Hause v. City of Fayetteville, Arkansas

IN THE UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF ARKANSAS

FAYETTEVILLE DIVISION

SHELLEY HAUSE and STEPHEN HAUSE PLAINTIFFS

V. CASE NO. 5:24-CV-5143

CITY OF FAYETTEVILLE, ARKANSAS DEFENDANT

MEMORANDUM OPINION AND ORDER

TABLE OF CONTENTS

I. BACKGROUND .......................................................................................................... 2

II. LEGAL STANDARD .................................................................................................. 4

III. DISCUSSION ............................................................................................................ 4

A. Dormant Commerce Clause ................................................................................ 4

B. Void for Vagueness ............................................................................................ 12

C. Takings Clause ................................................................................................... 15

IV. CONCLUSION ........................................................................................................ 18

Now before the Court are the parties’ cross-motions for summary judgment (Docs.

26 & 34).1 Both motions are fully briefed, and the facts are not disputed. For the reasons

that follow, the City of Fayetteville’s Motion for Summary Judgment (Doc. 26) is

GRANTED, Plaintiffs Shelley and Stephen Hause’s Motion for Summary Judgment (Doc.

34) is DENIED, and the case is DISMISSED WITH PREJUDICE.

1 The City asserts that Plaintiffs’ Motion is untimely because it was filed more than thirty

days after the end of the parties’ agreed discovery period. However, the Court failed to

enter a case management order adopting the parties’ agreed discovery period and setting

a deadline for dispositive motions. The Court therefore will not penalize Plaintiffs for the

timing of their summary judgment motion.

I. BACKGROUND

In 2021, the City of Fayetteville passed an ordinance (the “Ordinance”) regulating

short-term rentals (“STRs”), residential dwelling units or portions thereof leased or rented

“for a period of less than thirty (30) consecutive days.” (Doc. 28, ¶ 3; Fayetteville, Ark.,

Code of Ordinances § 118.01(E) (2025)). Before the Ordinance’s enactment, STRs were

treated as hotels/motels and were therefore prohibited from operating in residential

zoning districts, but hundreds of illegal STRs were in operation nonetheless. (Doc. 2-1;

Doc. 28, ¶ 1). The Ordinance made it legal to operate STRs in residential zoning districts

subject to certain restrictions.

Fayetteville’s regulatory scheme divides STRs into two types which are subject to

different requirements. Type 1 STRs are those “where the owner or long-term tenant

occupies the principal dwelling . . . as their primary full-time residence for at least nine (9)

months of each calendar year and rents the remaining portion of their residence . . . as a

short-term rental.”2 Fayetteville, Ark., Code of Ordinances § 118.01(E)(1) (2025). Type 2

STRs are those that “do[ ] not qualify as a short-term rental, Type 1.” Id. § 118.01(E)(2).

Operators of both types of STRs are required to, among other things, obtain and maintain

business licenses, comply with occupancy limits, maintain guest registration records, and

pay the Fayetteville Hotel, Motel and Restaurant tax. Id. § 118.01(E)(3)–(15). But

someone seeking to operate a Type 2 STR in a residential zoning district must also obtain

a conditional-use permit, and such permits are subject to density restrictions including a

2 The City has amended the definitions of Type 1 and 2 since this suit was filed although

the changes do not materially alter the regulatory environment. The Court quotes and

references the current versions. Plaintiffs’ desired use of their house would be considered

“Type 2” under either set of definitions.

city-wide cap of 475 on the total number of Type 2 STRs. Id. §§ 118.01(E)(16), 163.18(A).

Such permits “may be permitted by right or by conditional use . . . subject to the zoning

regulations enacted by the City Council . . . .” Id. § 163.18(A). And such permits “may be

subject to denial . . . based upon the Planning Commission’s findings” on a number of

factors including the “[f]requency or concentration of nearby licensed Type 2 short-term

rentals.” Id. § 163.18(H).

