Campus Crest at Tuscaloosa LLC, et al. v. City of Tuscaloosa, [Ms. SC-2025-0020, Oct. 3, 2025] __ So. 3d __ (Ala. 2025). The Court (Sellers, J.; Bryan, Mendheim, McCool, and Lewis, JJ., concur) affirms in part and denies in part the Tuscaloosa’s Circuit Court’s order dismissing claims against the City of Tuscaloosa (“the City”) asserted by out-of-state owners, operators, or lessees of multifamily housing developments in the City challenging the constitutionality of City Ordinance No. 9112 (“the Ordinance”) imposing business-license fees.
The multifamily housing developments the taxpayer plaintiffs own, operate, or lease have been designated by the City, through its zoning officer, as student-oriented housing developments (“SOHDs”). The ordinance in question imposed a business license fee of 3% of annual rents collected on owners of SOHDs with more than 200 bedrooms. Owners of SOHDs with fewer than 200 bedrooms were charged a business license fee of 1%. Ms. *4.
The Court reverses the 12(b)(6) dismissal of the constitutional claims. As to the equal-protection claim, the Court concludes, “[t]he complaint contains sufficient factual averments that, if developed, could show that the City had no rational basis for drawing the line of demarcation at 201 bedrooms and tripling the business-license fee on foreign entities that own, operate, or lease housing developments that have been designated as SOHDs.” Ms. *9.
In considering the due-process claim, the Court explains “‘[a] statute can be impermissibly vague for either of two independent reasons. First, if it fails to provide people of ordinary intelligence a reasonable opportunity to understand what conduct it prohibits. Second, if it authorizes or even encourages arbitrary and discriminatory enforcement.’” Ms. *10, quoting Hill v. Colorado, 530 U.S. 703, 732 (2000). The complaint states a due-process claim because it is “not merely conclusory” and alleges that “the characteristics or factors used by the zoning officer to determine whether a housing development receives an SOHD designation are vague, that the zoning officer has unfettered discretion in applying those characteristics or factors, and that the Ordinance fails to afford a person of ordinary intelligence a reasonable opportunity to understand which characteristics or factors caused a housing development to be designated as an SOHD.” Ms. *13.
The Commerce Clause includes a “restraint on the power of state governments or municipalities to regulate [interstate] commerce.” Ms. *15. The taxpayers argued that although “the Ordinance nominally applies to in-state owners of large housing developments, the only entities actually paying the treble tax are out-of-state entities, whether because the zoning officer has not applied the SOHD designation to housing developments owned, operated, or leased by in-state entities or because there are no developments with over 200 bedrooms owned, operated, or leased by in-state entities. Ms. *18. The Court holds the “allegations that the Ordinance unconstitutionally discriminates against out-of-state interests in favor of in-state economic interests alleges a classic violation of the dormant Commerce Clause.” Ms. *19.
Finally, the Court “conclude[s] that the taxpayers’ complaint does not sufficiently allege that the Ordinance falls within the scope of the City’s zoning regulations, which would be subject to the notice requirements of § 11-52-77” and accordingly affirms dismissal of that state law claim. Ms. *21.