Some wait for opportunities to come to them; others create opportunities. After he was laid off from his engineering job in the aerospace industry in June 2003, Blayne McAferty and his wife, Julie, decided to fulfill their dream of running a bed and breakfast from their Seattle home. After months of preparation and renovation, they launched the Greenlake Guest House bed and breakfast to rave reviews. One visitor to the Guest House, wrote:
What a treasure you have here. You have sold me on B&B’s! The bed is fabulous, the food is beautifully presented and delicious (and abundant!) and your family is delightful. You have all been so kind and helpful and thank you all for the wonderful experience.
Unfortunately, the Greenlake Guest House may soon be closed despite its excellent service because the government is more concerned with overly sensitive neighbors rather than the rule of law. When the Greenlake Neighborhood Coalition, an association of local homeowners, heard of the McAfertys’ plans to open a bed and breakfast, they complained to the City of Seattle. Certain neighbors claimed that the bed and breakfast—located on a high-traffic thoroughfare near a commercial district and directly across the street from Green Lake Park—was somehow disruptive to the “residential” character of the neighborhood. One neighbor, who lives next door to the McAfertys whined, “I’ve got people waving at me and I don’t know who they are.” 
Caving Into Pressure
In a free and open society, disgruntled neighbors would have had two options available to them: buy out the McAfertys or accept the McAfertys and attempt to change the law to restrict new B&Bs. Instead, reeling from the barrage of unsolicited waving, the Coalition recognized that it would be easier to get the government to do their dirty work. After pressure from the Coalition to shut down the McAfertys’ home-based business, the City of Seattle reverted to its traditional anti-small business stance and issued a notice of violation ordering the McAfertys to discontinue operating their bed and breakfast. (On February 14, 2005, the City of Seattle Department of Planning and Development office issued an order that the McAfertys’ B&B shut down by March 31 or face fines of $75 per day.)
The City’s attempt to drive yet another small business into the ground was even more disheartening than usual, however, because the McAfertys had opened their B&B after the City had considerably liberalized its bed and breakfast ordinance. Despite the City’s most recent action against the McAfertys, the Seattle City Council recognized the importance of the bed and breakfast industry when it unanimously passed an ordinance permitting new bed and breakfasts in single-family residential zones in Seattle. Prior to the passage of the ordinance in 2003, the City had permitted bed and breakfasts only in multi-family and commercial zones—places no one would want to put a B&B. Councilmember Richard Conlin, who introduced the ordinance, recognized that the change would help to remedy the shortage of bed and breakfasts in Seattle (“a low number for a city of our size and tourist appeal”) and encourage small businesses in the City. He wrote, “I am reluctant to adopt a ‘protectionist’ attitude that uses the Land Use Code to artificially limit entry.”
Unfortunately, the City’s good sense and enthusiasm for small businesses was short-lived once opponents exerted political pressure. The McAfertys were the first and only homeowners to attempt to open a bed and breakfast in a single-family residential zone following the passage of the new law. When certain neighbors complained, the City buckled and now seeks to shut down the Greenlake Guest House.
Why would the City seek to close a thriving business providing a much-needed service to guests and tourists visiting Seattle? The answer, according to the City, lies in Seattle Municipal Code (SMC) 23.44.051(6), which prohibits any and all exterior structural alterations that are made to a home to accommodate its use as a bed and breakfast. Because the McAfertys remodeled their home with the intention of later opening and operating a bed and breakfast, the City now claims that it may permanently turn off the lights at the Greenlake Guest House.
What did the McAfertys do to their home to warrant such severe action by the City? Was it dangerous or unsightly? Did the remodel violate some zoning law? No. To the contrary, the McAfertys added two attractive and fully permitted dormers to the second story, preserving the beautiful Craftsman style of the home. Their home now looks like this:
Under the bizarre logic of Seattle’s Department of Planning and Development (DPD), however, if the McAfertys had completed the same remodel for any other reason, their actions would have been perfectly legal. Apparently, the McAfertys’ mistake was not in performing the beautiful remodel, but in pursuing their dream of opening a B&B after remodeling their home.