In 2023, after the Ordinance went into effect but before the 475 cap was reached,

Plaintiffs bought a house in Fayetteville. (Doc. 36, ¶¶ 4–5). They intended to use the

house “personally upon their frequent visits to Fayetteville” and “as a short-term rental”

the rest of the time. Id. ¶ 4. They applied for a conditional-use permit, but the Fayetteville

Planning Commission unanimously denied their application because there were already

four Type 2 STRs operating in the 56-house subdivision and there was limited street

parking available due to ongoing construction. (Doc. 28, ¶¶ 9, 11). “Prior to Plaintiffs’

application . . . , the Fayetteville Planning Commission had previously denied six other

Type 2 short-term rental applications for dwellings in the area due to concerns about

density and parking.” Id. ¶ 10.

Plaintiffs filed this lawsuit on July 14, 2024, bringing five constitutional challenges

to the Ordinance. (Doc. 2). Plaintiffs sought a preliminary injunction and the City moved

to dismiss. The Court denied Plaintiffs’ request for a preliminary injunction, finding they

were not likely to succeed on the merits, and dismissed two of their five claims. See Doc.

25. The following claims remain: the Ordinance violates the dormant Commerce Clause,

is void for vagueness, and constitutes a taking without just compensation. Plaintiffs now

seek summary judgment in their favor and a permanent injunction against enforcement

of the Ordinance, while the City seeks summary judgment and dismissal of Plaintiffs’

remaining claims.

II. LEGAL STANDARD

A party moving for summary judgment must establish the absence of a genuine

dispute of material fact and its entitlement to judgment as a matter of law. See Fed. R.

Civ. P. 56; Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586–87

(1986); Nat’l Bank of Commerce of El Dorado, Ark. v. Dow Chem. Co., 165 F.3d 602 (8th

Cir. 1999). The same standard applies where, as here, the parties have filed cross-

motions for summary judgment. When there exists no genuine issue as to any material

fact, “summary judgment is a useful tool whereby needless trials may be avoided, and it

should not be withheld in an appropriate case.” United States v. Porter, 581 F.2d 698,

703 (8th Cir. 1978). “[T]he plain language of Rule 56(c) mandates the entry of summary

judgment, after adequate time for discovery and upon motion, against a party who fails to

make a showing sufficient to establish the existence of an element essential to that party's

case, and on which that party will bear the burden of proof at trial.” Celotex Corp. v.

Catrett, 477 U.S. 317, 322 (1986).

III. DISCUSSION

A. Dormant Commerce Clause

Plaintiffs assert that the Ordinance violates the so-called dormant Commerce

Clause because it discriminates against out-of-state residents “by offering a less

burdensome licensing option [Type 1] exclusively to properties occupied by a Fayetteville

resident for nine-months [sic] out of the year.” (Doc. 35). The City argues that Type 1 and

Type 2 STRs are not substantially similar and their differential treatment is therefore not

the kind of discrimination the Dormant Commerce Clause is concerned with.

The Commerce Clause gives Congress the power to regulate interstate

commerce. “The dormant Commerce Clause is the negative implication of the Commerce

Clause: states may not enact laws that discriminate against or unduly burden interstate

commerce.” Paul's Indus. Garage, Inc. v. Goodhue Cnty., 35 F.4th 1097, 1099 (8th Cir.

2022). “This negative aspect of the Commerce Clause prevents the States from adopting

protectionist measures and thus preserves a national market for goods and services.”

Tenn. Wine & Spirits Retailer Ass'n v. Thomas, 588 U.S. 504, 514 (2019).

In determining whether a law violates the dormant Commerce Clause, courts must

first determine whether the law is discriminatory and then apply the appropriate level of

scrutiny. In this context, “‘discrimination’ simply means differential treatment of in-state

and out-of-state economic interests that benefits the former and burdens the latter.”

Oregon Waste Sys., Inc. v. Dep't of Env't Quality, 511 U.S. 93, 99 (1994). However, “any

notion of discrimination assumes a comparison of substantially similar entities.” Gen.

Motors Corp. v. Tracy, 519 U.S. 278, 298 (1997).

