other grounds, 869 S.W.2d 941 (Tex. 1994) .......................................................49

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State v. Steelman, 16 S.W.3d 483 (Tex. App. 2000), aff’d, 93 S.W.3d 102 (Tex. Crim. App. 2002) .............................................................61, 62 State of Washington ex rel. Seattle Title Trust Co. v. Roberge, 278 U.S. 116 (1928) .....................................................................................................39, 47 Sullivan v. Little Hunting Park, Inc., 396 U.S. 229 (1969) ...........................................................30 Texas Rice Land Partners, Ltd. v. Denbury Green Pipeline-Texas, LLC, 363 S.W.3d 192 (Tex. 2012) ........................................................................................40, 44 Tex. State Employees Union v. Tex. Dept. of Mental Health & Mental Retardation, 746 S.W.2d 203 (Tex. 1987) ..................................................................................33, 35, 37 Tex. Workers’ Comp. Comm’n v. Garcia, 893 S.W.2d 504 (Tex. 1995)............. 27, 28, 29, passim Texas Workers’ Compen. Commn. v. Patient Advocates of Texas, 136 S.W.3d 643 (Tex. 2004) ........................................................................................33, 37 Turner Broad Sys., Inc. v. FCC, 512 U.S. 622 (1994) ...................................................................50 United Prop. Owners Ass’n of Belmar v. Borough of Belmar, 447 A.2d 933 (App. Div. 1982) .........................................................................................59 United States v. Stevens, 559 U.S. 460 (2010) ...................................................................31, 32, 49 Vale v. Louisiana, 399 U.S. 30, 90 S.Ct. 1969, 26 L.Ed.2d 409 (1970) ........................................62 Vernonia Sch. Dist. V. Acton, 515 U.S. 646 (1995) .......................................................................37 Vill. of Tiki Island v. Ronquille, 463 S.W.3d 562 (Tex. App. 2015) .......................................28, 40 Zgabay v. NBRC Prop. Owners Assn., 03-14-00660-CV, 2015 WL 5097116 (Tex. App.—Austin, Aug. 28, 2015) ..............................................4, 43 OTHER AUTHORITIES: Tex. R. Civ. P. 166a(c) ...........................................................................................................................1, 23 Tex. Const. Art. I, § 1 ............................................................................................................................23 Art. I, § 9 ......................................................................................................................61, 65

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TO THE HONORABLE JUDGE OF SAID COURT

Plaintiffs file this motion for summary judgment pursuant to Tex. R. Civ. P. 166a(c)

seeking a declaration that seven discrete provisions of the City of Austin’s Short-term Rental

Ordinance 20160223-A.1 (“the STR Ordinance”) violate Plaintiffs’ rights under the Texas

Constitution to privacy, assembly, equal protection, movement, due course of law, and the right to

be secure from unreasonable searches and seizures. Plaintiffs also request that this Court enter an

order permanently enjoining Defendants the City of Austin and Mayor Steve Adler in his official

capacity from enforcing these challenged provisions of the STR Ordinance.

I. INTRODUCTION

When local laws restrict private property rights or other individual freedoms, the Texas

Constitution requires that, at a minimum, those restrictions be rationally related to a legitimate

government interest and not unduly harsh or burdensome in proportion to the government interest

at stake. Restrictions on the right to privacy, the freedom of assembly, or the freedom of movement

receive strict scrutiny protections. The City of Austin’s STR Ordinance cannot survive under either

standard.

In 2016, the City outlawed a large percentage of short-term rentals (STRs) in the city and

placed unreasonable restrictions on those that remain. Among other things, these restrictions place

arbitrary caps on the number of people that can be present at an STR, require that STR guests be

asleep by 10pm, and demand that STR guests1 and owners submit to warrantless searches of the

home to confirm compliance.

1 Plaintiffs use the term “guests” interchangeably with “tenants” in this brief to describe STR lessees as well as their guests. Plaintiffs do so to be consistent with the STR Ordinance which uses the term “guests” to describe individuals staying at an STR. However, Plaintiffs maintain that the relationship between an STR owner and an STR lessee is more akin to a landlord-tenant relationship. The sole distinction between a long-term rental and an STR is length of lease.

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Renting a home for 29 days, as opposed to 30, is not the type of nuisance activity that

justifies such severe burdens on fundamental rights. Indeed, the City’s data shows that STRs are

less likely than their long-term neighbors to generate public disturbance complaints. Moreover,

any alleged problems caused by individual STR properties could be solved through the

enforcement of existing noise, trash, and public nuisance ordinances. The City need not, and

cannot, arbitrarily discriminate against STR owners and guests in order to regulate alleged

nuisance behavior in neighborhoods when there is no evidence that STR owners and guests cause

such problems in greater numbers than their neighbors. Accordingly, the City of Austin’s STR

Ordinance is unconstitutional as a matter of law, and summary judgment in this case is proper.

II. STATEMENT OF FACTS A. BACKGROUND

Renting out one’s home as an STR (a home rented for less than thirty days) has been a

common way for Austinites to utilize their property since at least the 1940’s.2 For the vast majority

of Austin’s history, STRs were treated just like other residential properties—they were subject to

traditional noise, trash, and parking regulations, but otherwise left alone.3 Indeed, the practice was

even encouraged by the City. The City advertised that “for Austin residents seeking a place to stay

for a short period of time renting a house has become an increasingly popular option. These ‘short-

term rentals,’ sometimes called vacation rentals, or STRs, offer flexibility, a more authentic Austin

experience for visitors, and can provide a source of income for the property owner.”4

2 Ex. 2, Declaration of Rachel Nation; COA 006647 (City Council testimony that family had participated in STRs in Austin since at least 1942.) 3 In 2012, the City passed an ordinance (the 2012 Ordinance) requiring that all STRs register for a license and pay the Hotel Occupancy Tax. The driving purpose of this ordinance was to collect additional tax revenue. Ex. 3, Deposition of Marcus Elliot at 57:11-22. But, for the most part, the STRs remained unregulated. 4 Ex. 4, City of Austin Short-term Rental Licensing Program Flyer, available at http://www.austintexas.gov/sites/default/files/Code_Compliance/STR_Flyer.pdf; verified by the City’s Supplemental Response to Intervenor’s RFA no 1.

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In reliance on this long history of acceptance and encouragement, hundreds of Austinites,

including Plaintiffs, invested in using their homes as licensed short term rentals. For families like

Plaintiffs Ahmad and Marwa Zaatari, the extra income from their STR provided a lifeline to keep

their home when Mr. Zaatari was temporarily out of work.5 Later, it provided an initial income

stream that allowed Mr. Zaatari to follow his dream and build an education technology startup

company.6

For individuals like Plaintiff Tim Klitch, the extra income from using his home as an STR

will hopefully make it possible for him to offset the rising cost of living in Austin and retire in the

home where he raised his children.7 For Plaintiffs Lindsay and Ras Redwine, owning and

managing STRs has become a primary source of income.8

But the benefits of STRs aren’t limited to STR owners. For Plaintiff Jennifer Gibson

Hebert—who was raised in Austin, but now lives in California 60% of the year—STRs provide a

way to feel connected to the community and have an accommodating place to stay when she comes

to Austin on business.9

Despite this long history of public benefits and the City’s prior endorsement of the practice,

the City decided in 2016 to change course and eliminate the rights of hundreds of STR owners and

thousands of STR guests. Relying on unconfirmed anecdotal reports of unlicensed STRs operating

as “party houses,” the City declared that licensed STRs were incompatible with residential

neighborhoods and had to be strictly regulated and, in the case of non-homesteaded STRs,

abolished. 10

5 Ex. 5, Deposition of Ahmad Zaatari at 21:22-25; 22:1-6. 6 Id. at 102:12-25; 103:1-10. 7 Ex. 6, Deposition of Tim Klitch at 17:4–14. 8 Ex. 7, Deposition of Lindsay Redwine at 11:23–12:19; 24:14–25. 9 Ex. 8, Transcript of Hearing on Temporary Injunction 18:16-21. 10 Ex. 1, STR Ordinance §§ 25-2-788-790, 795, 950.

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Before acting, the City conducted three studies to justify its forgone conclusion to abolish

STRs. As explained in section II (D) (2) below, each of these studies refuted the notion that STRs

were causing any problem in neighborhoods. Indeed, the City’s own data shows that STRs

generate fewer complaints than long-term residential uses.11 Moreover, in the four years preceding

the STR Ordinance, the City did not issue a single citation against a licensed STR owner or guest

for violating the City’s noise, trash, or parking ordinances.12

Undeterred by this overwhelming evidence that licensed STRs were not generating

significant neighborhood disturbances, the City adopted one of the most draconian STR

regulations in the country on February 23, 2016.13

B. THE STR ORDINANCE RESTRICTS PLAINTIFFS’ RIGHTS

An STR is as a residential property that is rented for a period of less than thirty consecutive

days.14 The City Code is unequivocal that STRs are a residential, as opposed to commercial use.15

11 Ex. 9, COA 17382-17390; COA 011395 (City Staff testifying that their studies show that “Short-term rental properties have significantly fewer 311 calls and significantly fewer 911 calls than other single family properties.”) 12 Ex. 10, See City’s Response to Intervenor’s Second Request for Production No. 25 (stating COA 17072-17368 were responsive to Intervenor’s request for “All documents related to the citations, if any, that were given to STR Type 2 properties for each of the following calendar years: 2012, 2013, 2014, 2015 and 2016.”; COA 17072-17368 contain zero citations for noise, parking, or trash; See also Ex. 11, City’s Supplemental Response to Plaintiffs’ Request for Production No. 73 (stating that COA 3531-5320 were responsive to Plaintiffs’ request for “all citations and notices of violation issued by the city Austin against short-term rental operators or guests.”). Those pages contain 7 notices of violation for alleged over-occupancy (COA 3770, 3725, 3773, 3776). Those pages also contain 2 notices of violation failure to remove trash receptacles from the curb in a timely manner (COA 3693, 4872), and one notice of violation for debris in the yard. COA 3909. There are no citations for noise, trash, parking, or over occupancy. There are no notices of violation for noise or parking. 13 See, STR Ordinance, attached as Ex. 1. 14 Ex. 3, Deposition of Marcus Elliot, 9:23-25, 10:1. Marcus Elliot was designated by the City to testify regarding the interpretation and enforcement of the STR Ordinance. 15 The City Code lists STRs as a residential use (Austin City Code § 25-2-3 (B)(10)) and excludes STRs from the list of commercial uses. See Austin City Code §25-2-4 (B). Moreover, the Austin Court of Appeals has found STRs to be consistent with the term “residential use.” Zgabay v. NBRC Prop. Owners Assn., 03-14- 00660-CV, 2015 WL 5097116, at *3 (Tex. App.—Austin Aug. 28, 2015). This is in accord with numerous other jurisdictions. See, e.g., Slaby v. Mountain River Estates Residential Ass'n, Inc., 100 So. 3d 569, 578–79 (Ala. Civ. App. 2012); Lowden v. Bosley, 395 Md. 58, 909 A.2d 261 (2006); Mullin v. Silvercreek Condominium, Owner's Ass'n, 195 S.W.3d 484 (Mo.Ct.App.2006).

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An STR is defined solely by the length of the lease, not the nature of activities that occur there,

the size of the home, or its history. 16

The City breaks STRs down into 3 main categories; Type 1 (primary)17, Type 2, and Type

3.18 A Type 1 STR is a single family residential home rented for less than thirty consecutive days

that the owner claims as a homestead for tax purposes.19 A Type 2 STR is a single family

residential home rented for less than thirty consecutive days that the owner does not claim as a

homestead for tax purposes.20 And a Type 3 STR is a multifamily residential home rented for less

than thirty consecutive days. 21

1. The Challenged Provisions

Section 25-2-791 (G) of the STR Ordinance prohibits all new Type 2 licenses in residential

areas after November 12, 2015. Existing Type 2 licenses are grandfathered until April 1, 2022.22

After April 1, 2022, Section 25-2-950 requires that all Type 2 STRs in residential areas discontinue

use. This prohibition is based solely on the fact that the owner does not claim the property as a

homestead.23 The prohibition is not limited to properties with a history of code violations,

properties of a certain size, or properties within close proximity to neighbors.24

In addition to this prohibition on Type 2 STRs, the STR Ordinance imposes a host of

restrictions on all STRs. For example, the STR Ordinance prohibits all STR guests and owners

from the following:

16 Ex. 3, Deposition of Marcus Elliot, 9:23-25, 10:1. 17 Hereafter referred to as Type 1. 18 Ex. 3, Deposition of Marcus Elliot, 10: 2-9. 19 Ex. 1, STR Ordinance § 25-2-788; Ex. 3, Deposition of Marcus Elliot, 11:8-11. 20 Ex. 1, STR Ordinance § 25-2- 789; Ex. 3, Deposition of Marcus Elliot, 11:17-25, 12:1-6. 21 Ex. 1, STR Ordinance § 25-2-790. 22 Ex. 1, STR Ordinance § 25-2-950. 23 Ex. 3, Deposition of Marcus Elliot at 11:8-11. 24 Ex. 3, Deposition of Marcus Elliot at 13:13-23.

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1) “Assembling” outside with a group of more than six adults between 7:00 a.m. and 10:00

p.m.; 25

2) “Assembling” indoors or outdoors with a group of any size for a purpose “other than

sleeping” between 10:00 p.m. and 7:00 a.m.; 26

3) “Use” by more than ten related adults or six unrelated adults at any time — regardless

of the square footage or capacity of the home; 27

4) Presence of more than two adults per bedroom plus two additional adults between 10:00

p.m. and 7:00 p.m.28

These restrictions do not turn on noise, trash, parking, or other public disturbances.29 Mere

presence on the property during the prohibited time in the prohibited numbers is enough.30 Indeed,

Mayor Adler made this point clear when the Ordinance was adopted. According to Mayor Adler,

the caps aren’t just targeted at raging parties, they apply equally to “a family… that is sitting around

the pool in a very quiet way in the backyard and not bothering anybody.”31 It doesn’t matter “how

quiet they are.”32 If “you’re renting an str in this community you’re renting it so that people can

sleep.”33 34

Violations of the STR Ordinance are punishable by a $2,000 fine per violation and the

potential loss of the owner’s STR license.35

25 Ex. 1, STR Ordinance § 25-2-795 (E). 26 Ex. 1, STR Ordinance § 25-2-795 (D); Ex. 3, Deposition of Marcus Elliot, 26:2 - 29:5. 27 Ex. 1, STR Ordinance § 25-2-795 (G). 28 Ex. 1, STR Ordinance § 25-2-795 (B). 29 Ex. 3, Deposition of Marcus Elliot, 15:20-25; 16:1-18; 24:21-25; 28:6-25; 29:1-5. 30 Id. 31 Ex. 12, COA 001809-1811. 32 Id. 33 Id. 34 See also Ex. 12, COA 001812 Mayor Adler describing the STR Ordinance before its adoption: “No gatherings of more than 10 of any kind at any time. Six people—gathering of six people outside at any time. No gatherings of anybody, anybody, two people, three people, after10:00P.M. …no people on the property in excess of two per bedroom plus two.” 35 Ex. 1, Austin City Code §25-1-462; STR Ordinance § 1307.