Consistent with the spirit of the ordinance, the City originally offered a reasonable reading of the bed and breakfast law. In an April 6, 2004, response to a neighbor’s objection to the McAfertys’ planned opening of the bed and breakfast, the Director of the DPD, Diane M. Sugimura, explained:
I understand that regulations pertaining to bed and breakfast use stipulate that exterior alterations must not be a part of establishing a bed and breakfast use. However, there is no restriction on how much time must transpire between making exterior alterations for a house remodel and establishing bed and breakfast use.
Unfortunately, the City has since abandoned this reasonable interpretation and now seeks to shut down the Greenlake Guest House.
Bed and Breakfast Establishments
Bed and breakfast establishments provide significant benefits to the local economy. In 2003, visitors to Washington spent $1.5 billion on commercial accommodations, including hotels, motels, bed and breakfasts and resorts. Tourists pumped almost twice that amount, or $2.9 billion, into the state’s economy. Room taxes alone raised about $83.5 million for state, local and county governments. Because bed and breakfasts serve a somewhat different clientele than do more traditional types of lodging, they likely draw overnight guests to Seattle who might not otherwise visit.
Customers clearly appreciate the difference. Bed and breakfasts are an increasingly important part of the travel industry. In 1980, 1,000 bed and breakfasts scattered around the country served one million guests annually. By 2001, these numbers had risen to 29,000 establishments serving 55 million guests. Indeed, during the period following September 11, 2001, when hotel and other travel-related industries saw declines in revenues, the bed and breakfast sector actually experienced net growth in total revenues. However, unlike its Pacific Northwest neighbors, Vancouver and Victoria, B.C., Seattle has considerably fewer bed and breakfasts, largely due to the City’s attempts to keep them out of Seattle by force of law. B&B entrepreneurs in Seattle thought that situation was changing. They were wrong.
The Fight for the Greenlake Guest House
In addition to sending a chilling message to other potential B&B owners, closing the Greenlake Guest House would lead to devastating personal and financial consequences for Julie and Blayne McAferty. Their lifelong dream would be crushed, their time and money wasted, and their hopes for the future dashed. Equally devastating, the McAfertys would be forced to sell their home and move their family, as the McAfertys rely on the profits they earn from the Greenlake Guest House for their livelihood.
But the McAfertys have decided to fight.
On March 1, 2005, the Institute for Justice Washington Chapter (IJ-WA) filed this case, McAferty v. City of Seattle, in King County Superior Court in Seattle. IJ-WA and the McAfertys are challenging violations of the Washington Constitution on substantive due process and free speech grounds, as well as the privileges or immunities clause. The lawsuit on behalf of Julie and Blayne McAferty seeks to prevent the City from enforcing its arbitrary restrictions on the McAfertys’ economic liberty. The suit seeks a declaration that the City’s interpretation of the ordinance is unconstitutionally irrational and a ruling that the McAfertys may continue to operate their business from their home. The McAfertys also request freedom to advertise their business by placing a sign on their property and by including their name and other identifying information on certain advertising materials. IJ-WA hopes that this lawsuit, like its four other ongoing cases, will send a message to local governments that they may no longer interfere with Washingtonians’ exercise of rights guaranteed under the state constitution.
IJ-WA recognizes that the McAfertys’ struggle with the City is more than a simple disagreement over the interpretation of a section of the Seattle Municipal Code—it is yet another example of local bureaucrats interfering with residents’ constitutional right to earn an honest living free from irrational and unnecessary regulation. In this lawsuit, IJ-WA will demonstrate that there is no rational basis for prohibiting property owners from operating a bed and breakfast business in a home that has been remodeled when such a remodel would be perfectly legal under any and all other circumstances.
The grant of police power to a city carries with it the necessary implication that its exercise must be reasonable. The Washington Supreme Court has warned “the courts are equally concerned to see that, under the guise of protecting the public, private business—especially private business carried out on private property—is not arbitrarily restricted or interfered with.” Seattle v. Ford, 144 Wash. 107, 110, 257 P. 243 (1927).