A discriminatory law is subject to strict scrutiny; it is “virtually per se invalid and will

survive only if it advances a legitimate local purpose that cannot be adequately served by

reasonable nondiscriminatory alternatives.” Dep't of Revenue v. Davis, 553 U.S. 328, 338

(2008) (citation modified). A non-discriminatory law is subject to Pike balancing; it is

unconstitutional “if the burden it imposes upon interstate commerce is clearly excessive

in relation to the putative local benefits.” LSP Transmission Holdings, LLC v. Sieben, 954

F.3d 1018, 1026 (8th Cir. 2020) (citation modified) (citing Pike v. Bruce Church, Inc., 397

U.S. 137 (1970)).

There is a circuit split on the constitutionality of STR restrictions under the dormant

Commerce Clause. The Ninth Circuit held that Santa Monica’s STR ordinance, which

banned STRs unless a primary resident was on site throughout the stay, did not violate

the dormant Commerce Clause. Rosenblatt v. City of Santa Monica, 940 F.3d 439 (9th

Cir. 2019). The Fifth Circuit, by contrast, held that New Orleans’ STR ordinance, which

allowed STR licenses only for an owner’s primary residence, violated the dormant

Commerce Clause. Hignell-Stark v. City of New Orleans, 46 F.4th 317 (5th Cir. 2022).

The two courts disagreed about whether the STR ordinances discriminated

between substantially similar entities by having a residency or ownership requirement to

operate an STR. The Rosenblatt court found that Santa Monica’s ordinance did not

discriminate between substantially similar entities by requiring a primary resident to be on

site during STR bookings because “[w]hile non-resident property owners cannot

personally serve as the primary resident whose presence is required during the home

share, that is because they are not similarly situated to the Santa Monica residents who

can.” 940 F.3d at 451. The Hignell-Stark court, on the other hand, found that New Orleans’

ordinance did discriminate between substantially similar entities by requiring STRs to be

operated out of a property owner’s primary residence because both occupant and non-

occupant owners “want to offer the same services to the same customers in the same

locations.” 46 F.4th at 326. The Rosenblatt court therefore applied Pike balancing which

the Santa Monica ordinance survived, while the Hignell-Stark court applied strict scrutiny

which was, in fact, fatal. Rosenblatt, 940 F.3d at 453; Hignell-Stark, 46 F.4th at 329.

As the Court previously found in its preliminary injunction order, the Fayetteville

Ordinance looks more like the Santa Monica ordinance than the New Orleans ordinance

because it does not require STRs to be owner-occupied, thereby allowing out-of-state

owners to enter the market on the same terms as in-state owners. Thus, out-of-state

owners like Plaintiffs can get Type 1 licenses by leasing a house to a long-term tenant for

nine months of the year. And Plaintiffs’ desired Type 2 permit is available on identical

terms to residents and non-residents alike (but is unavailable to Plaintiffs for reasons

unrelated to their out-of-state status).

The Court finds the Hignell-Stark decision unpersuasive, not least of all because it

runs counter to Eighth Circuit precedent. In Paul’s Industrial Garage, Inc. v. Goodhue

County, the Eighth Circuit stated:

[T]he Commerce Clause was “never intended to cut the States off from

legislating on all subjects relating to the health, life, and safety of their

citizens, though the legislation might indirectly affect the commerce of the

country.” Gen. Motors Corp. v. Tracy, 519 U.S. 278, 306 (1997) (citation

omitted). Accordingly, the dormant Commerce Clause doesn't prohibit

differential treatment of companies that perform different services, because

“any notion of discrimination assumes a comparison of substantially similar

entities.” Id. at 298. “Thus, in the absence of actual or prospective

competition between the supposedly favored and disfavored entities in a

single market there can be no local preference . . . .” Id. at 300. State and

local governments are therefore free to treat vacation homes

differently from primary residences, Rosenblatt v. City of Santa

Monica, 940 F.3d 439, 453 (9th Cir. 2019), humane societies differently

from for-profit breeders, Park Pet Shop, Inc. v. City of Chicago, 872 F.3d

495, 497–98 (7th Cir. 2017), and brick and mortar liquor stores differently

from their online counterparts, Cherry Hill Vineyard, LLC v. Baldacci, 505

F.3d 28, 36–37 (1st Cir. 2007), to name a few examples.