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To determine compliance with the above mentioned restrictions, Section 1301 of the STR

Ordinance provides that the owner or person in charge of the home at the time “shall give code

officials free access to the dwelling…at all reasonable times for the purpose of inspection.” This

inspection need not be justified by a warrant, or based on probable cause or exigent

circumstances.36 The inspection is also not limited in scope. The officer may search any part of the

house. 37

Failure to allow the inspection can result in civil and criminal penalties, including the loss

of the right to use one’s home as an STR.38 None of the above mentioned restrictions or penalties

apply to residential dwellings occupied for longer than 30 consecutive days.39

2. Enforcement

The STR Ordinance enforces its mandates in two ways. First, any licensee or guest at an

STR that uses the home in way that violates the STR Ordinance is subject to civil and criminal

penalties, up to and including a $2,000 fine per violation.40 41

Second, the Ordinance coerces STR owners to monitor their guests by punishing owners

for any violation caused by the guest.42 If STR guests violate the city code, the STR owner can

lose her license and is subject to additional civil and criminal penalties.43 These penalties apply

36 Ex. 3, Deposition of Marcus Elliot at 35:12-22. 37 Ex. 3, Deposition of Marcus Elliot 35:23-25; 36:1. 38 Ex. 3, Deposition of Marcus Elliot at 33:6-18; 35:1-10; STR Ordinance §§ 1301, 1307; Austin City Code §25-1-462. 39 Ex. 3, Deposition of Marcus Elliot at 29:14-25; 30:1-23. 40 Ex. 1, Austin City Code § 25-1-462 41 The STR Ordinance’s penalties apply to STR tenants/guests on their face. See, e.g., Ex. 1, Austin City Code § 25-2-795 (D) (“a licensee or guest may not use or allow another to use a short term rental…”); Austin City Code § 25-2-795 (E) (“a licensee or guest may not use or allow another to use a short term rental…”). Austin City Code § 25-1-462 provides that any “person who violates” the STR Ordinance is subject to penalties. The STR Ordinance and its penalties apply to STR owners and guests. Deposition of Marcus Elliot at 39: 15-25; 40: 1-25; Deposition of Cora Wright 13:5-8. Cora Wright was designated by the City to testify regarding chain of command and how the city determines the enforcement of the STR Ordinance. 42 Ex. 3, Deposition of Marcus Elliot at 43:21-24; Ex. 1, STR Ordinance § 1307; Austin City Code § 25-1-462. 43 Ex. 3, Deposition of Marcus Elliot at 43:21-24; Ex. 1, STR Ordinance §1307; Austin City Code § 25-1-462.

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even if the STR owner clearly indicates to the guest that they must comply with all city

codes.44 Moreover, if a citation is entered against the property, the property owner bears the

burden of proving her innocence—i.e., that the violation did not occur.45 The City concedes that

an STR owner would have to constantly “monitor their property” to prevent violations that could

result in the loss of their license or the imposition civil and criminal penalties.46

C. THE STR ORDINANCE INJURES PLAINTIFFS

1. Ahmad and Marwa Zaatari

Plaintiffs Ahmad and Marwa Zaatari own and operate a licensed Type 2 STR located in

Austin, Texas.47 The Zaatari Property contains four bedrooms with an outside patio and grill area

large enough to comfortably accommodate 10 people. As of 2022, the STR Ordinance will make

it illegal for the Zaataris to continue to use their home as a Type 2 STR.48

The Zaataris originally purchased the property with intentions of living there as a family

with their young son.49 However in 2014, when Mr. Zaatari lost his job, the Zaataris elected to

use the home as an STR as a means to pay for the property and generate income while Mr. Zaatari

was looking for work.50 While the Zaataris occasionally live in the house, they do not claim it as

their homestead for tax purposes. Accordingly, they are not permitted to claim the property as a

Type 1 STR.51

44 Ex. 3, Deposition of Marcus Elliot at 43:21-25; 44:1-16. 45 Ex. 3, Deposition of Marcus Elliot at 24:11-20; 43:8-14. 46 Ex. 3, Deposition of Marcus Elliot at 44:17-24. 47 Ex. 5, Deposition of Ahmad Zaatari at 14:1-3. 48 Ex. 1, STR Ordinance § 25-2-950; Ex. 5, Deposition of Ahmad Zaatari at 39:1–8. 49 Id. at 21:13-21. 50 Id. at 21: 22-25; 22: 1-6. 51 Ex. 1, STR Ordinance § 25-2- 789; Ex. 3, Deposition of Marcus Elliot, 11:17-25, 12:1-6.

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Making the home desirable as an STR was not an easy process. The Zaataris spent

approximately $20,000 in cookware and furniture52 and approximately 500 hours of Mr. Zaatari’s

labor converting and updating the property for use as an STR.53

The Zaataris received a permit to use the home as a Type 2 rental in May of 2015. Since

that time, the home has generated as much as $2,000 more dollars a month than similarly situated

long-term rentals.54 This additional income has made it possible for Mr. Zaatari to fund a start-up

company specializing in education technology.55 Without the income from the STR, Mr. Zaatari

would have to abandon his dream and close his business.56

In the more than two-years that the Zaataris have used the property as an STR, they have

never received a complaint.57

2. Jennifer Gibson Hebert and Mike Hebert

Jennifer and Mike Hebert own and operate a licensed Type 2 STR in Austin, Texas. The

home has three bedrooms, three bathrooms, and comfortably sleeps eight people.58 As of April 1,

2022, the STR ordinance will make it illegal for the Heberts to continue to use their home as a

Type 2 STR.59

The Heberts spent $60,000 - $70,00060 renovating the property, installing a security

system, and furnishing the home in order to make it more appealing as an STR.61 Among other

things, the Heberts built an outdoor seating area, fences, a screened porch, and an outdoor barbeque

52 Ex. 5, Deposition of Ahmad Zaatari at 100:7-25 53 Id. at 101: 5-25; 102: 1-5. 54 Id. at 99: 4-17. 55 Id. at 102:12-25, 103: 1-10. 56 Id. at 102:12-25; 103:1-10. 57 Ex. 5, Ahmad Zaatari Dep. 81:23–82:21, 88:22–89:1; Ex. 14, Marwa Zaatari Dep. 74:4–7 (Ms. Zaatari answering that she was not aware of any complaints from her neighbors regarding her and Mr. Zaatari’s STR). 58 Ex. 15, Deposition of Jennifer Gibson Hebert at 33:1-5; 35:1-11. 59 Ex. 1, STR Ordinance § 25-2-950. 60 Ex. 15, Deposition of Jennifer Gibson Hebert at 20:11-16. 61 Id. at 17:14-21.

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area with built-in grill.62 The Heberts would not have made these modifications if they did not

believe they could use the home as an STR. The home is not financially viable for the Heberts as

a long term rental.63

Owning a Type 2 STR is a dual benefit for the Heberts.64 First, it provides additional

revenue allowing the Heberts to cover rising property taxes, maintenance costs, and the

outstanding mortgage on the home while generating a modest profit.65

Second, using her home as an STR as opposed to a long-term rental provides Mrs. Hebert

with a place to stay for significant portions of the year when she is in Austin on business.66 Mrs.

Hebert is a native Austinite and local business owner, but she currently lives in California with her

husband.67 The demands of her business require that she spend approximately forty percent of the

year in Austin.68 Because her home is not always booked as an STR, she is often able to stay in

her own home while she is in town. If Mrs. Hebert were forced to rent to long-term tenants, the

home would not be available for her business trips and she would likely stay at a hotel, a costly

option that she does not prefer. 69

On occasions when Mrs. Hebert’s home is currently unavailable, she often stays in other

STRs within the city of Austin as a way to feel connected to the community and have an

accommodating place to stay when she comes to Austin on business.70 As an STR tenant/guest,

62 Id. 19:7-18 63 Id. at 68: 9-13(“Q: When you say it wasn't covering the costs, what costs do you mean? A: Well, we were renting it out around $2,500, and our mortgage was around 31- to $3,300, plus our taxes have increased every year significantly.”) 64 Id. at 68: 3-8 (“Q: And why did -- can you tell me why you decided to switch from long-term rental to short-term rental? A: It wasn't covering the costs, and we had the issue still of when I didn't have place to stay, and so this was a solution to that problem.”) 65 Id. at 27: 1-7; 68:9-13. 66 Id. at 68: 3-8; 67 Id at 26: 3-10. 68 Id at 26: 3-10; 65: 7-14. 69 Id. at 65: 14-17 70 Ex. 8, Transcript of Hearing on Temporary Injunction 18:16-21.

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she is subject to all of the restrictions of STR Ordinance § 25-2-795 and the threat of warrantless

searches under STR Ordinance § 1301. These restrictions impact her ability to use the property

and to comfortably entertain family and friends when she is in town.

3. Lindsay and Ras Redwine

Lindsay and Ras Redwine own and operate a licensed Type 2 short term rental in Austin.71

The house has 6 bedrooms and 3 bathrooms.72 The home shares a yard with 2-bedroom backhouse

which the Redwines also rent out as a licensed Type 2 Short term rental.73 Lindsay Redwine also

acts as a property manager for other short term rentals in Austin.74 As of April 1, 2022, the STR

ordinance will make it illegal for the Redwines to continue to use their home as a Type 2 STR.75

The Redwines purchased the property in 2012 solely for the purpose of using the home as

a Type 2 short term rental.76 Had they not been able to use the property as a Type 2 STR, they

would not have bought it.77

At the time of purchase, the property had been on the market for over a year.78 The

previous owner said that it was difficult to move a property that size as a long-term residence,

because it is adjacent to a low-income housing project.79 The Redwines applied for and received a

license to use the property as a Type 2 STR in 2012.80

The Redwines spent more than $10,000 dollars and numerous hours renovating the

property to make it more attractive as a short term rental.81 These renovations included installing

71 Ex. 7, Deposition of Lindsay Redwine 13:15–24. 72 Ex. 7, Deposition of Lindsay Redwine 14:7-12. 73 Id. at 14: 13-14. 74 Ex. 7, Deposition of Lindsay Redwine at 11:23–12:19. 75 see id. at 28:3–6; Ex. 1, STR Ordinance § 25-2-950. 76 Ex. 7, Deposition of Lindsay Redwine at 14:22–25, 18:12–25. 77 Id. at 18:16–21; 30: 1-25. 78 Id. at 100: 7-25. 79 Id. at 17:5–9. 80 See id. at 18:22–19:2. 81 Ex. 16, Deposition of Ras Redwine VI at 14:13–15:25.

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a water heater and two air-conditioning units, remodeling the bathrooms, painting, landscaping,

and furnishing.82

If the Redwines are not able to use the home as a Type 2 STR they will have to sell the

property at a loss.83 Use of the property as a short term rental can generate over $32,000 in quarterly

revenue.84

4. Tim Klitch

Tim Klitch owns and operates a Type 1 short term rental in Austin.85 The home has eight

bedrooms, two driveways, and approximately 30,000 sq. ft. of yard space, including an outdoor

basketball court.86 As the STR Ordinance prohibits more than six adults from being outside the

STR, it is illegal for Mr. Klitch’s STR guests to play a game of basketball during the daytime, an

activity they could lawfully do so at a nearby City park.

Mr. Klitch and his wife purchased their home in 1993 and raised their family there.87

Mr. Klitch would like to retire in several years in the home where he raised his children, but the

increased cost of living and property taxes in Austin have forced him to consider other forms of

retirement income.88

Prior to 2016, Mr. Klitch researched utilizing his home on limited occasions as a Type

1 short term rental.89 Based on his research, Mr. Klitch invested between $500,000 and $700,000

dollars and between 500 and 1,000 hours extensively renovating the property to make it more

attractive to short term renters.90 These renovations include, among other things, landscaping,

82 Id.; Ex. 7, Deposition of Lindsay Redwine at 20:19–22:15. 83 See Ex. 7, Deposition of Lindsay Redwine at 30:8–25. 84 Id. at 24:14–25; 101: 1-18. 85 Ex. 6, Deposition of Tim Klitch at 17:4–18:9, Ex. 4. 86 Id. at 48:22, 58:11–4, 64:11–4, Ex. B at 2. 87 Id. at 14:11–3, 17:9–14. 88 Id. at 17:4–14. 89 Id. at 17:4–6. 90 Id. at 20:15–8, 65:16-22.

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exterior painting, interior remodeling, and new furnishings.91 Maintenance cost on the property are

now between $30,000 and $50,000 per year due to the upgrades made for use as an STR.92 Mr.

Klitch applied for a Type 1 license in October of 2015.93

The STR Ordinance has significant effects on Mr. Klitch’s ability to rent out his

property. Due to the size of the home, the number of bedrooms, the size of the yard, and available

parking, Mr. Klitch’s home can comfortably accommodate at least 20 guests without disturbing

neighbors.94 Indeed, Mr. Klitch often hosts gatherings of family and friends of at least 20 persons

when he is using the property as his residence.95 However, under the STR ordinance, his property

may not be used by more than 6 unrelated adults or ten adults at any time. Moreover, these guests

may not even lawfully go outside and utilize the basketball court in the day, because the STR limits

the home to six guests outdoors.96

These restrictions make it difficult to market a property of that size. Indeed, bookings made

in the four months prior to the adoption of the STR ordinance generated $50,000 dollars. In the

eleven months since the ordinance went into effect, Mr. Klitch has only been able to rent the home

out twice, for a grand total of $5,000 dollars.97 If these losses continue, Mr. Klitch will be forced

to consider selling the house where he raised his children.

91 Id. at 19:13–17. 92 Id at 27:8-13. 93 Id. at Ex. 4. 94 Id. at 48:7-25; 49: 1-8. 95 Id. at 63: 22-25; 64: 1-6. 96 Ex. 1, STR Ordinance § 25-2-795 (E). 97 Ex. 6, Deposition of Tim Klitch at 67:19–69:5.

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D. STRs DO NOT GENERATE SUFFICIENT PUBLIC DISTURBANCES TO JUSTIFY THE STR ORDINANCE

The City claims that the STR Ordinance is designed to address neighborhood disturbances

such as noise, trash, and parking.98 Yet over a four year period, the city issued zero citations

against licensed STRs or their guests within the entire City of Austin for violating city noise,

trash, or parking ordinances, and a mere 10 notices of violation for trash or occupancy related

violations.99

City of Austin Citations Issued Against STR Owners or Guests 2012-2015

Noise Parking Trash Over Occupancy

Type 2 STRs 0 0 0 0

Total STRs 0 0 0 0

City of Austin Notices of Violations Issued Against STR Owners or Guests 2012-2015

Noise Parking Trash Over Occupancy

Type 2 STRs 0 0 0 0

Total STRs 0 0 3 7

98 Ex. 17, Deposition of Reynaldo Arellano at 85:10-25; 86:1-18; 104:10-16. Reynaldo Arellano was designated by the City to testify as to the government interest supporting the STR Ordinance, the data the City relies on to justify the STR Ordinance, and how that data was collected. 99 See Ex. 10, City’s Response to Intervenor’s Second Request for Production No. 25 (stating COA 17072-17368 were responsive to Intervenor’s request for “All documents related to the citations, if any, that were given to STR Type 2 properties for each of the following calendar years: 2012, 2013, 2014, 2015 and 2016.”; COA 17072-17368 contain zero citations for noise, parking, or trash.; See also Ex. 11, City’s Supplemental Response to Plaintiffs’ Request for Production No. 73 (stating that COA 3531-5320 were responsive to Plaintiffs’ request for “all citations and notices of violation issued by the city Austin against short-term rental operators or guests.”). Those pages contain 7 notices of violation for alleged over-occupancy (COA 3770, 3725, 3773, 3776). Those pages also contain 2 notices of violation failure to remove trash receptacles from the curb in a timely manner (COA 3693, 4872), and one notice of violation for debris in the yard. COA 3909. There are no citations for noise, trash, parking, or over occupancy. There are no notices of violation for noise or parking.

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Given this lack of verified evidence that STRs are generating public disturbance problems,

the City relies on three forms of anecdotal evidence to support the STR Ordinance: 1) 311 call

data, 2) transcripts from city meetings, and 3) staff reports.100 Yet even these unverified sources

contradict Defendants’ claims that licensed STRs are incompatible with residential neighborhoods.

