Amicus Brief: Marfil v. City of New Braunfels

In 2011, the City of New Braunfels, Texas, passed an ordinance banning short-term rentals (STRs) in large portions of the city. A coalition of STR owners sued, alleging that the ban was an irrational violation of their property rights. The City moved to dismiss the case, arguing that the Court must accept the City’s statements that STRs were a nuisance. Both the U.S. Court of Appeals for the Fifth Circuit and Texas Supreme Court have struck down economic regulations whose rationale was not supported by evidence. Recently, however, state and local governments have attempted to avoid such meaningful meaningful review by filing motions to dismiss economic-liberty and property-rights cases before any evidence is discovered or presented. These motions typically involve a bare statement that the challenged regulation serves a legitimate interest, which they assert is alone under “rational basis” judicial review to pass constitutional muster. That's what happened here: the district court accepted New Braunfels’s assertions that the STRs were a nuisance despite the lack of any discovery (which would've shown no complaints or other evidence of nuisance). On appeal before the Fifth Circuit, MI joined the Pacific Legal Foundation on an amicus brief focused on the importance of real judicial scrutiny in property-rights cases.

Ultimately, the Fifth Circuit ruled in our favor in a very short opinion confirming that evidence matters in zoning cases and remanding back to the lower court to collect and consider evidence. On remand, the record was about as good as it could ever be in an STR case. The properties are across the street from the largest waterpark in the country and surrounded by other STRs. The city's own findings were that additional STRs wouldn’t negatively affect the public welfare. New Braunfels also admitted that it had no data suggesting that STRs produce more nuisances than other uses. To the contrary, despite being home to more than 700 STRs, the city couldn’t produce a single citation against an STR for nuisance in the past decade, and only 23 alleged complaints for things like parking or trash—a per-unit rate far lower than for other residential uses. But the district court didn’t review any of this evidence. Instead, in a 5-page opinion, it explicitly adopted the "same logic" as its initial opinion dismissing the case, again holding that neighborhood opposition alone was sufficient.

So we’re back to the Fifth Circuit again, this time joined by Southeastern Legal Foundation and three other groups, to argue that (1) bans on STRs are subject to heightened constitutional scrutiny and (2) STRs and other increased access-points to housing serve vital roles in increasing America’s housing stock at decreased cost.

Ilya Shapiro is a senior fellow and director of Constitutional Studies at the Manhattan Institute. Follow him on Twitter here.

Photo: Peter Dazeley / The Image Bank via Getty Images