Apartment Owners Sue Tuscaloosa Mayor & Council Over Higher Fees for Student Complexes

Owners of more than a dozen housing developments in Tuscaloosa have sued the city, Mayor Walt Maddox, the entire city council and two government employees over extra fees paid by owners of "student-oriented" complexes.

The lawsuit was filed Wednesday by fourteen companies, mostly LLCs, who own complexes that primarily lease to students at the University of Alabama and Stillman College, including the Bluff at Waterworks Landing, Campus Crest, Hillside Commons, the Hub Tuscaloosa, the Preserve Tuscaloosa and several more.

At issue is a 2021 decision by the Tuscaloosa city council to begin charging higher fees for the owners of "student-oriented" housing complexes which are above and beyond what other apartment owners are required to pay.

Municipal code enacted decades ago requires apartment owners to pay the city a business rental license fee equal to one percent of all rent received for leasing property they own, so if a landlord collects $1 million from tenants in a year, $10,000 of that goes to the city.

In September 2021, though, the city council adopted a new law, discussed then as Tuscaloosa Ordinance 9112, which required "student-oriented housing developments" with more than 200 bedrooms to begin in April 2022 to pay the city three percent of their rent earnings, not one percent.

The fee did not change for non-student complexes or those with under 200 bedrooms, and one owner said the higher fees applied to only about a quarter of developments in the city.

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The ordinance reads in part, "Because of their population density and typical proximity to other densely populated and highly-developed areas, Student-Oriented Housing Developments impose increased burdens on the city's infrastructure and have required and may in the future require a disproportionate provision of public services to maintain public health and safety," justifying the increased fees.

The owners of the properties disagree.

"This arbitrary and discriminatory classification scheme lacks any rational relationship to any legitimate municipal purpose," they said in a lawsuit filed against Maddox, each of the seven members of the city council individually, the city clerk and the Tuscaloosa County Tax Assessor tasked with enforcing the ordinance.

The defendants also take issue with the language in the ordinance that "relies on something that 'may happen in the future' and not anything currently happening, or that has happened or been proved to have happened in the past."

The five-count lawsuit accuses the mayor and council of violating due process, treating "out-of-state, foreign property owners" with discrimination, violating parts of the US and Alabama Constitutions and enacting an ordinance that was adopted in a way invalid with state code.

The property owners are asking Judge Jim Roberts, Jr. to "issue a declaratory judgment establishing that the Ordinance is and has at all times been invalid," and to order the city to refund all the allegedly excess fees collected since April 2022.

Citing municipal policy, a spokesperson for the city said they will not comment on current litigation.

For more on the case as it develops in court, stay connected to the Tuscaloosa Thread.