1. 311 complaints

311 complaints against licensed STRs comprise a small percentage of the total 311

complaints called in against residential properties in Austin. According to the City, there were over

16,935 complaints against all residential properties from January to October of 2015.101 Of those

16,935 complaints, 137 complaints (.8%) were made against licensed STRs.102 70 complaints

(.4%) were against licensed Type 2 STRs.103 The City concedes that this is not “a substantial

number of complaints.”104

Additionally, many complaints against STRs have been complaints against hotels that were

inaccurately entered as STR complaints.105 A review of the City’s native STR complaint

documents shows several complaints recorded as STR complaints were actually complaints made

against hotels, fraternity houses, and rv parks—none of which qualify as STRs under the

Ordinance.106

Even if the complaint totals numbers were accurate, they do not show that STRs are

creating a significant amount of public disturbances.107 In 2016, in response to an open records

100 Ex. 17, Deposition of Reynaldo Arellano at 38:19-25; 39: 1-20; 43: 20-25; 44: 1-11. 101 Ex. 18, Def’s Res. to Pltff’s Interrogatory No. 15. 102 Ex. 19, COA 000660. 103 Id. 104 Ex. 17, Deposition of Reynaldo Arellano at 79: 9-14. 105 Ex. 17, Deposition of Reynaldo Arellano at 95: 11-22. 106 Ex. 17, Deposition of Reynaldo Arellano at 95: 11-22. 107 A complaint is not the same as a citation. If an anonymous person calls in to 311 and mentions STRs, that could be considered a complaint. This is true regardless of whether the complaint is ever verified. Indeed, it is considered an STR complaint even if the property is not actually an STR. See, e.g. Ex. 25, COA 000240 (STR complaints investigated as part of a study turned out to not be STRs); Id. (complaints investigated and no activity was

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request for all complaints against STR properties, the City produced a spreadsheet containing all

311 complaints received over a four-year period from September of 2012 to June of 2016 that

referenced STRs.108 The majority of 311 complaints received during that time were for operating

without a license.109 Only 87 complaints referenced noise disturbances.110 11 complaints related

to parking, 22 complaints referenced trash, and 51 complaints mentioned parties.111 Less than 17

percent of these complaints were ever verified in any way.112

311 Complaints Vs. STRs 2012-2016

Total

Verified

Parking

11

1

Trash

22

8

Noise

87

11

Party

51

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going on); Ex. 17, Deposition of Reynaldo Arellano at 95:11-22 (complaints against hotels erroneously recorded as STR complaints) 108 Ex. 20, Temporary Inj. Hr'g. Plaintiff's Ex. 4, July 20, 2017 (spreadsheet of all STR Complaints produced by the City); Temporary Inj. Hr’g. 40:3-23, July 20, 2017 (verifying validity of spreadsheet); Transcript of Temporary Inj. Hr’g. 96:18-99:19, July 20, 2017 (providing explanation of summary of the City’s spreadsheet as a summary of voluminous records); Temporary Inj. Hr'g. Plaintiff's Ex. 5, July 20, 2017 (summary of spreadsheet); Affidavit of Zhen Cai reaffirming spreadsheet, summary, and previous testimony. 109 Id. 110 Id. 111 Id. 112 Id.

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When unlicensed STRs are removed from the equation, the absence of any real public

disturbance issue becomes clear. In 2015, the City of Austin Code Department conducted a study

of 311 complaints received against licensed STRs during the three-year period of October 2012

through August 2015.113 During that period, there were only 31 noise complaints against licensed

STRs.114 Only 13 of those complaints were against Type 2s.115 During that same three-year

period, a mere 40 complaints were recorded against licensed STRs for alleged parking

violations.116 Only 10 of those complaints were against Type 2s.117

311 Complaints Against Licensed STRs 2012-2015

Noise Parking

Type 2 STRs 13 10

Total STRs 31 42

When broken down on a per capita basis, the lack of a public problem is striking. According

to the City, there were 1,169 licensed STRs during the study period.118 Accordingly, each STR

accounts for approximately .008 noise complaints and .01 parking complaints per-property, per-

year.119

113 Ex. 21, COA 003256. 114 Id. 115 Id. 116 Id. 117 Id. 118 Ex. 22, COA 003249. 119 Id.

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2. Staff Reports

In May of 2012, the City of Austin conducted its only study to date comparing complaints

against STRs against residential properties that were not being used as STRs. The City “found that

the average number of calls per property and the percent of properties associated with 311 or 911

calls were similar for STRs and the sample of residential properties.”120 Indeed, on average, non-

STR’s (23.82%) were slightly more likely than STRs (22.86%) to receive a complaint.121

In the summer of 2015, the Code Department attempted a second study of STR

complaints.122 That study was unsuccessful, however, because no STR complaints were received

during the testing hours for that study.123

In response, Councilwoman Gallo announced to a group of citizens favoring STR

regulation that a third study of STR complaints would be conducted in the followings weeks.124

The City also issued a press release publicizing the fact that this study would be taking place and

120 Ex. 9, COA 17382 121 Ex. 9, COA 17382-17390. 122 Ex. 23, COA 000739. 123 Id. (“And so we just did a routing for that team to go after hours and take a look and knock on the door and just talk to folks, how're things going. And document if there's any noise or parking issues that are going on at that time. Fortunately, this weekend was quiet. We did not get any -- we did not have any noisy parties, over-parking. We didn't have any of that this weekend, even though there was a number of activities going on here in Austin, as you know.”) 124 Id.

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encouraging residents to call 3-1-1 if they thought they had an STR in the area. The release was

covered by Fox 7 Austin.125

After this announcement, complaints against STRs went up an unprecedented amount—

jumping from 16 complaints in June, to 93 in July.126 Indeed, the complaints during those weeks

more than doubled those experienced during the SXSW music festival—a time period recognized

as the high point of STR Complaints. After the study period was over, complaints returned to their

normal rates.127

125 Ex. 24, http://www.fox7austin.com/news/2412204-story ("Their release does say quote in addition to spot inspections -- the team will respond to complaints received and inspect known trouble properties… Code enforcement is asking residents to call 311 with complaints.” 126 Ex. 19, COA 000661. 127 Id.

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128

Despite priming the pump, the City’s study once again failed to show a problem with

licensed STRs. Over a five weekend test period, the Code Department investigated 19 complaints

against alleged STRs.129 The report found that many of the alleged STRs were not STRs.130

Moreover, while these investigations resulted in two citations and a few broken up parties, these

disturbances were solely at long-term residential properties, not STRs.131 Indeed, none of the

parties or other disturbances investigated turned out to be licensed STRs.132

3. Transcripts

The City also claims to rely on statements made by City Council members and members

of the public during the public hearings leading up to the adoption of the STR Ordinance.133 The

City concedes that statements made at these meetings were not verified and may not be true.134 The

City also concedes that it did not consider whether anecdotal stories about problem STRs discussed

at these meetings pertained to licensed vs unlicensed STRs.135

128 Ex. 19, COA000660. 129 Ex. 25, COA 000240. 130 Id. 131 Id. 132 Id. 133 Ex. 17, Deposition of Reynaldo Arellano at 123:23-25; 124:1-19. 134 Id. at 49:24-25; 50:12. 135 Ex. 17, Deposition of Reynaldo Arellano at 114: 1-16; 124: 6-19.

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The transcripts from those meetings show that public opinion on the issue was mixed, with

individuals speaking both for and against STR regulation.136 Moreover, many of the statements in

favor of regulation gave reasons that would be unconstitutional if relied upon by the City.

For example, at least one speaker claimed that STRs should be regulated in order to protect

hotel companies from competition.137 Another individual argued that STRs should be regulated to

keep Californians out of the City.138 Another argued in favor of regulations because the

neighborhood was “diverse already” and he didn’t want it turning into “the east side of Austin.

Enough said.”139

When pressed, the City struggled to even disown these statements as a basis for the

regulation, claiming “Certainly the Council hears all comments in its deliberative process, takes

into account information it finds relevant, in order to make a decision that balances the needs—or

interests of everybody.”140

4. Less Burdensome Alternatives

One of the primary reasons given for the City to justify its regulations of Type 2 STRs and

STRs more generally is that STRs are allegedly used as “party houses.” The City presents no data

to support the claim that licensed STRs are more likely to be “party houses” than other residential

properties. Indeed, when asked if there was “more than one” licensed STR being used as a party

house, the City responded, “I don’t know…it may be.”141

136 Ex. 17, Deposition of Reynaldo Arellano at 49:20-23. 137 Ex. 26, COA 000745 (My position is, simply and clearly, outlaw type two strs... You will do a great favor to the hotel industry.”) 138 Ex. 27, COA 000354 (“Because Austin should be left to the local Austinites. Not Californians.”) 139 Id. 140 Ex. 17, Deposition of Reynaldo Arellano at 60:2-10; see also, Id. at 57-61 (similarly dismissing other inappropriate statements). 141 Ex. 17, Deposition of Reynaldo Arellano at 129:2-18.

22

Yet even if party houses were a problem, the City had more direct ways to regulate party

houses without adopting the various restrictions on innocent owners contained in the STR

Ordinance. The City has chosen not to utilize these options.

For example, under existing law, an STR owner with two or more verified nuisance

complaints can have their STR license revoked.142 Yet, in the past five years, the City has not

initiated a single proceeding to remove a property owner’s STR license for multiple party

complaints.143 If STRs are really being used as party houses all over the City, it seems inconsistent

that the City has not taken action to suspend a single party house’s license.

Similarly, the City could have increased staff to address nuisance complaints. The “hours

of operation for the Austin Code Department are Monday through Friday from 7 am – 4 pm.”144

There are currently only 4 people on staff to respond to complaints regarding STRs.145 And those

individuals are not even on duty most nights after 6 p.m. when most complaints take place.146 Prior

to adopting the STR Ordinance, the City rejected proposals to increase enforcement of existing

public disturbance ordinances as a way to deal with alleged problem STRs.147 Put simply, there

were other less burdensome options on the table than those that the City ultimately adopted.

142 Austin Code §25-1-462; Ex. 1, STR Ordinance § 1307. 143 Ex. 28, Def’s Res. To Pltffs’ Interr. No. 20. 144 Ex. 32, COA 002624. 145 Ex. 3, Deposition of Marcus Elliot at 45:10-15. 146 Id. at 45:16-23. 147 Ex. 29, COA 000778. Mayor Adler regarding proposal to increase enforcement of existing ordinances prior to adopting STR Ordinance: “We heard from a lot of neighbors that have been really frustrated with some of the short-term rentals operating not in compliance in their neighborhood and they're just not feeling like there's much movement in the way of being able to either pull the permits or if they don't have permits get them shut down. This resolution is specifically to address the enforcement component of the existing ordinance. It was not my intention at all to bring forth an ordinance that would bring up the discussion of short-term rentals. If other councilmembers would like to do that then they need to come forward with a different resolution, but this one is specifically to address the issue at hand with enforcement.”

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III. STANDARD FOR REVIEW

Plaintiffs challenge the validity of several provisions of the STR Ordinance under the Texas

Constitution. “Although determining whether a property regulation is unconstitutional requires the

consideration of a number of factual issues, the ultimate question… is a question of law, not a

question of fact.” Mayhew v. Town of Sunnyvale, 964 S.W.2d 922, 932–33 (Tex. 1998); Nelson v.

Clements, 831 S.W.2d 587, 590 (Tex. App. Austin--1992), writ denied (Oct. 21, 1992) (“a claim

of deprivation of property without due process is always a question of law for the court's

determination.”). Summary judgment is therefore the proper mechanism to address Plaintiffs’

constitutional claims. Hunt v. City of San Antonio, 462 S.W.2d 536, 539 (Tex. 1971).

To prevail on a traditional summary-judgment motion, a movant must show that no genuine

issue of material fact exists and that it is entitled to judgment as a matter of law. Tex. R. Civ. P.

166a(c).

IV. SUMMARY OF THE ARGUMENT

The Texas Constitution was written to preserve the “great and essential principles of liberty

and free government.” Tex. Const. art. I, § 1. To that end, the “Texas Constitution places limits

on government encroachments, and does so on purpose.” Robinson v. Crown Cork & Seal Co.,

335 S.W.3d 126, 164 (Tex. 2010).

The Texas Constitution provides at least three levels of protection for Texans’ liberty and

private property rights—the Due Course of law provision, the Equal Protection Clause, and the

protection against unreasonable searches and seizures. First, the Due Course of Law provision

requires that any ordinance that restricts a protected liberty or property right be justified by a

government interest and not unduly burdensome given the interest at stake. Patel v. Texas Dept.

of Licensing and Reg., 469 S.W.3d 69, 87 (Tex. 2015). The Due Course of Law provision exists

24

to ensure that “private rights sacrificed [to the majority] are outweighed in public good, burdened

as little as possible, and amply justified on public-necessity grounds.” Robinson v. Crown Cork &

Seal Co., 335 S.W.3d 126, 163 (Tex. 2010) (Justice Willett, joined by Justice Lehrmann,

concurring).

The second level of protection is the Equal Protection Clause. Even if an ordinance

satisfies the Due Course of Law provision, the Equal Protection Clause requires that the restrictions

of the ordinance be applied to Texans equally. Richards v. League of United Latin Am. Citizens

(LULAC), 868 S.W.2d 306, 310–11 (Tex. 1993). If an ordinance draws distinctions between

classes of individuals, those distinctions must be justified by the government interest at stake. Id.

Finally, even if valid on all other grounds, the Texas Constitution places limits on how the

ordinance is enforced to ensure that government does not unduly intrude into home. Article 1

Section 9 of the Texas Constitution protects Texans’ homes from unreasonable searches and

seizures. To determine whether a search is reasonable, courts must “balance the nature and the

quality of the intrusion” against the “importance of the governmental interests alleged to justify

the intrusion.” Hereford v. State, 339 S.W.3d 111, 119 (Tex. Crim. App. 2011).

The theme that ties all of these protections together is that Texas Courts take liberty and

private property rights seriously. Cities have authority to regulate to protect the public, but that

authority is not unlimited. “Majorities don’t possess an untrammeled right to trammel.” Patel, 469

S.W.3d at 95 (Willett concurring). When municipal desires conflict with the rights of Texans, the

Texas Constitution requires courts to review the actual evidence of a public harm in need of solving

that justifies the infringement on Texans natural rights. Or, as Justice Willet recently put it,

“Texans are thus presumptively free, and government must justify its deprivations.” Id. at 93.

25

The STR Ordinance does not meet that burden. Indeed, the STR Ordinance fails at all three

of the above-mentioned levels of constitutional protection. First, the various provisions of the STR

Ordinance fail to satisfy the Due Course of Law provision because they are not adequately

supported by a government interest. Under the Ordinance, STR guests are subject to arbitrary caps

on the number of individuals that can be present in the home, limitations on when they can go in

the back yard, a 10 pm adult bedtime, and must submit to warrantless searches of the home.148 As

explained in Section V (B), infra, these restrictions violate Plaintiffs’ rights to assembly, privacy,

movement, and the right to be free from unreasonable searches. The Ordinance also infringes on

Plaintiffs’ property rights by prohibiting Type 2 STRs and requiring that all STR owners under

utilize their properties.

The City’s claimed justification for these restrictions—public disturbances—crumbles

under even the mildest scrutiny. The City’s own study confirmed that STRs generate fewer

nuisance complaints per-capita than non-STRs.149 In the case of Type 2 STRs, the City didn’t enter

a single citation for a public disturbance violation against a Type 2 STR in the four years preceding

the adoption of the STR ordinance.150

Moreover, even if STRs were creating a marginally greater impact on neighborhood

character than long-term uses, that impact cannot justify the path the City has chosen address that

impact. The City concedes that neighborhood disturbances like noise, trash, and parking can be

148 Ex. 1, STR Ordinance §§ 25-2-795; 1301. 149 Ex. 4, City of Austin Special Request Report on Short-Term Rentals, available at https://austintexas.gov/sites/default/files/files/Auditor/Audit_Reports/Archived/AS12106b__May_2012_.pdf ; Ex. 30, COA 011395 (City Staff testifying that their studies show that “Short-term rental properties have significantly fewer 311 calls and significantly fewer 911 calls than other single family properties.”) 150 See Ex. 10, City’s Response to Intervenor’s Second Request for Production No. 25 (stating COA 17072-17368 were responsive to Intervenor’s request for “All documents related to the citations, if any, that were given to STR Type 2 properties for each of the following calendar years: 2012, 2013, 2014, 2015 and 2016.”; COA 17072-17368 zero citations for noise, parking, or trash.