35 F.4th at 1099–100.

Plaintiffs urge the Court to reach a contrary conclusion—that Type 2 rentals cannot

be treated differently from Type 1—based on an expansive conception of what constitutes

a single market: “Here, as in New Orleans, the ‘service’ being provided is the rental of

lodging to paying guests . . . .” (Doc. 38, p. 3). Putting aside the fact that the New Orleans

ordinance permitted only owners to operate STRs, Plaintiffs’ expansive theory of markets

would impose correspondingly circumscribed local government power to regulate

different industries differently. See United Haulers Ass'n, Inc. v. Oneida-Herkimer Solid

Waste Mgmt. Auth., 550 U.S. 330, 343 (2007) (“The dormant Commerce Clause is not a

roving license for federal courts to decide what activities are appropriate for state and

local government to undertake, and what activities must be the province of private market

competition.”). On Plaintiffs’ telling, governments could not distinguish between humane

societies and for-profit breeders because they both provide pets to paying customers, or

between brick and mortar liquor stores and their online counterparts because they both

sell liquor. Such an expansive conception of a “market” is unsupported by law or common

sense. See Alaska v. Arctic Maid, 366 U.S. 199, 204–05 (1961) (concluding that fish

destined for out-of-state canning were not competitors of fish destined for fresh-frozen

retail sale, so their differential tax treatment did not run afoul of the Commerce Clause).

Plaintiffs also focus their analysis solely on the area of commonality between Type

1 and 2 STRs—the three months during which a Type 1 STR can compete with Type 2

STRs in the whole-home STR market. But this argument ignores the distinguishing

feature between Type 1 and 2—the other nine months during which Type 1 rentals must

serve as primary full-time residences while Type 2 rentals continue to operate as STRs.

Plaintiffs do not argue, nor could they, that long-term residential leases are substantially

similar to or directly compete with STRs. Compare Zillow, https://www.zillow.com/, with

Airbnb, https://www.airbnb.com/. Indeed, while in their dormant Commerce Clause

discussion, Plaintiffs frame Type 1 rentals as “a less burdensome licensing option,” see

Doc. 35, p. 1, their Takings Clause argument belies this framing, instead urging that the

Ordinance burdens their rights by requiring them to lease on a long-term, rather than

short-term, basis, just as the purportedly “less burdensome” Type 1 rental would, see

Doc. 29, p. 5. Properly viewed, Type 1 operators are differently but no less burdened than

Type 2, because Type 1 operators are required to participate for the majority of the year

in what Plaintiffs implicitly concede is a less desirable market. Further, the “Ordinance

applies equally to out-of-state owners and in-state-owners who reside in [Fayetteville],

but at a property separate from their rental property.” MDKC, LLC v. City of Kansas City,

2023 WL 6406403, at *7 (W.D. Mo. Oct. 2, 2023). Because Type 1 rentals must remain

primary full-time residences, they are not similarly situated to Type 2 rentals for purposes

of the dormant Commerce Clause.

For the same reason, Plaintiffs’ argument that the Ordinance discriminates against

out-of-staters by “requiring [them] to enlist the support of locals to operate” must also fail.

(Doc. 35, p. 3 (citing Granholm v. Heald, 544 U.S. 460 (2005)). In Heald, the Supreme

Court struck down state laws that allowed in-state wineries to ship directly to consumers

but required out-of-state wineries to establish various in-state distribution operations to

do the same. 544 U.S. at 473–75. Such “differential treatment” is inconsistent with the

Constitution’s dictates because it “deprive[s] citizens of their right to have access to the

markets of other States on equal terms.” Id. at 472–73.