The ordinance at issue—which the City claims prohibits the use of a home as a bed and breakfast if any exterior structural alterations are made to accommodate the bed and breakfast use—is arbitrary and irrational. The ordinance has no logical connection to the protection of the general welfare (i.e., the preservation of the residential character of the neighborhood). It is entirely subjective, as there is no requirement that any particular period of time pass before a remodel is completed and a bed and breakfast is opened. If the McAfertys were not operating a bed and breakfast, their remodel would be perfectly legal, regardless of its impact on the residential nature of the neighborhood. Absurdly, the McAfertys could sell their home tomorrow to a buyer who could operate the home as a bed and breakfast. The only difference between the McAfertys and this hypothetical buyer is that the buyer would purchase the house after the exterior alterations were completed.
In short, the ordinance is, like others the Washington Supreme Court has held to be unconstitutional, “unjust, unreasonable and discriminatory in that it does not operate alike on all persons and property under the same circumstances and conditions, and is therefore class legislation in discriminating against some and favoring others. It presents nothing but an arbitrary selection and as such is invalid.” Kaufman v. West, 133 Wash. 192, 193, 233 P. 321 (1925).
Freedom of Commercial Speech
IJ-WA also challenges the City’s regulations prohibiting the McAfertys’ use of an exterior sign to identify the B&B and the inclusion of the Greenlake Guest House’s name and address on advertising materials other than business cards. The McAfertys wish to put into practice the words of Washington’s Constitution, “Every person may freely speak, write, and publish on all subjects, being responsible for the abuse of that right.” The City clearly violates this constitutional provision by favoring one form of commercial speech (advertising businesses that are not a bed and breakfast) over another form of commercial speech (advertising a bed and breakfast), and by creating a number of irrational restrictions on commercial content of bed and breakfast advertising.
The U.S. Supreme Court has recognized that consumers benefit from more—rather than less—information. As the Court stated nearly 30 years ago, “It is a matter of public interest that [economic] decisions, in the aggregate, be intelligent and well-informed. To this end, the free flow of commercial information is indispensable.” More recently, the Court reiterated, “If the First Amendment means anything, it means that regulating speech must be a last—not first—resort.”
IJ-WA’s Legal Battle for Economic Liberty and Commercial Speech
Of all the rights Washingtonians cherish, the right to earn an honest living is the least recognized as deserving protection from government interference. This lawsuit is another step in IJ-WA’s campaign to restore economic liberty as a basic civil right under the Washington Constitution. Its goal is to create a rule of law whereby governments must demonstrate that restraints on businesses must be rationally related to legitimate public health and safety objectives. It is also a continuation of IJ-WA’s work litigating to protect the right of small businesses to communicate with their customers.
The Institute for Justice has successfully litigated numerous cases on behalf of entrepreneurs in situations similar to the McAfertys’. Some of these important cases include:
· Clutter v. Transportation Services Authority: A group of independent limousine operators represented by the Institute for Justice took on an unjust and unconstitutional system for obtaining certificates of “public convenience and necessity” required by Nevada for driving limos in the state. The court agreed that state officials were denying the independent drivers their due process right to earn a living in their chosen profession.
· Wexler v. City of New Orleans Josh Wexler and Anne Jordan Blanton dreamt of opening a bookselling business on the streets of New Orleans. But, in a bureaucratic Catch-22, the City repeatedly informed them that selling books on the street required a license, but that they did not issue such licenses. Represented by the Institute for Justice, the couple filed suit, arguing that selling books was a classic exercise of free speech and earning an honest living was an exercise of economic liberty. The court agreed.
· Cornwell v. California Board of Barbering and Cosmetology: IJ represented JoAnne Cornwell, creator of the Sisterlocks technique of hairbraiding and locking, in defeating the irrational cosmetology-licensing requirement for African braiders in California.