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addressed at the property line by enforcement of existing ordinances.151 The City does not need to

snoop inside the confines of the home, count bodies, check familial relations, double-check adults’

bedtimes, or completely eradicate a well-established property right to avoid neighborhood

disturbances. Put simply, the City may not constitutionally use a sledgehammer to address a

problem best suited for a scalpel.

Second, even if the restrictions of the STR Ordinance could be justified under the Due

Course of Law provision, they fail under the Equal Protection Clause because they arbitrarily

discriminate. For example, the STR Ordinance prohibits Type 2 STRs, while allowing Type 1

STRs to continue operation. The City concedes that the only difference between Type 1 STRs and

Type 2 STRs is that the owners of Type 1 STRs claim their properties as homesteads for tax

purposes.152 But tax status has nothing to do with the City’s claimed purpose for the law—avoiding

public disturbances—and there is no legally significant evidence that licensed Type 2s generate

more disturbances than Type 1s.

The STR Ordinance also arbitrarily discriminates against STR guests. Under the STR

Ordinance, a tenant who rents a home for 30 days has the full panoply of constitutional rights. But

a person who rents a home for 29 days is subject to warrantless searches, is limited in the number

of people he can have over, when he can go outside in the yard, and when he must go to sleep.

Yet, there is simply no connection between the length of one’s lease and public disturbances.

Indeed, the City’s own study showed that STR tenants generate fewer complaints than non-

STRs.153 The Equal Protection clause does not abide such arbitrary discrimination.

151 Ex. 3, Deposition of Marcus Elliot at 36:9- 38:2. 152 Ex. 3, Deposition of Marcus Elliot 11:8-11. 153 City of Austin Special Request Report on Short-Term Rentals, available at https://austintexas.gov/sites/default/files/files/Auditor/Audit_Reports/Archived/AS12106b__May_2012_.pdf ; Ex. 30, COA 011395 (City Staff testifying that their studies show that “Short-term rental properties have significantly fewer 311 calls and significantly fewer 911 calls than other single family properties.”)

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Finally, the STR ordinance fails because it requires that STR owners and guests open their

homes to warrantless searches at almost any time without probable cause.154 Failure to do so can

result in penalties of up to $2,000 and cause the owner of the STR to lose her STR license. The

government cannot mandate that one surrender her right to be secure from warrantless searches in

order to exercise a basic property right.

V. ARGUMENT AND AUTHORITIES

A. PLAINTIFFS HAVE STANDING TO CHALLENGE THE STR ORDINANCE

Plaintiffs challenge three different aspects of the STR Ordinance: 1) the prohibition of Type

2 STRs, 2) the restrictions on all STRs, regardless of type, and 3) the restrictions on STR

tenants/guests. Plaintiffs have standing to challenge these aspects of the STR Ordinance because

they own, operate, or utilize STRs within the Austin city limits, and are therefore injured by the

challenged provisions of the STR Ordinance. Moreover, Plaintiffs have standing to bring these

claims on behalf of their tenants/guests who are also injured by the above-challenged provisions

of the STR Ordinance.

The standing doctrine identifies suits appropriate for judicial resolution. Brown v. Todd,

53 S.W.3d 297, 305 (Tex. 2001). Standing assures there is a real controversy between the parties

that will be determined by the judicial declaration sought. Id. (quoting Tex. Workers' Comp.

Comm'n v. Garcia, 893 S.W.2d 504, 517–18 (Tex. 1995)). “[T]o challenge a statute, a plaintiff

must [both] suffer some actual or threatened restriction under the statute” and “contend that the

statute unconstitutionally restricts the plaintiff’s rights.” Garcia, 893 S.W.2d at 518.

Plaintiffs’ claims arise under the Declaratory Judgment Act. “[W]here there are multiple

plaintiffs in a case, who seek injunctive or declaratory relief (or both), who sue individually, and

154 Ex. 1, STR Ordinance § 1301.

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who all seek the same relief, the court need not analyze the standing of more than one plaintiff—

so long as that a plaintiff has standing to pursue as much or more relief than any of the other

plaintiffs.” Patel, 469 S.W.3d at 77. The reasoning “is fairly simple: if one plaintiff prevails on

the merits, the same prospective relief will issue regardless of the standing of the other plaintiffs.”

Id at 77-78.

Here, Plaintiffs all seek identical relief—namely, an order declaring the challenged

provisions of the STR Ordinance unconstitutional and enjoining the City from enforcing those

provisions. Accordingly, as long as one Plaintiff has standing for each of these claims, standing

has been established in this case. This burden is easily met. Multiple plaintiffs have standing for

each claim.

1. Plaintiffs have standing to challenge the ban on Type 2 STRs

To establish standing for declaratory relief, Plaintiffs must claim that the STR Ordinance

is unconstitutional and that it has, or likely will, injure them or restrict their rights in some way.

Garcia, 893 S.W.2d at 518. Accordingly, because all Plaintiffs challenge the same provisions of

the STR Ordinance as being unconstitutional, Plaintiffs need only establish some likely injury or

restriction on their rights to establish standing. Id.

With regard to the prohibition on Type 2 STRs (STR Ordinance § 25-2-950), the Zataaris,

Redwines and Heberts have clearly been injured by the STR Ordinance because: 1) they own and

operate Type 2 STRs; 2) they have made investments in those properties for the purpose of

operating them as Type 2 STRs; and 3) under the STR Ordinance, they will be prohibited from

using their homes as Type 2 STRs starting in 2022. This loss of use is sufficient to establish

standing. See, Vill. of Tiki Island v. Ronquille, 463 S.W.3d 562, 587 (Tex. App. 2015) (STR owner

had standing to challenge ban on STRs).

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2. Plaintiffs have standing to challenge the use, presence, assembly, and search requirements placed on all STRs

With regard to the use, presence, assembly, and search requirements placed on all STRs,

all Plaintiffs are likewise injured and therefore have standing. Garcia, 893 S.W.2d at 518. All

Plaintiffs own and operate STRs in Austin. The STR Ordinance restricts the number of people that

they can rent their homes to, therefore denying them a portion of their return on investment.155

More importantly, the Ordinance also places excessive burdens on Plaintiffs by requiring that they

monitor the familial relationship of guests, who those guests invite over, where the guests gather

on the property, and when the guests go to sleep.156 Moreover, the Ordinance requires that

Plaintiffs make their homes available for warrantless searches.157 Because Plaintiffs claim that

these restriction violate their rights under the Constitution and injure them in a material way, these

burdens are sufficient to give Plaintiffs standing. Garcia, 893 S.W.2d at 518 (“[T]o challenge a

statute, a plaintiff must [both] suffer some actual or threatened restriction under the statute” and

“contend that the statute unconstitutionally restricts the plaintiff’s rights.”)

3. Plaintiffs have standing to challenge the STR Ordinance’s restrictions on STR Tenants/guests

With regard to the restrictions on tenants/guests, Mrs. Hebert utilizes STRs as a guest when

she travels to Austin on business. Therefore, the STR Ordinance’s restrictions on privacy,

movement, assemblies, as well as the warrantless search requirement affect her directly.158

Moreover, because she chooses to rent a home for less than thirty days, the Ordinance subjects her

155 Ex. 1, STR Ordinance § 25-2-795. 156 Id. 157 Ex. 1, STR Ordinance § 1301. 158 The STR Ordinance’s penalties apply to STR tenants/guests on their face. See, e.g., Austin City Code § 25-2-795 (D) (“a licensee or guest may not use or allow another to use a short term rental…”); Austin City Code § 25-2-795 (E) (“a licensee or guest may not use or allow another to use a short term rental…”). Austin City Code § 25-1-462 provides that any “person who violates” the STR Ordinance is subject to penalties. In fact, the City concedes that, on its face, the STR Ordinance and its penalties apply to STR owners and guests. Ex. 3, Deposition of Marcus Elliot at 39:15-25; 40:1-25; Ex. 13, Deposition of Cora Wright 13:5-8.

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to numerous burdens not imposed on her neighbors in violation of the equal protection clause.159

Mrs. Hebert therefore has standing to challenge these provisions of the Ordinance. Garcia, 893

S.W.2d at 518.

Because Mrs. Hebert has standing to challenge the Ordinance, this Court is not required to

address the standing of the other plaintiffs. However, if is inclined to do so, each of the plaintiffs

also have standing as STR owners to challenge the STR Ordinance on behalf of their guests.

In Sullivan v. Little Hunting Park, Inc., 396 U.S. 229, 237 (1969) and Barrows v. Jackson,

346 U.S. 249, 258 (1953), the Court held that Caucasian landlords had standing to bring anti-

discrimination claims on behalf of their African-American guests. The Court reasoned that it

would be impermissible to require an owner to choose between imposing an unconstitutional

restriction, or violating the law. Id.

The Court’s holding was not limited to racial discrimination claims. See, e.g., Craig v.

Boren, 429 U.S. 190, 192-197 (1976) (licensed beer distributor could bring equal protection claim

on behalf of customers who felt that liquor law discriminated on the basis of sex); Carey v.

Population Services Int’l, 431 U.S. 678, 682-684 (1977) (vendor of contraceptives had standing to

bring privacy claim on behalf of couples challenging a law limiting distribution of contraceptives);

Pierce v. Society of Sisters, 268 U.S. 510 (1925) (private school had standing to bring due process

claim on behalf of parents). The thread that ties the cases together is that plaintiffs may not be

“obliged either to heed the statutory discrimination, thereby incurring a direct economic injury

through the constriction of her buyers' market, or to disobey the statutory command and suffer, in

the words of Oklahoma's Assistant Attorney General, ‘sanctions and perhaps loss of license.’”

159 Ex. 3, Deposition of Marcus Elliot at 29:14-25; 30:1-23.

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Craig, 429 U.S. at 194. The Court “repeatedly has recognized that such injuries establish the

threshold requirements of a ‘case or controversy’ mandated by Art. III.” Id.

Similarly here, Plaintiffs must choose between enforcing the challenged provisions of the

STR Ordinance against their guests, “thereby incurring a direct economic injury through the

constriction of [their] buyers’ market, or to disobey the statutory command and suffer, …sanctions

and perhaps loss of license.” Craig, 429 U.S. at 194. This injury is sufficient to establish standing.

4. The City may not evade this Court’s jurisdiction by claiming that it does not enforce the STR Ordinance

Plaintiffs anticipate that the City will argue that it does not enforce the STR Ordinance

against STR Tenants/guests and therefore that this Court does not have jurisdiction over Plaintiffs’

assembly, privacy, movement, equal protection, or unreasonable search claims. This argument

fails for at least two reasons.

First, even assuming that the STR Ordinance does not apply to STR guests, the City

concedes that it does enforce the STR Ordinance against STR owners.160 As explained in Sections

V (A) (1) - (3), supra, each of the challenged provisions of the STR Ordinance injures Plaintiffs

personally as STR owners because they are subject to criminal fines and penalties and could lose

their license based on the actions of their guests. Accordingly, this Court has jurisdiction to hear

Plaintiffs’ claims.

Second, the City may not evade a challenge to an ordinance that applies to Plaintiffs on its

face by merely promising not to enforce the law as written. In United States v. Stevens, the Court

struck down a law that prohibited videos depicting cruelty to animals as violating the First

Amendment. 559 U.S. 460 (2010). The government argued that the challenged law, on its face,

could be read to apply to the plaintiff’s videos, but claimed that it did not interpret the law that

160 Ex. 3, Deposition of Marcus Elliot at 17:8-22.

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way. Id. at 480. The government claimed it only applied the law to depictions of “extreme

cruelty… and it neither has brought nor will bring a prosecution for anything less.” Id. The Court

rejected this argument outright. The Court noted that, the Constitution “protects against the

Government; it does not leave us at the mercy of noblesse oblige.” Id. The Court “would not

uphold an unconstitutional statute merely because the Government promised to use it responsibly.”

Id. In fact, the Court noted that the government’s promise not to enforce the law as written was

an implicit admission that the law was constitutionally problematic. Id. (holding that “[t]he

Government’s assurance that it will apply §48 far more restrictively than its language provides is

pertinent only as an implicit acknowledgment of the potential constitutional problems with a more

natural reading.”).

Here, the City has provided even less assurance than what was rejected in Stevens. As in

Stevens, the City concedes that the STR Ordinance applies to Plaintiffs on its face.161 But it also

concedes that its promise not to enforce is limited to the Code department and not currently binding

on the police.162 Even with regard to the Code department, there is nothing that would stop the

City from changing its enforcement policy tomorrow.163 Moreover, the City concedes that an STR

tenant/guest would have no reason to believe that the Ordinance would not be enforced against

her.164 Put simply, the City’s promise is not really even a promise. Plaintiffs’ constitutional rights

may not be held at “the mercy of noblesse oblige.” Stevens, 559 U.S. at 480. This Court has

jurisdiction to hear Plaintiffs’ claims.

161 Ex. 3, Deposition of Marcus Elliot at 39:15-25; 40:1-13. 162 Ex. 13, Joint Deposition of Cora Wright and Marcus Elliot at 22:20-25; 23:1; 28:20-25; 29:1-25. 163 Ex.3, Deposition of Marcus Elliot at 42:8-19. 164 Ex. 3, Deposition of Marcus Elliot at 41:19-25; 42:1-2.

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B. THE STR ORDINANCE RESTRICTS PLAINTIFFS’ LIBERTY IN VIOLATION OF THE TEXAS CONSTITUTION

Like the Due Process Clause of the Fourteenth Amendment of the United States

Constitution, the Due Course of Law provision of the Texas Constitution protects all rights central

to the “scheme of ordered liberty.” Texas Workers’ Compen. Commn. v. Patient Advocates of

Texas, 136 S.W.3d 643, 658 (Tex. 2004). To prevail on a Due Course of Law challenge, Plaintiffs

must establish that the STR Ordinance restricts a constitutionally protected right and that such

restriction is not sufficiently related to the government interest at stake, or that the government

interest is not sufficient to justify the restriction. Patel, 469 S.W.3d at 87.

The level of fit required between a challenged restriction and the government interest

alleged to justify its existence is determined by the constitutional right that is infringed.

Restrictions on fundamental rights, such as, assembly, privacy, and movement, are subject to

“strict scrutiny.” Tex. State Employees Union v. Tex. Dept. of Mental Health & Mental

Retardation, 746 S.W.2d 203, 205 (Tex. 1987). Under strict scrutiny, the ordinance must be

narrowly tailored to address a compelling state interest. Id.

A restriction on private property rights will be unconstitutional if it does not “bear a

substantial relationship” to a legitimate government interest165 or is “as a whole is so unreasonably

burdensome that it becomes oppressive in relation to the underlying governmental interest.” Patel,

469 S.W.3d at 87; City of W. U. Place v. Ellis, 134 S.W.2d 1038, 1041 (Tex. 1940) (If the “loss to

the property owner affected, in proportion to the good accomplished [by the Ordinance]” is

unreasonable, then the Ordinance must fail.); Satterfield v. Crown Cork & Seal Co., 268 S.W.3d

190, 215 (Tex. App.—Austin 2008) (an Ordinance will fail if it is “out of proportion to the end

sought to be accomplished.”).

165 City of Pharr v. Tippitt, 616 S.W.2d 173, 176 (Tex. 1981).

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The STR Ordinance fails under either standard. As explained below, the STR Ordinance

places restrictions on Plaintiffs’ freedoms of assembly, privacy, movement, and private property.