Plaintiffs, however, cannot complain of differential treatment here, nor do they seek

equal access to the whole-home STR market. The Ordinance does not “require an out-

of-state [owner] ‘to become a resident in order to compete on equal terms.’” Rosenblatt,

940 F.3d at 451 n.5 (quoting Nationwide Biweekly Admin., Inc. v. Owen, 873 F.3d 716,

736 (9th Cir. 2017)). Instead, both in-state and out-of-state owners who wish to operate

Type 1 STRs must jump through the same hoop: acquiring a primary full-time resident.

And even then, their access to the whole-home STR market is limited to three months of

the year. But Plaintiffs seek to operate their home as a Type 1 STR without jumping

through that hoop and for as much of the year as they want. The dormant Commerce

Clause certainly does not entitle non-residents to more favorable terms than residents.

Plaintiffs also argue that “[w]hether nonresident and resident homeowners are

similarly situated for purposes of operating short-term rentals depends on the legal

character of short-term rentals themselves.” (Doc. 35, p. 5). They argue that STRs must

either be residential3 or commercial in nature and that “[t]he nature of renting out a

property on a short-term basis is the same regardless of how many times it is done.” Id.

Therefore, whether residential or commercial, Type 1 and Type 2 rentals are not rendered

dissimilar based on the duration of their whole-home STR use. The Court rejects both the

premise and the conclusion.

First, Plaintiffs do not present and the Court is not aware of any case where the

dormant Commerce Clause analysis depended on how a zoning board would classify a

property—maybe because most dormant Commerce Clause cases do not deal with land

use regulations. Courts instead look to the realities of the market. See Gen. Motors Corp.

v. Tracy, 519 U.S. 278, 287–99 (1997) (“Assessing [whether the tax at issue is

discriminatory] requires an understanding of the historical development of the

3 Plaintiffs argue that if the Court concludes that the use of STRs is residential in nature,

then the law raises separate right-to-privacy concerns by regulating who Plaintiffs can

invite into their home. Plaintiffs have not pled a right-to-privacy claim, nor are privacy

concerns a relevant consideration in analyzing their dormant Commerce Clause claim.

contemporary retail market for natural gas . . . .”). Second, the frequency or duration of

whole-home STR use does affect a change in kind, not degree, by completely removing

a property from the full-time residence market.

In sum, the Ordinance does not discriminate against out-of-state economic

interests. Thus, Pike balancing applies. “Where the statute regulates even-handedly to

effectuate a legitimate local public interest, and its effects on interstate commerce are

only incidental, it will be upheld unless the burden imposed on such commerce is clearly

excessive in relation to the putative local benefits.” Pike, 397 U.S. at 142. The party

“challenging the legislative action ha[s] the burden of showing that the statute's burden

on interstate commerce exceeds its local benefit.” LSP Transmission, 954 F.3d at 1026

(citation modified).

As in their preliminary injunction briefing, Plaintiffs only argue that the Ordinance

is discriminatory but do not address the Ordinance’s burden on interstate commerce in

relation to local benefits. The City of Fayetteville has a “legitimate interest in local

neighborhood preservation, continuity, and stability.” Nordlinger v. Hahn, 505 U.S. 1, 12

(1992) (citation omitted). “The regimes of boarding houses, fraternity houses, and the like

present urban problems.” Vill. of Belle Terre v. Boraas, 416 U.S. 1, 9 (1974). The party

“challenging the legislative action ha[s] the burden of showing that the statute's burden

on interstate commerce exceeds its local benefit,” and Plaintiffs have not made that

showing here. LSP Transmission, 954 F.3d at 1026. The City’s Motion for Summary

Judgment (Doc. 26) is accordingly GRANTED as to Plaintiffs’ dormant Commerce Clause

claim (Count I).