·· Jones, et. al. v. Temmer, et. al.: Leroy Jones, Ani Ebong and Girma Molalegne opened Freedom Cabs, Inc., in Denver after IJ helped them overcome Colorado’s protectionist taxicab monopoly. Stemming from pressure in the court of public opinion created by their lawsuit, the state legislature enabled Freedom Cabs to become the first new cab company in Denver in nearly 50 years. Jones’ testimony also contributed to the breakdown of government-sanctioned taxicab monopolies in Indianapolis and Cincinnati.
·· Craigmiles v. Giles: A federal appeals court upheld the Institute for Justice’s lower court ruling that found Tennessee’s government-imposed cartel on casket sales was unconstitutional. This is the highest pro-economic liberty court decision since the New Deal.
The City claims to have passed the bed and breakfast law to encourage Seattle residents to open bed and breakfasts, but with the way the City is now enforcing that law, the McAfertys have learned their business is not welcome. At the behest of Greenlake neighbors who want bed and breakfasts banned in their neighborhood, the City adopted a new and illogical interpretation of its law. The City’s actions have perverted the representative process and violated the McAfertys’ constitutional rights.
IJ-WA aims to vindicate the McAfertys’ right to earn an honest living free from arbitrary and irrational government regulations, and to restore economic liberty to every person as a fundamental civil right.
The lead attorney in McAferty v. City of Seattle is Institute for Justice Washington Chapter Staff Attorney Jeanette Petersen. Also on the litigation team are IJ-WA Staff Attorney Charity Osborn and William Maurer, IJ-WA Executive Director, who recently defeated the City of Redmond’s unconstitutional ban on portable signs in Ballen v. City of Redmond, et al.
The Institute for Justice is a nonprofit public interest law firm that represents individuals, free of charge, when government has violated their essential liberties. From its offices in Seattle, the Institute’s Washington Chapter litigates under the Washington Constitution to reinvigorate economic rights, preserve property rights, promote educational choice, and defend the right of Washingtonians to freely speak, write and publish on all subjects. The national organization trains law students, lawyers, and others in the tactics of public interest litigation with the goal of limiting governmental power and advancing individual freedom. The Institute was founded in 1991.
For more information, or to arrange an interview with the Institute for Justice and its clients, please contact:
John E. Kramer Vice President for Communications Institute for Justice 901 N. Glebe Road, Suite 900 Arlington, VA 22203 W: (703) 682-9320, ext. 205 E-mail: email@example.com
Jeanette M. Petersen Staff Attorney Institute for Justice Washington Chapter 811 First Avenue, Suite 625 Seattle, WA 98104 W: (206) 341-9300 C: (206) 979-6217 E-mail: firstname.lastname@example.org
 Stuart Eskenazi, City Threatening to Shut Down B&B at Green Lake, The Seattle Times, November 27, 2004, at B1.
 See the materials regarding the City’s attempts to drive independent construction waste haulers out of business at /index.php?option=com_content&task=view&id=705&Itemid=165.
 Seattle City Council Newsletter October 14, 2003, Volume V, Issue 9 (viewed December 20, 2004) <http://www.ci.seattle.wa.us/council/conlin/miw_0903.htm#bandb>.
 B&B Industry Facts & Figures: Statistics and Historical/Economic Overview (visited December 20, 2004) <http://www.bedandbreakfast.com/about/pressFaq.aspx>.
 IJ-WA is currently challenging the government-created construction waste-hauling cartel in the City of Seattle, the City of Redmond’s portable sign ban preventing small businesses, like Blazing Bagels, from advertising, the City of Lynnwood’s portable sign ban, which restricts both commercial and political speech, and the tangled mess of cosmetology regulations that Washington’s Department of Licensing is attempting to apply to African hairbraiders.
 Wash. Const. art. 1, §5.
 Virgnia Bd. of Pharmacy v. Virginia Citizens Consumer Council, Inc., 425 U.S. 748, 765 (1976).
 Thompson v. Western States Medical Center, 535 U.S. 357, 373 (2002).