These restrictions do not serve a rational (much less a compelling) governmental interest.

Moreover, the various restrictions of the STR Ordinance are so vastly out of proportion to the

alleged harm they seek remedy as to render them unconstitutional.

1. The Freedom of Assembly

Article 1, Section 27 of the Texas Constitution protects Texans’ fundamental right to

“assemble together for their common good.” The Constitution does not “permit a State to make

criminal the exercise of the right of assembly simply because its exercise may be ‘annoying’ to

some people.” Olvera v. State, 806 S.W.2d 546, 549 (Tex. Crim. App. 1991), citing Coates v. City

of Cincinnati, 402 U.S. 611 (1971). Restrictions on the freedom of assembly must be narrowly

tailored to address a compelling state interest. Olvera, 806 S.W.2d at 549 (discussing anti-

picketing statutes); Geissler v. Coussoulis, 424 S.W.2d 709, 712 (Tex. Civ. App.—San Antonio

1967, writ ref’d n.r.e.) (“The right to assemble peaceably is ‘cognate to those of free speech and

free press.’”).

The STR Ordinance restricts assemblies on its face. Indeed, it even uses the term

“assembly” to describe the activities restricted.166 The STR Ordinance § 25-2-795 prohibits STR

tenants from assembling quietly and peaceably in their rental property’s backyard during the day

in numbers greater than six; assembling indoors during the day in numbers greater than six (or ten

if all members are related); or assembling at all for purposes “other than sleeping” after 10 p.m.

As explained below, these restrictions are unconstitutional because they are not narrowly

tailored to serve a compelling government interest and are more burdensome than necessary.

166 See, Ex. 1, STR Ordinance 25-2-795 (D), (E).

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Additionally, these restrictions do not serve a rational (much less a compelling) governmental

interest. Moreover, the various restrictions of the STR Ordinance are so vastly out of proportion

to the alleged harm they seek remedy as to render them unconstitutional.

2. The Right to Privacy

Section 25-2-795 of the STR Ordinance unconstitutionally infringes on STR Tenants’

rights to privacy by regulating the number of people present in the home, the time that those guests

can be present, their familial relationship to one another, the quiet, harmless activities they can

engage in inside the home, and the time they must be asleep.

“[A] right of individual privacy is implicit among those general, great, and essential

principles of liberty and free government established by the Texas Bill of Rights.” Tex. State

Employees Union v. Tex. Dept. of Mental Health & Mental Retardation, 746 S.W.2d 203, 205

(Tex. 1987) (internal quotations omitted); see also Collins v. Collins, 904 S.W.2d 792, 797 (Tex.

App.—Hous. [1st Dist.] 1995, writ. denied) (“Texas courts have long recognized both a common

law and a constitutional right of privacy”). The right to privacy is perhaps most important in the

home. Clayton v. Richards, 47 S.W.3d 149, 152 (Tex. App.—Texarkana 2001, pet. denied) (“The

Texas Constitution protects personal privacy from unreasonable intrusion and guarantees the

sanctity of the home and person against unreasonable intrusion.”); Lawrence v. Tex., 539 U.S. 558,

564 (2003) (discussing and upholding the right to privacy in the bedroom).

In Griswold v. Connecticut, the Court held that a ban on the use of contraceptives violated

the right to privacy, because the law could not be enforced without allowing “the police to search

the sacred precincts of marital bedrooms for telltale signs of the use of contraceptives.” 381 U.S.

479, 485-86 (1965). As the Court noted, the “very idea [of snooping around bedrooms] is repulsive

to the notions of privacy.” Id.

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Here, the City concedes that the STR Ordinance requires precisely the type of invasive

inspections of private activity in the home that the Court rejected in Griswold.167 The STR

Ordinance prohibits all group activities inside the home after 10 p.m. Specifically, the STR

Ordinance prohibits any “assembly,” which encompasses all “group activity other than sleeping.”

The Ordinance is not triggered by noise or visible activities.168 It is not triggered by the size of the

assembly. The Ordinance is violated by merely being awake and in a group inside a private

dwelling. As in Griswold, the City concedes that there is no logical way to confirm such violations

without looking inside the home.169

The STR Ordinance likewise regulates the number of people present in the home, the time

that those guests can be present, their familial relationship to one another, and what rooms or

portions of the property they occupy. As with the 10 pm bedtime, there is no logical way to confirm

such violations without looking inside the home, or questioning guests about relationship status.170

Finally, the Ordinance requires that STR owners and guests submit to warrantless searches

of the property at any “reasonable time” to confirm compliance with the Ordinance. Because the

Ordinance places restrictions on activities that can take place indoors, in private bedrooms, after

10 pm, this warrantless search provision effectively allows code compliance to search the entirety

of the home at any time without notice or probable cause.

Intrusions on the right to privacy in a residential dwelling are presumptively

unconstitutional and are only permitted “when the government can demonstrate that an intrusion

is reasonably warranted for the achievement of a compelling governmental objective that can be

167 Ex. 3, Deposition of Marcus Elliot at 25:11-14 (“Q: could Code issue a citation for violating these indoor caps on use without a visual inspection? A: No it couldn’t.”). 168 Ex. 3, Deposition of Marcus Elliot, 15:20-25; 16:1-18; 24:21-25; 28:6-25; 29:1-5. 169 Ex. 3, Deposition of Marcus Elliot at 25:11-14 (“Q: could Code issue a citation for violating these indoor caps on use without a visual inspection? A: No it couldn’t.”). 170 Ex. 3, Deposition of Marcus Elliot at 25:11-14 (“Q: could Code issue a citation for violating these indoor caps on use without a visual inspection? A: No it couldn’t.”).

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achieved by no less intrusive, more reasonable means.” Tex. State Employees Union, 746 S.W.2d

at 205.






3. The Freedom of Movement

Section 25-2-795 of the STR Ordinance restricts the movement of STR tenants by limiting

movement on the property during the day and effectively setting a 10 pm adult curfew for

movement inside or outside the home after 10 pm.

Like the Due Process Clause of the Fourteenth Amendment of the United States

Constitution, the Due Course of Law provision protects all rights central to the “scheme of ordered

liberty.” Texas Workers’ Compen. Commn. v. Patient Advocates of Texas, 136 S.W.3d 643, 658

(Tex. 2004) (Texas’s due course of law clause and the federal due process clause are textually

different, but we generally construe the due course clause in the same way as its federal

counterpart.). This liberty includes the freedom of movement without arbitrary restraint. Casarez

v. State, 913 S.W.2d 468, 487 n.18 (Tex. Crim. App. 1994), on reh'g (Dec. 13, 1995) (“Personal

freedom ‘consists in the power of locomotion, of changing situation, or removing one’s person to

whatsoever place one’s own inclination may direct, without imprisonment or restraint, unless by

due course of law.’”).

The freedom of movement, even in its narrowest sense, includes the right to move about

or “come and go at will.” Vernonia Sch. Dist. v. Acton, 515 U.S. 646, 654 (1995); Bykofsky v.

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Borough of Middletown, 97 S.Ct. 394, 395 (1976) (Marshall, J. dissenting) (liberty includes “the

freedom to leave one’s house and move about at will.”). Curfews and other restrictions on adults’

ability to move about freely, like those at issue here, are generally unconstitutional. Bykofsky, 97

S.Ct. at 395 (“a curfew aimed at all citizens could not survive constitutional scrutiny”).

The STR Ordinance infringes on the freedom of movement in several ways. First, it

prohibits more than six individuals from being outdoors at an STR at any time for any purpose.171

This prohibition applies even if the home can legally house more than six individuals.172

Accordingly, if Plaintiffs’ guests are congregating on the back patio, or in the yard of the rental

for any purpose, a seventh legal guest may not exit the home and stand in the yard lest she be

prosecuted for violating the STR Ordinance.

Second, the STR Ordinance prohibits movement, even inside the home, after 10 p.m.173

Specifically, the STR Ordinance prohibits any “assembly,” which is defined to include all “group

activity other than sleeping.”174 Thus, two STR guests watching television at 10:01 p.m. would

be in violation of the Ordinance and subject to up to $2,000 in penalties.






171 Ex. 1, STR Ordinance §§ 25-2-795 (D), (E). 172 Id. 173 Ex. 1, STR Ordinance § 25-2-795 (D). 174 Id.

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4. Private Property

The STR Ordinance infringes on Plaintiffs’ property rights in three ways. First it prohibits

the Type 2 Plaintiffs from using their properties as STRs after 2022. Second, it forces Plaintiffs

to underutilize their properties by placing an arbitrarily low number on the amount of guests that

may be present on the property and the number of guests that may be in the yard. Third, it places

unreasonable burdens on Plaintiffs by requiring that they monitor the familial relationship,

sleeping habits, and other non-nuisance activities of their guests at all times, and requiring that

Plaintiffs ensure that guests submit to warrantless searches.

a. Plaintiffs have a right to use their homes as STRs

Inherent in the concept of property rights is the right to dispose of one’s property, including

by lease. See French v. Chevron U.S.A. Inc., 896 S.W.2d 795, 797 (Tex. 1995) (right to lease out

property part of the bundle of sticks usually conveyed with title); R.R. Comm'n of Texas v. Waste

Mgmt. of Texas, Inc., 880 S.W.2d 835, 839 (Tex. App. 1994) (property is “the right to dispose of

a thing in every legal way, to possess it, to use it, and to exclude everyone else from interfering

with it.”); Spann v. City of Dallas, 111 Tex. 350, 355, 235 S.W. 513, 514–15 (1921)(“ a law which

forbids the use of a certain kind of property, strips it of an essential attribute and in actual result

proscribes its ownership.”); Gangemi v. Zoning Bd. of Appeals of Town of Fairfield, 763 A.2d

1011, 1015 (2001) (“it is undisputable that the right of property owners to rent their real estate is

one of the bundle of rights that, taken together, constitute the essence of ownership of property.”);

State of Washington ex rel. Seattle Title Trust Co. v. Roberge, 278 U.S. 116, 121 (1928) (“The

right of the trustee to devote its land to any legitimate use is property within the protection of the

Constitution.”).

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This right, like all property rights, is a “foundational liberty not a contingent privilege”

granted by city government. Texas Rice Land Partners, Ltd. v. Denbury Green Pipeline-Texas,

LLC, 363 S.W.3d 192, 204 (Tex. 2012); Eggemeyer v. Eggemeyer, 554 S.W.2d 137, 140 (Tex.

1977) (The right to use private property has been described as “fundamental, natural, inherent,

inalienable, not derived from the legislature and as preexisting even constitutions.”)

In Vill. of Tiki Island, the court held that this right includes the right to use one’s home as

an STR. 463 S.W.3d at 587. In that case, the plaintiff challenged the constitutionality of a local

law prohibiting STRs. Id. The City moved to dismiss her claims, arguing that the plaintiff’s

ownership of the property did not include a vested right to use the property as an STR. Id. The

Court disagreed, noting that the plaintiff had “been renting her Tiki Island home short-term since

2007. She bought it as an investment for the purpose of rentals, and made substantial improvements

to the property.” Id. Accordingly, the Court concluded that “she has identified a vested right for

purposes of conferring the trial court with jurisdiction to enter a temporary injunction in her

favor.” Id.

Similarly, here, Plaintiffs have a vested right to use their homes as STRs. Plaintiffs

purchased their homes at a time that STRs were legal and made extensive improvement to their

homes to use them as STRs.175 Plaintiffs have therefore established that they have a property right

in using their homes as short-term rentals.

175 Ex. 7, Deposition of Lindsay Redwine at 18:12–19:2. Each Plaintiff invested in improvements in order to use their homes for that purpose. Ex. 14, Deposition of Marwa Zaatari at 21:24–22:2; Ex. 16, Deposition of Ras Redwine VI at 14:13–5–25; Ex. 7, Deposition of Lindsay Redwine at 20:19–22:15; Ex. 6, Deposition of Tim Klitch at 19:8–10 (“We essentially renovated . . . every square foot of the property inside [and] outside to prepare for short-term rental usage”). Ex. 5, Deposition of Ahmad Zaatari at 21:9–12; Ex. 7, Deposition of Lindsay Redwine at 13:15–8; see Ex. 6, Deposition of Tim Klitch at 23:12–23.

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b. The STR Ordinance infringes on Plaintiffs property rights

The STR Ordinance places various burdens on Plaintiffs’ rights to use and dispose of their

properties as they see fit. For the Plaintiffs that own type 2 STRs, the STR Ordinance is particularly

problematic. Under the Ordinance, Type 2 rental owners will no longer be allowed to use their

properties as STRs after 2022.176

Moreover, all Plaintiffs’ rights to use their properties are impacted by the STR Ordinance

in some way. For example, all Plaintiffs are subject to the assembly and use caps contained in the

Ordinance.177 These caps place a dual burden on Plaintiffs. First, the caps force Plaintiffs’ to

underutilize their properties. For example, Mr. Klitch owns an eight-bedroom home.178 Under the

Ordinance, he could not rent all eight bedrooms out unless the tenants were all related.179

Moreover, even if all tenants were related, those tenants would be prohibited from going in the

backyard at one time, or inviting any unrelated guests over for dinner.180 Mr. Klitch testified that

these restrictions have made marketing his home as an STR almost impossible.181

The Redwines have experienced similar problems. The front house on their property can

comfortably sleep ten and the backhouse can comfortably sleep between four to six.182 Under the

STR ordinance, both homes are limited to ten related adults or six unrelated adults.183 Moreover,

the ordinance makes the simultaneous renting of both houses to different groups difficult, as no

more than 6 adults may be present in the shared yard at any time, but at least six adults may

lawfully stay at either house.184 Accordingly, individuals staying in the front house could

176 Ex. 1, STR Ordinance § 25-2-950. 177 See Ex. 1, STR Ordinance § 25-2-795. 178 Ex. 6, Deposition of Tim Klitch at 14:2–3. 179 See Ex. 1, STR Ordinance § 25-2-795 (G). 180 See Ex. 1, STR Ordinance § 25-2-795 (E), (G). 181 Ex. 6, Deposition of Tim Klitch at 68:12–69:5. 182 Id. at 35:12–23. 183 See Ex. 1, STR Ordinance § 25-2-795(G). 184 Id.

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effectively deny the backhouse access to yard by merely standing outside in numbers greater than

5. These caps along with the assembly and warrantless search restrictions of the STR ordinance

have caused potential guests to cancel bookings at the Redwines’ home.185

Second, the caps require that all Plaintiffs’ extensively monitor the familial relationships

and private activities of their guests, up to and including when those guests go to bed.186 Failure

to do so could subject Plaintiffs’ to civil and criminal penalties as well as the loss of their STR

licenses.187 Yet, monitoring such activities is far more burdensome, difficult, and intrusive than a

landlord’s traditional duties to generally monitor whether guests are creating a public nuisance.

To determine whether the STR Ordinance is being violated Plaintiffs would have to enter

the home, count guests, inquire as to their familial status, look in the back yard, and peek in

bedrooms after 10 pm to insure that everyone was sleeping.188 Such intrusions would not only be

burdensome for the owners, but also drive away guests, as no reasonable person would want to

subject themselves to such an invasion of privacy in order to use an STR. Indeed, Mr. Klitch

testified that these restrictions have made it virtually impossible to rent out his home.189 Mrs.