B. Void for Vagueness

Plaintiffs also challenge the Ordinance as impermissibly vague under the

Fourteenth Amendment’s Due Process Clause and under Arkansas law. They contend

that the Ordinance is unconstitutionally vague and violates Arkansas law “because it

allows the Fayetteville Planning Commission to consider ‘frequency or concentration of

nearby licensed Type 2 short-term rentals’ when deciding whether to grant a conditional

use permit but fails to provide any further guidance or measurable standards.” (Doc. 35,

p. 7 (quoting Fayetteville, Ark., Code of Ordinances § 163.18(H)(3) (2025))).

“The void-for-vagueness doctrine . . . ‘addresses at least two connected but

discrete due process concerns: first, that regulated parties should know what is required

of them so they may act accordingly; second, precision and guidance are necessary so

that those enforcing the law do not act in an arbitrary or discriminatory way.’” Sanimax

USA, LLC v. City of S. St. Paul, 95 F.4th 551, 569 (8th Cir. 2024) (quoting FCC v. Fox

Television Stations, Inc., 567 U.S. 239, 253 (2012)). But even when criminal punishment

or constitutional rights are involved, the Constitution permits “[l]aws with ‘flexibility and

reasonable breadth’”; quantitative standards are not required. Adam & Eve Jonesboro,

LLC v. Perrin, 933 F.3d 951, 958–59 (8th Cir. 2019) (quoting Grayned v. City of Rockford,

408 U.S. 104, 110 (1972)). “In the area of land use, a conditional use standard must be

sufficiently specific to guide both an applicant in presenting his case and the Board in

examining the proposed use.” Rolling Pines Ltd. P'ship v. City of Little Rock, 73 Ark. App.

97, 105 (2001).

Where there is no First Amendment interest at stake, a plaintiff may bring only an

as-applied challenge. Nygard v. City of Orono, 39 F.4th 514, 519 (8th Cir. 2022). And the

constitutional demand for definiteness is at its lowest when the challenged law does not

“impos[e] criminal sanction or implicat[e] constitutionally protected behavior.” Woodis v.

Westark Cmty. Coll., 160 F.3d 435, 438 (8th Cir. 1998) (citing Vill. of Hoffman Estates v.

Flipside, Hoffman Estates, Inc., 455 U.S. 489, 498–99 (1982)).

Elsewhere in their briefing, Plaintiffs argue that the Ordinance burdens their

constitutional right to freedom of association. But the vagueness sections of their briefing

are curiously devoid of this argument. And Plaintiffs have not in fact pled a First

Amendment or substantive-due-process freedom-of-association claim, nor could they:

Their desired course of conduct—renting their house on a short-term basis while they are

not in it—does not implicate their freedom of association. See Roberts v. U.S. Jaycees,

468 U.S. 609, 617–18 (1984) (recognizing “constitutionally protected ‘freedom of

association’ in two distinct senses”: a substantive due process right “to enter into and

maintain certain intimate human relationships” and a First Amendment right “to associate

for the purpose of engaging in those activities protected by the First Amendment—

speech, assembly, petition for the redress of grievances, and the exercise of religion”);

City of Dallas v. Stanglin, 490 U.S. 19, 24 (1989) (holding that the associational activity

of patronizing a dance hall is not entitled to constitutional protection under the guise of

freedom of association). The Court therefore applies the “less strict vagueness test”

applicable to economic regulations. Hoffman Estates, 455 U.S. at 498.

Plaintiffs “respectfully ask this Court to reconsider its earlier finding that the

‘meanings of “frequency” and “concentration” are sufficiently specific to clearly proscribe

Plaintiffs’ desired permit.’” (Doc. 29, p. 2 (quoting Doc. 25, p. 24)). Plaintiffs rely on the

same argument based on the same sources, and the Court reaches the same conclusion

for the same reasons. See Doc. 25, pp. 22–25.