Redwine likewise testified that she has lost bookings because the invasive and impractical nature

of these regulations.190 These privacy concerns are compounded by the fact that the Ordinance

requires that both owners and guests submit to warrantless searches of the home at “any reasonable

time.”191

Not only are such burdens not placed on other landlords, such interference is forbidden in

long-term rentals. De Leon v. Creely, 972 S.W.2d 808, 812 (Tex. App.—Corpus 1998) (lease

185 Ex. 7, Deposition of Lindsay Redwine at 67:17–69:6. 186 Ex. 3, Deposition of Marcus Elliot at 44:17-24. 187 Ex. 3, Deposition of Marcus Elliot at 43:21-24; Ex. 1, STR Ordinance § 1307; Austin City Code § 25-1-462. 188 Ex. 3, Deposition of Marcus Elliot at 25:11-18. 189 Ex. 6, Deposition of Tim Klitch at 68:12–69:5. 190 Ex. 7, Deposition of Lindsay Redwine at 67:17–69:6. 191 Ex. 1, STR Ordinance § 1301.

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grants a tenant exclusive possession of the premises as against the owner); Brown v Johnson, 12

S.W.2d 543 (Tex. 1929) (essential quality in a lease is it should appear to have been intention of

one party to dispossess himself of premises and of other to occupy them). People do not stop being

people, merely because they rent a home for less than thirty days. One cannot expect guests to

endure such invasions, or owners to impose them.

C. THE STR ORDINANCE DOES NOT ADVANCE A COMPELLING OR EVEN LEGITIMATE GOVERNMENT INTEREST

The City claims that the STR Ordinance is justified by the fact that STRs are generating

nuisance complaints and are therefore incompatible with neighborhoods.192 193 But as explained

above, there is no legally significant evidence that STRs are causing any problem, much less a

compelling one. The City’s own data shows that nuisance complaints against STRs constitute a

vanishingly small percentage of nuisance complaints against residential properties. In fact, the data

shows that STRs generate fewer such complaints than non-STRs.194 Moreover, any claim by the

City that STRs are creating a party-house atmosphere is contradicted by the fact that it has never

enforced existing regulations that would strip party houses of their STR licenses. The only thing

the City is left to rely on to support its claims is that some members of the City Council and some

members of the community who spoke at city council meetings oppose having STRs in

192 In response to discovery requests, the City initially claimed that the STR Ordinance is justified by the government’s interest in zoning. But as the Supreme Court has made clear, the zoning power is a means through which legitimate police powers may be exercised, it is not an end in itself. City of Sherman v. Simms, 143 Tex. 115, 118–19, 183 S.W.2d 415, 416 (1944) (“The justification for zoning rests in the police power of municipalities.” Therefore, zoning restrictions must be “reasonable and have a substantial relation to the health, safety, morals or general welfare of the community.”) In any event, the City eventually conceded at deposition that the “the health, safety, morals or general welfare” interest that the STR Ordinance targets is “public disturbances.” Ex. 17, Deposition of Reynaldo Arellano 104:10-16; 106:20-25; 107:1-20. 193 The City’s claim in this litigation that STRs are “incompatible with neighborhoods” is inconsistent given that both the City Code and the Austin Court of appeals recognize STRs as a compatible residential use. Austin City Code § 25-2-3 (B)(10); Zgabay v. NBRC Prop. Owners Assn., 03-14- 00660-CV, 2015 WL 5097116, at *3 (Tex. App.—Austin Aug. 28, 2015). This is in accord with numerous other jurisdictions. See, e.g., Slaby v. Mountain River Estates Residential Ass'n, Inc., 100 So. 3d 569, 578–79 (Ala. Civ. App. 2012); Lowden v. Bosley, 395 Md. 58, 909 A.2d 261 (2006); Mullin v. Silvercreek Condominium, Owner's Ass'n, 195 S.W.3d 484 (Mo.Ct.App.2006). 194 Ex. 9, COA 17382-17390.

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neighborhoods. But as both the United States Supreme Court and the Texas Supreme Court have

noted, neighborhood opposition to a property use alone is not sufficient to constitute a legitimate

government interest.

1. Under both strict scrutiny and the Texas version of rational-basis scrutiny for Due Course of Law claims, courts must examine the actual evidence of public harm that the Ordinance targets

The Texas Supreme Court has “deemed the preservation of property rights ‘the great and

chief end’ of government.” Texas Rice Land Partners, Ltd., 363 S.W.3d at 204. Unlike its federal

counterpart, the Texas “Constitution and laws enshrine landownership as a keystone right, rather

than one relegated to the status of a poor relation.” Id. Indeed, the Supreme Court has “repeatedly,

recently, and unanimously recognized that strong judicial protection for individual property rights

is essential to freedom itself.” Harris Cty. Flood Control Dist. v. Kerr, 499 S.W.3d 793, 804 (Tex.

2016), reh’g denied (Oct. 21, 2016). Accordingly, the Texas Constitution requires that restrictions

on the use of private property “bear a substantial relationship to the health, safety, morals or general

welfare of the community.” City of Pharr v. Tippitt, 616 S.W.2d 173, 176 (Tex. 1981).

Establishing the existence of a substantial relationship is “more than a pleading

requirement, and compliance with it more than an exercise in cleverness and imagination.”

Sheffield Dev. Co., Inc. v. City of Glenn Heights, 140 S.W.3d 660, 676 (Tex. 2004); see also,

Satterfield v. Crown Cork & Seal Co., 268 S.W.3d 190, 218–19 (Tex. App—Austin 2008). The

Court must look at the factual record and evidence underlying the Ordinance as well as “all of the

surrounding circumstances” to determine whether the Ordinance actually relates to the interest the

government claims. Mayhew v. Town of Sunnyvale, 964 S.W.2d 922, 932–33 (Tex. 1998).

For example, in Humble Oil & Ref. Co. v. City of Georgetown, 428 S.W.2d 405, 413 (Tex.

Civ. App—Austin 1968), the court overturned a local Ordinance limiting the size of underground

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storage tanks for gasoline. The city argued that the Ordinance was designed to reduce fire

hazards—a purpose well within the police power. Id. Nonetheless, the court did not simply accept

the City’s hypothetical justification. Instead, it looked at the actual evidence of fire risk created

by the larger tanks, compared to smaller tanks. The court held that the “evidence does not show

any real fire hazards that would be increased if the restrictions of Section 5 were removed and

operators such as Humble were permitted to install underground storage tanks of larger capacity.”

Id. Accordingly, there was no real and substantial connection between the Ordinance and fire

prevention. Id.

Similarly here, the evidence does not show any real threat posed by allowing homeowners

to continue to operate STRs as they have for more than a century.

2. There is no evidence that STRs are harmful to the public

To be substantial, the threat must be “real vs. merely perceived, and significant vs.

trivial.” Barr v. City of Sinton, 295 S.W.3d 287, 301 (Tex. 2009). The City claims that the STR

Ordinance is justified by the fact that STRs are generating public disturbance complaints that affect

the character of neighborhoods.195 But despite multiple attempts, the City has failed to present

data that bears this out. Indeed, the City’s own study showed that licensed STRs are generally less

likely to receive a nuisance complaint than their non-STR counterparts.196

Unsatisfied with this data, the City conducted a weekend sting operation in 2015 to produce

evidence of STR based nuisances. But this second study was canceled because no complaints were

called in during the weekend study period.197

195 Ex. 17, Deposition of Reynaldo Arellano at 35:20-25; 38:1-12. 196 Ex. 9, COA 17382-17390. 197 Ex. 23, COA 000739.

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Twice thwarted, the City initiated a third study to get the numbers it wanted. As part of its

third attempt to produce evidence that STRs were generating public disturbance complaints, the

City investigated 19 STR complaints called in during the study period.198 While these

investigations confirmed the existence of a few parties, most complaints were not confirmed, and

none of the confirmed complaints or parties turned out to be an actual STR.199 In other words,

complaints against non-STRs were being reported as STR complaints during the study period.

Even with this “priming the pump,” the lack of nuisance complaints against licensed STRs

is striking. Even assuming all complaints against STRs are valid—they are not—data collected by

the City in 2015 shows that during a three-year period, there were only 31 noise complaints against

licensed STRs.200 Only 13 of those complaints were against Type 2s.201 During that same three-

year period, a mere 40 complaints were recorded against licensed STRs for alleged parking

violations.202 Only 10 of those complaints were against Type 2s.203 That is hardly the “party

house” atmosphere that the City would have this Court believe.

3. Neighborhood opposition to STRs is not sufficient to establish a legitimate government interest absent evidence of actual harm

Given this lack of meaningful data, the City points to statements made by citizens and

members of the City Council during City Council meetings. But these unsubstantiated statements

are not sufficient to deny Plaintiffs their rights, particularly when those statements are contrary to

the facts on the ground. “It is a doctrine not to be tolerated in this country that either State or

municipal authorities can by their mere declaration make a particular use of property a nuisance

198 Ex. 25, COA 000240. 199 Id. 200 Id. 201 Id. 202 Id. 203 Id.

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which is not so, and subject it to the ban of absolute prohibition.” Spann v. City of Dallas, 111

Tex. 350, 358 (1921); Crossman v. City of Galveston, 112 Tex. 303, 312, 247 S.W. 810, 813 (1923)

(“The opinion of the city commissioners that the property of plaintiffs in error is a nuisance is not

due process. It is not process at all. It has no more vitality than the opinion of other citizens as

against the consent of plaintiffs in error.”).

The City admits that statements at the City Council were not substantiated and did not

distinguish between licensed and unlicensed STRs.204 Moreover, many of the statements were

based on protectionists and racist impulses that the City surely cannot claim constitute a legitimate

government interest.205 Nonetheless, the City seems to argue that people showing up to discuss an

issue, alone, is sufficient to justify an absolute prohibition on a vested property right. This is

nonsense.

It is well established that merely responding to neighborhood opposition to a property use

is not a legitimate government purpose. Lombardo v. City of Dallas, 124 Tex. 1, 10 (1934) (“nor

can the right of a person to use his property in a lawful manner be made to depend upon the

unrestrained predilection of other property owners.”); Spann v. City of Dallas, 111 Tex. 350, 357–

58, 235 S.W. 513, 516 (1921) (“A lawful and ordinary use of property is not to be prohibited

because repugnant to the sentiments of a particular class.”). This is because, while cities may only

restrict a property’s use to serve a legitimate government interest, the public may oppose a

particular use in their neighborhood for a host of illegitimate reasons. See, State of Washington ex

rel. Seattle Title Trust Co. v. Roberge, 278 U.S. 116, 122 (1928) (neighbors “are not bound by any

204 Ex. 17, Deposition of Reynaldo Arellano at 114:2-16. 205 Ex. 26, COA 000745 (My position is, simply and clearly, outlaw type two strs... You will do a great favor to the hotel industry.”); Ex. 27, COA 000354 (“Because Austin should be left to the local Austinites. Not Californians.”); id. (Another argued in favor of regulations because the neighborhood was “diverse already” and he didn’t want it turning into “the east side of Austin. Enough said.”).

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official duty, but are free to withhold consent for selfish reasons or arbitrarily and may subject the

trustee to their will or caprice.”); Eubank v. City of Richmond, 226 U.S. 137, 144, 33 S.Ct. 76, 77,

57 L.Ed. 156 (1912) (neighbors may oppose a use “solely for their own interest, or even

capriciously...even so arbitrary a think as taste may control.”) Deferring to such whims as if they

were a legitimate exercise of the police power is “repugnant” to the Constitution. Id.206

4. The City’s refusal to enforce nuisance based restrictions against STRs shows that alleged nuisances caused by STRs do not rise to the level of a legitimate government interest

That this meager number of complaints against STRs is not a real concern for the City is

buttressed by the fact that the City has taken no action under existing mechanisms to remedy the

problem by going after the alleged “party houses” that this Ordinance allegedly targets. Under

existing law, an STR owner with two or more verified nuisance complaints can have their STR

license revoked.207 Yet, in the five years since first regulating STRs in 2012, the City has not

initiated a single proceeding to remove a property owner’s STR license for multiple party

complaints.208 Moreover, the City has stipulated that it has no intention to enforce the provisions

of the STR Ordinance against unruly guests at all.209

206 In Ross v. City of Yorba Linda, 1 Cal.App.4th 954, 968 (Cal. App. 1991), the plaintiff owned a one-acre lot surrounded by parcels of a lesser size. Although the property was zoned to allow one dwelling per acre, a rezoning would have allowed an additional dwelling, which was the zoning designation of surrounding properties. The planning commission granted the rezoning, but that approval was denied by the city council after neighbors voiced opposition. The plaintiff prevailed on a “spot zoning” theory in the trial court, and the court of appeal affirmed.

In the court of appeal, the city argued, among other things, that neighborhood opposition was sufficient, in and of itself, to justify the land use restriction. Id. at 964. The court of appeal rejected that argument: “[I]n restricting individual rights by exercise of the police power neither a municipal corporation nor the state legislature itself can deprive an individual of property rights by a plebiscite of neighbors....Such action is arbitrary and unlawful.” Id. at 968, quoting Benner v. Tribbitt, 57 A.2d 346, 353) (1948). It is telling that even California, which provides far greater leeway for cities to restrict private property rights than Texas, would not sanction the radical majoritarian approach that the City urges this Court to adopt. 207 Ex. 1, STR Ordinance § 1307. 208 Ex. 28, Def’s Res. to Pltffs’ Interrog. No. 20. 209 Ex. 31, COA 003243.

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Lack of enforcement shows that the City’s alleged government interest is either pretext or

illusory. See, State v. Morales, 826 S.W.2d 201, 205 (Tex. App. Austin 1992), writ granted (Sept.

9, 1992), rev’d on other grounds, 869 S.W.2d 941 (Tex. 1994). (“it is disingenuous to suggest that

§ 21.06 serves to protect public morality when the State readily concedes that it rarely, if ever,

enforces this statute.”); see also, Stevens, 559 U.S. at 480 (“The Government’s assurance that it

will apply § 48 far more restrictively than its language provides is pertinent only as an implicit

acknowledgment of the potential constitutional problems with a more natural reading.”)

Similarly here, the City’s failure to take action under existing Ordinances to remedy the

alleged “party house” problem with STRs shows that the government’s claimed interest is illusory.

5. The STR Ordinance does not target or reduce public disturbances

Even if STRs were generating sufficient public disturbances for regulating STRs to amount

to a legitimate government interest, the STR Ordinance is not substantially related to that interest.

The City concedes that none of the challenged regulations actually address public disturbances

such as noise, parking, or trash.210 Indeed, the great irony of the STR Ordinance is that it regulates

quiet, harmless, private activities inside STRs while allowing raucous, nuisance generating public

activities to take place at adjacent long-term rentals.

Moreover, even if the Ordinance were successful in reducing some public disturbance

complaints, the City concedes that reduction would not be substantial.211 In 2015 the City of

Austin Code Department conducted a study of 311 complaints received against licensed STRs

from October 2012 through August 2015 (a three-year period).212 During that three-year period,

210 Ex. 3, Deposition of Marcus Elliot, 15:20-25; 16:1-18; 24:21-25; 28:6-25; 29:1-5. (walking through each provision and agreeing that it doesn’t turn on whether the guests are being noisy or disturbing neighbors); Ex. 12, COA 1809-1811 Mayor Adler noting that the caps aren’t just targeted at raging parties, they apply equally to “a family… that is sitting around the pool in a very quiet way in the backyard and not bothering anybody.” It doesn’t matter “how quiet they are.” If “you’re renting an str in this community you’re renting it so that people can sleep.” 211 Ex. 17, Deposition of Reynaldo Arellano at 78:19–79:14. 212 Ex. 21, COA 003256.

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there were only 31 noise complaints against licensed STRs.213 Only 13 of those complaints were

against Type 2s.214 In other words, best case scenario, the draconian restrictions of the STR

Ordinance might eliminate less than a dozen unverified noise complaints per year in a city of a

million people.

D. THE STR ORDINANCE FAILS STRICT SCRUTINY BECAUSE THERE ARE LESS BURDENSOME ALTERNATIVES TO ADDRESS ALLEGED PROBLEMS CAUSED BY STRs

To demonstrate a compelling interest, the government must show that the mandate furthers

interests “of the highest order.” Church of the Lukumi Babalu Aye, Inc. v. Hialeah, 508 U.S. 520,

546 (1993). This determination “is not to be made in the abstract” but “in the circumstances of this

case.” Cal. Democratic Party v. Jones, 530 U.S. 567, 584 (2000). Further, the government “must

demonstrate that the recited harms are real, not merely conjectural, and that the regulation will in

fact alleviate these harms in a direct and material way.” Turner Broad. Sys., Inc. v. FCC, 512 U.S.

622, 664 (1994). Strict scrutiny requires real evidence of an “actual problem in need of solving.”

Brown v. Entm’t Merchs. Ass’n, 131 S.Ct. 2729, 2738 (2011) (quotation omitted). “[A]mbiguous

proof” of abstract problems “will not suffice.” Id. at 2739.

As explained above, any alleged problems with STRs do not rise to the level of a legitimate

government interest, much less a compelling one. Yet, even assuming that such an interest exists,

the STR Ordinance still fails strict scrutiny. Under strict scrutiny, an ordinance will fail if it is not

narrowly tailored—i.e. it sweeps in more conduct than necessary to achieve its desired end, or if

less burdensome alternatives are available.

The STR Ordinance cannot meet this burden because ample alternatives were available to

the City that did not run roughshod over Plaintiffs’ constitutional rights. For example, under

213 Id. 214 Id.

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existing law, an STR owner with two or more verified nuisance complaints can have their STR

license revoked.215 Yet, in the past five years, the City has not initiated a single proceeding to

remove a property owner’s STR license for multiple party complaints.216 If STRs are really being

used as party houses all over the City, it seems contrary that the City has not taken action to suspend

a single party house’s license.

Similarly, the City could have increased staff to address nuisance complaints. The “hours

of operation for the Austin Code Department are Monday through Friday from 7 am – 4 pm.”217

There are currently only 4 people on staff to respond to complaints regarding STRs.218 And those

individuals aren’t even on duty most nights after 6 p.m. when most complaints take place.219 Prior

to adopting the STR Ordinance, the City rejected numerous proposals to increase enforcement of

existing public disturbance ordinances as a way to deal with alleged problem STRs.220 Given this

availability and rejection of less burdensome alternatives, the STR ordinance is not narrowly

tailored and therefore does not satisfy strict scrutiny.

E. THE STR ORDINANCE FAILS UNDER TEXAS’ HEIGHTENED FORM OF RATIONAL BASIS SCRUTINY BECAUSE IT IS UNDULY HARSH AND BURDENSOME GIVEN THE LACK OF EVIDENCE THAT STRs ARE HARMFUL

The Ordinance also fails rational basis scrutiny because the burdens imposed by the

ordinance so greatly outweigh any public benefit it creates. Even under rational basis scrutiny, an

215 Austin Code §25-1-462; Ex. 1, STR Ordinance § 1307. 216 Ex. 28, Def’s Res. To Pltffs’ Interr. No. 20. 217 Ex. 32, COA 002624. 218 Ex. 3, Deposition of Marcus Elliot at 45:10-15. 219 Id. at 45:16-23. 220 See, e.g., Ex. 29, COA 000778 Mayor Adler regarding proposal to increase enforcement of existing ordinances prior to adopting STR Ordinance: “We heard from a lot of neighbors that have been really frustrated with some of the short-term rentals operating not in compliance in their neighborhood and they're just not feeling like there's much movement in the way of being able to either pull the permits or if they don't have permits get them shut down. This resolution is specifically to address the enforcement component of the existing ordinance. It was not my intention at all to bring forth an ordinance that would bring up the discussion of short-term rentals. If other councilmembers would like to do that then they need to come forward with a different resolution, but this one is specifically to address the issue at hand with enforcement.”

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ordinance restricting the use of property will fail if the means chosen to pursue a legitimate

government interest are “out of proportion to the end sought to be accomplished.” Satterfield v.

Crown Cork & Seal Co., 268 S.W.3d 190, 215 (Tex. App.—Austin 2008). This necessarily

involves some investigation of the gravity of the public harm so that it can be balanced against the

gravity of the restriction. City of W. U. Place v. Ellis, 134 S.W.2d 1038, 1041 (Tex. 1940). If the

“loss to the property owner affected, in proportion to the good accomplished [by the Ordinance]”

is unreasonable, then the Ordinance must fail. Id. at 1040.

This balancing of harms mirrors the standard established in Patel for due course of law

challenges to economic regulations. Patel, 469 S.W.3d at 87 (“The standard of review for as-

applied substantive due course challenges to economic regulation statutes includes an

accompanying consideration as reflected by cases referenced above: whether the statute’s effect

as a whole is so unreasonably burdensome that it becomes oppressive in relation to the underlying

governmental interest.”) In Patel, plaintiffs challenged a state law requiring that “eyebrow

threaders” receive at least 320 hours of training in unrelated cosmetology practice in addition to

sanitation training before they could legally practice their trade. Id. at 90. While the Court

conceded that some sanitation training for threaders may serve a legitimate government interest, it

held that requiring 320 hours of unrelated training, at a cost of $3,000 – $9,000, was unduly

burdensome given the minor threat that eyebrow threading posed to the public and the minor

benefit that this additional training would generate. Id. In explaining the holding, the Court noted

that “the admittedly unrelated 320 required training hours, combined with the fact that threader

trainees have to pay for the training and at the same time lose the opportunity to make money

actively practicing their trade” was sufficient to render the restriction unconstitutional. Id. at 90.

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Similarly, the cost to Plaintiffs of STR regulation so greatly outweighs any public benefit

as to make the Ordinance unreasonable. In the five years preceding the STR Ordinance, the City

didn’t issue a single citation against an Type 2 STR for noise, parking, or trash violations.221 Even

if one considers unverified complaints against STRs as being truthful, the benefit of the STR

Ordinance will be negligible. Over a 3 year period there were only 13 noise complaints and 10

parking complaints against Type 2 STRs.222 That means that on average, each Type 2 is generating

approximately .02 unverified noise and parking complaints a year.223

In exchange for these meager benefits, Type 2 STR owners will sacrifice thousands of

dollars and numerous hours invested in converting their homes to Type 2 rentals.224 Over time,

they will be forced to forgo additional hundreds of thousands of dollars in lost income from their

properties.225 In the case of the Zaataris, this lost income means that they would have to sell the

house and Mr. Zaatari would have to abandon his new startup company, which relies on income

from their STR to stay afloat.226 For the Redwines, it means that they would have to sell their home

at a substantial loss, because the property’s size and location makes it virtually unmarketable as a

long-term residence.227

The public benefit of the various restrictions on all STRs would be similarly meaningless.

Over a three year period there were only 31 noise complaints and 40 parking complaints against

221 See Ex. 10, City’s Response to Intervenor’s Second Request for Production No. 25 (stating COA 17072-17368 were responsive to Intervenor’s request for “All documents related to the citations, if any, that were given to STR Type 2 properties for each of the following calendar years: 2012, 2013, 2014, 2015 and 2016.”; COA 17072-17368 contain zero citations for noise, trash, or parking. 222 Id. 223 Id. 224 See Ex. 14, Deposition of Marwa Zaatari at 21:24–22:2 (outlining her significant and STR-particular investments); Ex. 16, Deposition of Ras Redwine VI at 14:13–5–25; Ex. 7, Deposition of Lindsay Redwine at 20:19–22:15. 225 See, e.g., Ex. 5, Deposition of Ahmad Zaatari at 99:13–7. 226 Id. at 102:17–103:10. 227 Ex. 7, Deposition of Lindsay Redwine at 30:8–25.

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all STRs, city wide.228 When broken down on a per capita basis, the lack of a public problem is

striking. According to the City, there were 1,169 licensed STRs during the study period.229

Accordingly, each STR accounts for approximately .008 noise complaints and .01 parking

complaints per-property, per-year.230

In exchange for these meager benefits, STR owners are required to forfeit thousands of

dollars in investments and spend numerous hours each year monitoring guests and enforcing the

draconian restrictions of the ordinance.231 Moreover, Plaintiffs will forgo thousands of dollars

each year in lost bookings and empty rooms that, but for the ordinance, they could have filled.232

For example, Mr. Klitch testified that since the ordinance has gone into effect his income from the

property has gone down by over $40,000 in one year.233 Due to the ever increasing cost of living

in Austin, and his impending retirement, Mr. Klitch testified that this lost income could force him

to sell the home he raised his children in.234

In Patel, a one-time sacrifice of 320 hours and $3,000-9,000 was unduly burdensome to

justify a small increase in the safety and competence of practitioners of a trade that the Court

recognized could lead to “the spread of highly contagious bacterial and viral infections, including

flat warts, skin-colored lesions known as mulluscum contagiosum, pink eye, ringworm, impetigo,

and staphylococcus aureus, among others.” 469 S.W.3d at 89. Certainly, a yearly sacrifice of

thousands of dollars and hundreds of hours that may result in Plaintiffs selling their homes is

228 Ex. 21, COA 003256. 229 Ex. 22, COA 003249. 230 Id. 231 See Ex. 14, Deposition of Marwa Zaatari at 21:24–22:2 (outlining her significant and STR-particular investments); Ex. 16, Deposition of Ras Redwine VI at 14:13–5–25; Ex. 7, Deposition of Lindsay Redwine at 20:19–22:15; Ex. 6, Deposition of Tim Klitch at 19:8–10. 232 See, e.g., Ex. 6, Deposition of Tim Klitch at 68:12–69:5; Ex. 7, Deposition of Lindsay Redwine at 67:17–69:6. 233 Ex. 6, Deposition of Tim Klitch at 67:25–68:11. 234 Id. at 70:13–7.

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unduly burdensome to justify a hypothetical reduction in a dozen unverified noise complaints a

year spread across a city of a million people.

F. THE STR ORDINANCE VIOLATES THE EQUAL PROTECTION CLAUSE

1. The Texas Equal Protection clause requires, at a minimum, that unequal treatment be based on a real and substantial difference having relationship to the subject of the particular enactment

Under the Equal Protection analysis, courts “apply different standards of review depending

upon the right or classification involved.” Plyler v. Doe, 457 U.S. 202, 216–17, 102 S.Ct. 2382,

2394–95, 72 L.Ed.2d 786 (1982); Richards v. League of United Latin Am. Citizens (LULAC), 868

S.W.2d 306, 310–11 (Tex. 1993). If the classification turns on a suspect class, like race or religion,

or the ordinance impacts fundamental rights, like assembly, privacy, or movement, then the

classification must be narrowly tailored to serve a compelling government objective. Id. If the

ordinance affects property rights, then the classification must be “based on a real and substantial

difference having relationship to the subject of the particular enactment.” R.R. Comm'n of Texas

v. Miller, 434 S.W.2d 670, 673 (Tex. 1968); Crawford Chevrolet, Inc. v. McLarty, 519 S.W.2d

656, 661 (Tex. Civ. App. 1975).

The STR Ordinance implicates the equal protection clause in two ways. First it prohibits

Type 2 STRs while allowing Type 1 STRs to continue operation, despite the fact that the sole

difference between Type 1s and Type 2s is that Type 1 owners claim the property as a homestead

for tax purposes. Because this discrimination turns on tax status and not a protected class it is

subject to the Texas version of rational basis scrutiny.

Second the STR Ordinance imposes a host of restrictions on the fundamental rights of STR

guests that are not placed on their long-term neighbors. These restrictions are based solely on the

length of the guest’s lease. Because these restrictions implicate fundamental rights, such as

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assembly, privacy, and movement, they are subject to strict scrutiny. Richards, 868 S.W.2d at 310–

11.

However, as explained below, even under the Texas version of rational-basis scrutiny, both

the prohibition on Type 2 STRs and the regulations placed on STR guests violate the Equal

Protection clause.

2. There is no real and substantial difference between Type 1 and Type 2 STRs that can justify the prohibition of Type 2 STRs

The STR Ordinance treats Type 1 and Type 2 STRs differently by prohibiting Type 2 STRs

in residential areas after 2022. Because this disparate treatment of property rights does not turn on

a suspect class, the Equal Protection Clause requires that the regulation be “based on a real and

substantial difference having relationship to the subject of the particular enactment.” R.R. Comm'n

of Texas v. Miller, 434 S.W.2d 670, 673 (Tex. 1968); Crawford Chevrolet, Inc. v. McLarty, 519

S.W.2d 656, 661 (Tex. Civ. App. 1975).

To be “real and substantial,” the difference must be “real vs. merely perceived, and

significant vs. trivial.” Barr v. City of Sinton, 295 S.W.3d 287, 301 (Tex. 2009). This standard

requires the court to inquire as to the actual evidence available. For example, in Hunt v. City of

San Antonio, 462 S.W.2d 536, 540 (Tex. 1971), the city of San Antonio sought to rezone two

parcels based on alleged increased traffic in the area. The plaintiffs in that case challenged the

rezoning as violating the equal protection clause because there was no evidence of an increase in

traffic in that area sufficient to treat those lots differently than adjacent neighborhoods. Id. While

the Court assumed, arguendo, that an increase in traffic could be a legitimate reason to rezone an

area, it did not simply defer to the City’s claims of traffic increases. Id. Instead, the Court looked

to the actual evidence, and concluded that “there was no evidence of a ‘tremendous increase in

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traffic.’” Id. Accordingly, the distinction drawn by the city was not based on a “real and

substantial” difference and the rezoning was unconstitutional. Id.

Similarly, there is no “real and substantial difference” between the use of Type 1 and Type

2 STRs that justifies prohibiting Type 2 rentals. This makes sense. Both are single family homes

rented for less than thirty days.235 There is no distinction between the types of activities that will

take place there, the types of guest that are allowed in the home, or the number of days that the

home may be used as an STR.236 In both types, the owner will not be present when the home is

rented.237 In both types, the owner is required to maintain a local contact to respond to

complaints.238 And in both types, the owner can live in the home.239 The sole difference between

a Type 1 and a Type 2, is that the owner of a Type 1 claims the property as a homestead for tax

purposes.240

This lack of meaningful difference is borne out by data upon which the city relies. In the

five years preceding the adoption of the STR Ordinance, the City failed to produce a single citation

against a licensed Type 2 STR for violating the noise, trash, or parking ordinances.241 Moreover,

while the City contends that Type 2 STRs generate more noise complaints than other properties,

the actual number of complaints is so small as to make any comparison meaningless.

Given this lack of meaningful data, the City points to statements made by citizens and

members of the City Council during City Council meetings. But as explained supra, these

235 Ex. 17, Deposition of Reynaldo Arellano at 35:5-8. 236 Ex. 17, Deposition of Reynaldo Arellano at 37:12-18; Ex. 3, Deposition of Marcus Elliot 11:12-16. 237 Ex. 17, Deposition of Reynaldo Arellano at 33:2-5. 238 Ex. 17, Deposition of Reynaldo Arellano at 36:5-9. 239 Ex. 3, Deposition of Marcus Elliot 12:1-6. 240 Ex. 3, Deposition of Marcus Elliot 11:8-11. 241 Ex. 10, City’s Response to Intervenor’s Second Request for Production No. 25 (stating COA 17072-17368 were responsive to Intervenor’s request for “All documents related to the citations, if any, that were given to STR Type 2 properties for each of the following calendar years: 2012, 2013, 2014, 2015 and 2016.”; COA 17072-17368 contain zero citations for noise, trash, or parking.

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unsubstantiated statements are not sufficient to deny Plaintiffs their rights, particularly when those

statements are contrary to the facts on the ground. “It is a doctrine not to be tolerated in this

country that either State or municipal authorities can by their mere declaration make a particular

use of property a nuisance which is not so, and subject it to the ban of absolute prohibition.” Spann

v. City of Dallas, 111 Tex. 350, 358, 235 S.W. 513, 516 (1921); Crossman v. City of Galveston,

112 Tex. 303, 312, 247 S.W. 810, 813 (1923) (“The opinion of the city commissioners that the

property of plaintiffs in error is a nuisance is not due process. It is not process at all. It has no more

vitality than the opinion of other citizens as against the consent of plaintiffs in error.”).