Plaintiffs argue that the Ordinance is insufficiently specific because it lacks

quantitative standards. But neither the U.S. nor the Arkansas Supreme Courts have held

that quantitative standards are constitutionally required. See Grayned, 408 U.S. at 112

(approving law where “the prohibited quantum of disturbance [was] not specified”);

Benton Cnty., 374 Ark. at 523 (upholding ordinance that “encouraged” “clustering” of

industrial developments without any quantitative standards such as how many clusters

would be permitted or how close developments needed to be to form a cluster); see also

Adam & Eve, 933 F.3d at 958 (rejecting vagueness challenge to ordinance that “d[id] not

declare how an entity’s ‘principal business purpose [wa]s quantified”). Indeed, under

Arkansas law a city may enact “minimum standards” for particular conditional-use permits

and the planning commission can still “consider matters above and beyond those”

standards “in assessing a conditional use” because “designating a use as a conditional

one does not necessarily constitute a predetermination that the proposed use must be

permitted.” Rolling Pines, 73 Ark. App. at 103.

Plaintiffs’ instance on quantitative standards is at odds with their concession that

“mathematical certainty” is not required. (Doc. 29, p. 3). “[T]he law is full of instances

where a man's fate depends on his estimating rightly . . . some matter of degree.” Nash

v. United States, 229 U.S. 373, 377 (1913). And under Arkansas law, city planning

commissions maintain a high level of discretion in conditional-use permitting decisions.

Rolling Pines, 73 Ark. App. at 104 (quoting Robert R. Wright, Zoning Law in Arkansas: A

Comparative Analysis, 3 U. Ark. Little Rock L.J. 421, 452–53 (1980)). Plaintiffs knew that

the Ordinance required a conditional-use permit to operate a Type 2 STR. The Ordinance

clearly indicates that the granting of such a permit is discretionary: “Type 2 short-term

rentals may be permitted as a conditional use . . . .” Fayetteville, Ark., Code of Ordinances

§ 163.18(A) (2023) (emphasis added). And the Ordinance provided four factors that

limited the exercise of the Planning Commission’s discretion. Id. § 163.18(H); see Benton

Cnty., 374 Ark. at 525–26. Nothing more is required.

Plaintiffs also continue to argue that “the City has provided no indication that they

applied [this] standard uniformly.” (Doc. 29, pp. 2–3). But they do not dispute that the

Planning Commission “denied six other Type 2 short-term rental applications for dwellings

in the area” before denying Plaintiffs’. (Doc. 28, ¶ 10). The Ordinance provides a “legally

fixed standard” by which to assess these conditional use permit applications, which the

Planning Commission appears to have applied consistently. Benton Cnty., 374 Ark. at

522. “[T]he speculative danger of arbitrary enforcement does not render [the Ordinance]

void for vagueness” under the Fourteenth Amendment. Nygard, 39 F.4th at 520 (citation

modified).

Because the Ordinance, as applied to Plaintiffs, was sufficiently definite to put them

on notice and to guide the Planning Commission, and was not arbitrarily or discriminatorily

applied to them, the City’s Motion for Summary Judgment (Doc. 26) is GRANTED as to

Plaintiffs’ vagueness claim (Count III).

C. Takings Clause

Plaintiffs’ final claim is that the Ordinance constitutes a taking without just

compensation in violation of the Fifth Amendment. “The Fifth Amendment's Takings

Clause prevents the Legislature (and other government actors) from depriving private

persons of vested property rights except for a ‘public use’ and upon payment of ‘just

compensation.’” Landgraf v. USI Film Prods., 511 U.S. 244, 266 (1994). Plaintiffs assert

that the Ordinance interfered with their reasonable investment-backed expectations and

therefore constitutes a taking. They also argue for the first time that the Ordinance violates

their First Amendment right of free association and their substantive due process right of

privacy, ostensibly as part of their takings claim. But the Takings Clause is not a catch-all

for any constitutional claim bearing some relationship to property, so the Court does not

consider these arguments and instead analyzes Plaintiffs’ takings claim under the Penn

Central framework, which all agree applies here.

In determining whether a land-use regulation affects a taking, courts must conduct

an “ad hoc factual inquir[y]” taking into account the following factors: “(1) the economic

impact of the regulation on the claimant; (2) the extent to which the regulation has

interfered with distinct investment-backed expectations; and (3) the character of the

government regulation.” Armour & Co. v. Inver Grove Heights, 2 F.3d 276, 278 (8th Cir.