At the end of the day, there is no constitutionally meaningful difference between Type 1

STRs and Type 2 STRs that can justify the complete and utter prohibition of the latter. The City

may not, by its “mere declaration make a particular use of property a nuisance which is not so, and

subject it to the ban of absolute prohibition.” Spann v. City of Dallas, 111 Tex. 350, 358, 235 S.W.

513, 516 (1921).

3. There is no real and substantial difference between STR tenants and tenants of long-term residential housing that can justify the restrictions placed on STR tenants by Sections 25-2-795 and 1301 of the STR Ordinance

As explained supra, the STR Ordinance restricts the fundamental rights of STR guests by

subjecting them to warrantless searches, and by regulating the number of people present in the

home, the time that those guests can be present, their familial relationship to one another, the quiet,

harmless activities they can engage in inside the home, and the time they must be asleep. None of

these restrictions apply to individuals who own their homes, or rent their homes for more than

thirty-days. Accordingly, the question before this Court is whether there is any inherent difference

between renting a home for 29 days as opposed to 30 days that creates a compelling governmental

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interest that is sufficient to warrant the various draconian provisions of the STR Ordinance. There

is not.

Yet even if this Court were to apply rational basis scrutiny to Plaintiffs’ claims, the STR

Ordinance is unconstitutional because there is no “real and substantial difference” between short

and long-term rentals that can justify the Ordinance’s restrictions. The Texas Supreme Court has

held that there is no constitutionally meaningful difference between renting a home and other

residential uses, despite the fact that the owner of a rental property uses the home to generate

income. See, Southampton Civic Club v. Couch, 322 S.W.2d 516, 518–19 (Tex. 1958). The

question before this Court, therefore, is whether renting a home for less than thirty days is so

fundamentally different than renting for more than thirty days that it justifies the STR Ordinances

restrictions? It does not.

While the Texas Supreme Court has not spoken on the issue, other jurisdictions have held

that treating STRs differently than other residential uses violates equal protection. For example,

New Jersey’s courts have regularly struck down restrictions on STRs as falling outside the zoning

authority. As one court explained, “Zoning laws are designed to control types of uses in particular

zones and are not ordinarily concerned with periods of occupancy or the property interest of the

occupants.” United Prop. Owners Ass'n of Belmar v. Borough of Belmar, 447 A.2d 933, 936 (App.

Div. 1982). A more recent decision from that court explained the issue more directly: “obnoxious

personal behavior can best be dealt with officially by a vigorous and persistent enforcement of

general police power Ordinances and criminal statutes of the kind earlier referred to. Zoning

Ordinances are not intended and cannot be expected to cure or prevent most anti-social conduct in

dwelling situations.” Ocean Cty. Bd. of Realtors v. Twp. of Long Beach, 599 A.2d 1309, 1311–12

(1991).

60

These holdings make sense. Individuals who frequent STRs are no different that the

citizens of Austin. Nor are homes rented for less than thirty days being used in a way that is

distinguishable from long-term rentals. Families staying at STRs eat, sleep, shower, and

congregate in the living spaces. Numerous jurisdictions have held that the presence of these

activities, not the length of the lease, determines whether a property is being used for residential

purposes. See, e.g. Slaby v. Mountain River Estates Residential Ass'n, Inc., 100 So. 3d 569, 578–

79 (Ala. Civ. App. 2012) (“We agree with those courts that property is used for ‘residential

purposes’ when those occupying it do so for ordinary living purposes. Thus, so long as the renters

continue to relax, eat, sleep, bathe, and engage in other incidental activities, as the undisputed

evidence indicates renters did in this case, they are using the cabin for residential purposes.”)

Moreover, the record does not show that those staying in a home for less than thirty days

are substantially more likely than others to engage in nuisance behavior. Indeed, the only study

the City ever conducted comparing STRs to long-term rentals found that on average, non-STR’s

(23.82%) were slightly more likely than STRs (22.86%) to receive a complaint.242

Given this lack of meaningful difference, the burdens of the STR Ordinance are arbitrary

and unconstitutional. There is no good reason why a person renting a home for 31 days can have

dozens of friends over, play beer pong in the yard, and stay up all night, but a family renting the

house next door is limited to 6 adults, must limit the number of people outside, must be asleep at

10 pm and must submit to warrantless searches. Yet this radical disparate treatment is precisely

242 City of Austin Special Request Report on Short-Term Rentals, available at https://austintexas.gov/sites/default/files/files/Auditor/Audit_Reports/Archived/AS12106b__May_2012_.pdf ; Ex. 9, COA 011395 (City Staff testifying that their studies show that “Short-term rental properties have significantly fewer 311 calls and significantly fewer 911 calls than other single family properties.”).

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the intent and effect of the ordinance.243 The Equal Protection Clause does not abide such arbitrary

and disparate treatment.

G. SECTION 1301 OF THE STR ORDINANCE VIOLATES ARTICLE 1 SECTION 9 OF THE TEXAS CONSTITUTION BY MANDATING THAT PLAINTIFFS SUBMIT TO UNREASONABLE SEARCHES

Section 1301 of the STR Ordinance violates Article 1 section 9 of the Texas Constitution

because it requires STR owners or guests to submit to warrantless searches of the home at virtually

any time, and these searches need not be based on probable cause or exigent circumstances.

Like the Fourth Amendment to the United States Constitution, Article 1, Section 9 of the

Texas Constitution protects citizens from unreasonable searches, providing:

The people shall be secure in their persons, houses, papers and possessions, from all unreasonable seizures or searches, and no warrant to search any place, or to seize any person or thing, shall issue without describing them as near as may be, nor without probable cause, supported by oath or affirmation.

While Texas courts are not ‘bound by the Fourth Amendment jurisprudence of the United

States Supreme Court when interpreting Article I, section 9,” (Heitman v. State, 815 S.W.2d 681

(Tex. Cr. App. 1991)), Fourth Amendment cases do “provide advisory authority, and Texas courts

generally follow them in their interpretations.” State v. Steelman, 16 S.W.3d 483, 486 (Tex. App.

2000), aff'd, 93 S.W.3d 102 (Tex. Crim. App. 2002) (citing Johnson v. State, 912 S.W.2d 227, 230

(Tex. Cr. App. 1995); Aitch v. State, 879 S.W.2d 167, 171–72 (Tex. App.—Houston [14th Dist.]

1994, pet’n ref'd).

The touchstone of what is permissible under Article 1 Section 9 is “reasonableness.” Id.

To determine whether a search is reasonable, courts must “balance the nature and the quality of

243 See, e.g. Ex. 33, COA 001721(Councilwoman Tovo explaining the purpose of the caps on the number of people present at an STR: “I’m not trying to get to occupancy in there. Here's why we need to have a number because single-family homes can have gatherings up to 50 people, and I do not want short-term rentals to have that same right.”

62

the intrusion” against the “importance of the governmental interests alleged to justify the

intrusion.” Hereford v. State, 339 S.W.3d 111, 119 (Tex. Crim. App. 2011).

In determining that balance, courts recognize that a private dwelling is “a sacrosanct place

in search and seizure law.” Steelman, 16 S.W.3d at 488–89. The Texas Constitution “specifically

names people’s houses as a place in which they are entitled to feel secure from governmental

intrusion.” Id. Searches of a private residence are therefore presumed to be unconstitutional in the

absence of a warrant or “exigent circumstances.” Id (citing Vale v. Louisiana, 399 U.S. 30, 34, 90

S.Ct. 1969, 26 L.Ed.2d 409 (1970).).

The STR Ordinance runs afoul of this command on its face. Section 1301 of the STR

Ordinance provides that the owner or person in charge of the home at the time “shall give code

officials free access to the dwelling…at all reasonable times for the purpose of inspection.” This

inspection need not be justified by a warrant, or based on probable cause or exigent circumstances.

244 The inspection is also not limited in scope. The officer may search any part of the house.245

Moreover, because the violations such searches are seeking to uncover involve private activity

occurring after 10 pm, these searches may occur at all hours of the night. Failure to allow the

inspection can result in civil and criminal penalties, including the loss of the right to use one’s

home as an STR.246

Because these searches are not supported by warrant, exigent circumstances, or even

probable cause, they are presumptively unconstitutional. Steelman, 16 S.W.3d at 488–89. But

even if the lack of a warrant were not fatal to section 1301, the search provision still fails because

the invasion of privacy is inherently unreasonable.

244 Ex. 3, Deposition of Marcus Elliot at 35:12-22. 245 Ex. 3, Deposition of Marcus Elliot 35:23-25; 36:1. 246 Ex. 3, Deposition of Marcus Elliot at 33:6-18; 35:1-10; Ex. 1, STR Ordinance §§ 1301, 1307; Austin City Code § 25-1-462.

63

To determine whether a search is reasonable, courts must “balance the nature and the

quality of the intrusion” against the “importance of the governmental interests alleged to justify

the intrusion.” Hereford v. State, 339 S.W.3d 111, 119 (Tex. Crim. App. 2011). Here, the City

concedes that the purpose of the search provision is to determine the number and relationships of

the people inside the home and whether or not they are sleeping.247 The City concedes that these

searches are not required to determine public disturbance violations.248 Noise, trash, and parking

violations can be determined at the property line.249 When public disturbances are removed from

the equation, it is not clear that searching homes to determine the number of occupants, their

familial status, or whether they are sleeping, serves any legitimate government interest, much less

an interest sufficient to justify random warrantless searches of the home. See, Lombardo v. City of

Dallas, 124 Tex. 1, 9–10, 73 S.W.2d 475, 478 (1934) (the police power “is founded in public

necessity and only public necessity can justify its exercise.”) Id. at 479 (“the police power … may

be invoked to abridge the right of the citizen to use his private property when such use will

endanger public health, safety, comfort or welfare,-and only when this situation arises.”)

Indeed, even in the context of “administrative” searches — serving to ensure regulatory

compliance, rather than seeking the fruits of a crime — the warrant requirement is only waived if

exigent circumstances exist, the party is given an opportunity for precompliance review, or when

the property is a “closely regulated” business. Adust Video v. Nueces County, 996 S.W.2d 245,

255 (Tex. App.—Corpus Christi 1999, no pet.); City of Los Angeles, Calif. v. Patel, 135 S.Ct. 2443

(2015) (“absent consent, exigent circumstances, or the like, in order for an administrative search

247 Ex. 17, Deposition of Reynaldo Arellano at 29:7 -25; 30:1-6. 248 Ex. 3, Deposition of Marcus Elliot at 36:9–37:7. 249 Ex. 3, Deposition of Marcus Elliot at 37:8–38:13.

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to be constitutional, the subject of the search must be afforded an opportunity to obtain

precompliance review before a neutral decision maker”).

The Supreme Court of the United States struck down a Los Angeles Ordinance authorizing

warrantless hotel searches, noting that “on demand” searches “conducted outside the judicial

process, without prior approval by [a] judge or [a] magistrate [judge], are per se unreasonable,”

and violate citizens’ constitutional right to protection from unreasonable searches. City of Los

Angeles, Calif. v. Patel, 135 S.Ct. 2443, 2452 (2015)

Section 1301 of the STR Ordinance gives police even more “on demand” authority than

that authorized by Los Angeles’ unconstitutional provision. The City requires STR licensees to

permit code compliance officers to “enter, examine, and survey, at all reasonable times, all

buildings, dwelling units, tenant rooms, and premises.” STR Ordinance § 1301. The Austin

Ordinance is not limited to a single registry, sheet of paper, or even a single room.250 Without

warrant, justification, or even a chance to protest, Section 1301 authorizes code officers to intrude

upon and search citizens’ bedrooms, pantries, nurseries, and everywhere in between.251 No room,

closet, or drawer is off limits.252 Accordingly, the STR Ordinance violates the Texas

Constitution’s prohibition on unreasonable searches and seizures.

Finally, the City will argue that Article 1 section 9 is not implicated by Section 1301 of the

STR Ordinance, because code enforcement has no authority under Section 1301 to force their way

into the home if the guest or owner refuses to grant entry. But this is a distinction without a

difference. The City concedes that failure to allow entry can result in penalties to owners and

250 Ex. 3, Deposition of Marcus Elliot at 35:23-25; 36:1. (“Q: And Section 1301 doesn’t provide any limitation on where a Code Enforcement officer can look inside the home, does it? A: No. It doesn’t.”). 251 Id. 252 Id.

65

guests of up to $2,000 per violation, and the loss of the owner’s STR license.253 Indeed, the code

enforcement officer will make note of any refusal to search the premise precisely so punitive

measures can be considered later.254 In other words, there is a substantial penalty for exercising

one’s rights.

Art 1, section 9 may not be circumvented so easily. It is well established that the

government “may not impose substantial penalties because [a person] elects to exercise his

[constitutional] right.” Lefkowitz v. Cunningham, 431 U.S. 801, 805–06 (1977). Nor may the City

require plaintiffs to “forfeit one constitutionally protected right as the price for exercising another.”

Id. at 807-808; Simmons v. United States, 390 U.S. 377, 394 (1968) (“we find it intolerable that

one constitutional right should have to be surrendered in order to assert another.”). This is because,

as the Supreme Court noted, a penalty imposed for exercising a constitutional right, “cuts down

on [the right] by making its assertion costly.” Griffin v. California, 380 U.S. 609, 614 (1965). At

a minimum, section 1301 punishes STR owners and guests for refusing to submit to

unconstitutional searches and is therefore unconstitutional.

VI. CONCLUSION

The City has run rough-shod over Plaintiffs’ rights in the name of the police power, but

there is no evidence that STRs are causing the type of public problem that would warrant such

intrusion, or that the intrusions into Plaintiffs’ rights caused by the STR Ordinance actually target

the public problems the City claims.

“The courts are not bound by mere forms, nor are they to be misled by mere pretenses.

They are at liberty—indeed, are under a solemn duty—to look at the substance of things, whenever

they enter upon the inquiry whether the legislature has transcended the limits of its authority.”

253 Ex. 3, Deposition of Marcus Elliot at 35:5–11. 254 Ex. 3, Deposition of Marcus Elliot at 33:6–18.

66

Satterfield v. Crown Cork & Seal Co., 268 S.W.3d 190, 218–19 (Tex. App—Austin 2008) (quoting

Mugler v. Kansas, 123 U.S. 623, 661 (1887)). When, as in this case, an ordinance “purporting to

have been enacted to protect the public health, the public morals, or the public safety, has no real

or substantial relation to those objects, or is a palpable invasion of rights secured by the

fundamental law, it is the duty of the courts to so adjudge, and thereby give effect to the

Constitution.” Id.

The undisputed facts in this case show that the challenged provisions of the STR Ordinance

violate Plaintiffs’ constitutional rights. Summary judgment and a permanent injunction against the

City preventing the enforcement of the challenged provisions is proper.

Respectfully submitted,

ROBERT HENNEKE Texas Bar No. 24046058 [email protected] CHANCE WELDON Texas Bar No. 24076767 [email protected] TEXAS PUBLIC POLICY FOUNDATION 901 Congress Avenue Austin, Texas 78701 Phone: (512) 472-2700 Fax: (512) 472-2728

Attorneys for Plaintiffs

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CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the foregoing document has been served in compliance with the Texas Rules of Civil Procedure, on this 28th day of August, 2017, on all parties or their attorneys of record as follows: Michael Siegel Brandon Carr Assistant City Attorneys City of Austin Law Department P.O. Box 1546 Austin, Texas 78767-1546 Attorneys for Defendants David Hacker Austin Nimocks Michael C. Toth Joel Stonedale Office of Special Litigation Attorney General of Texas P.O. Box 12548, Mail Code 009 Austin, Texas 78711-2548 Attorneys for Intervenor

ROBERT HENNEKE

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