1993) (citing Penn Central Transp. Co. v. New York, 438 U.S. 104, 124 (1978)). Plaintiffs

must show a “deprivation significant enough to satisfy the heavy burden placed upon one

alleging a regulatory taking.” Keystone Bituminous Coal Ass'n v. DeBenedictis, 480 U.S.

470, 493 (1987).

Plaintiffs only discuss the second factor, interference with distinct investment-

backed expectations. They argue that they had a reasonable expectation that they would

be able to use their property as an STR when they purchased it because they verified

that the City had not yet reached the cap for Type 2 permits. (Doc. 35, p. 10). But “[a]

reasonable investment-backed expectation must be more than a unilateral expectation or

an abstract need.” Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1005 (1984) (citation

modified). Indeed, the reasonableness of a property owner’s expectations “is shaped by

the ‘regulatory regime’ that was in place” when they acquired the property. Becker v. City

of Hillsboro, 125 F.4th 844, 858 (8th Cir. 2025), cert. denied, 2025 WL 1603608 (U.S.

June 6, 2025). One might also expect that a reasonable investor would investigate

whether other nearby property owners had been granted or denied the desired permit

before purchasing. As the City rightly argues, Plaintiffs were in no way guaranteed a Type

2 permit, and to this day “they retain all legally permissible uses of the property they

possessed at the time they purchased it.” (Doc. 37, p. 14 n.3).

With respect to the first and third factors, Plaintiffs offer no evidence that the

Ordinance has had any economic impact on their property, and the character of the

regulation—“a limitation on use” rather than a “physical invasion”—weighs against this

being a taking. Becker, 125 F.4th at 859 (quoting Lingle v. Chevron U.S.A. Inc., 544 U.S.

528, 539 (2005)). None of the Penn Central factors weigh in favor of finding a taking here,

and the Court again concludes that restrictions on STRs in residential neighborhoods do

not constitute a “taking” within the meaning of the Fifth Amendment. See, e.g., ALA

Mgmt., LLC v. Hall Cnty., 2024 WL 4449752, at *3 (11th Cir. Oct. 9, 2024) (“But simply

because [the plaintiff] cannot use the property as exactly what it originally wanted does

not mean that its investment-backed expectations are eradicated.” (citation modified));

Nekrilov v. City of Jersey City, 45 F.4th 662, 678 (3d Cir. 2022); Purple Munky Prop. Co.,

LLC v. Walnut Twp., 2023 WL 3069752 (S.D. Ohio Apr. 25, 2023); cf. Hignell-Stark, 46

F.4th at 325 (no property interest in the renewal of STR licenses).

Finally, Plaintiffs ask the Court to “reconsider its grouping of short-term rentals

within the same category as hotels.” (Doc. 35, p. 11). The Court’s discussion of STRs’

similarity to hotels in its preliminary injunction order was in response to Plaintiffs’

dismissed right-to-travel claim. (Doc. 18-1, p. 9 n.1). Whether STRs are or are not like

hotels—and whether STRs are or not commercial in nature—is not relevant to the Takings

Clause analysis.

For the foregoing reasons, the City’s Motion for Summary Judgment (Doc. 26) is

GRANTED as to Plaintiffs’ Takings Clause claim (Count IV).

IV. CONCLUSION

The facts of this case are not disputed: the City of Fayetteville passed an

Ordinance restricting short-term rentals which adversely affected Plaintiffs who hoped to

operate a short-term rental. The City has shown that the Ordinance is constitutional, so

the City is entitled to judgment as a matter of law on each of Plaintiffs’ claims. The City’s

Motion for Summary Judgment (Doc. 26) is therefore GRANTED, and Plaintiffs’ Motion

for Summary Judgment (Doc. 34) is DENIED. The case is accordingly DISMISSED WITH

PREJUDICE.

IT IS SO ORDERED on this 22" day of September, 2025.

UNITED STATES DISTRICT JUDGE

18