New Orleans City Council Passes Total Ban on New Short-Term Residential Rental Permits | Local policy

The New Orleans City Council moved Thursday to dramatically expand the temporary ban on new residential short-term rentals, halting renewals of existing permits and those already in the process of applying.

The expanded ban, which passed unanimously, could begin as early as November 3 and remain in effect for up to a year. It represents the council’s latest attempt to deal with an explosive 5th Circuit Court of Appeals decision in August that struck down a central provision of the city’s 2019 short-term rental law.

Once officially enacted, the new moratorium will immediately crush more than 600 pending permit applications, more than half of which have been approved but not yet issued because fees have not been paid, according to data provided by the administration of the Mayor LaToya Cantrell.

At-Large City Council member JP Morrell said on Thursday that the council had pledged to honor previous promises to pass a new short-term rental law by March, which would then allow the issuance of new permits. But he said the schedule will require “we really put our nose to the grindstone”.






New Orleans City Council member JP Morrell speaks to a group of tenant advocates during a council meeting at City Hall Thursday, Oct. 20, 2022.




‘I think this council is very committed to passing a short-term tenancy ordinance in March that respects people, especially smallholders trying to get by, and also protects the integrity of neighbourhoods’ , Morrell said.

Hugging mom and dad

If the one-year moratorium runs its course, nearly all of the 1,300 short-term residential rentals with valid permits would be removed without renewal. There are around 900 other short-term rental permits in commercial areas, which are not affected by the court ruling or moratorium.

The main difference between residential and commercial short-term rental permits is a provision of municipal law that the 5th Circuit ruled unconstitutional: residence permit holders must live in the properties they rent, as evidenced by an exemption of family property. Owners of commercial areas like the central business district are free to consolidate units into larger complexes that essentially function as boutique hotels.

“All the deep-pocketed folks are in the game, but the mum and the pop are kicked out,” 7th Arrondissement resident Morgan Clevenger said, describing the impact of the moratorium to council on Thursday.

There are also an unknown number of illegal short-term rentals that do not have permits but continue to welcome visitors. Previous estimates have suggested they far outnumbered the legal ones. A year ago, tech company Granicus had about 6,500 unique rentals in New Orleans listed on platforms like AirBnB. This was more than triple the number of valid permits at the time.

Morrell acknowledged that law-abiding local landlords who rent out parts of their properties for extra income are the most likely to bear the brunt of the moratorium. But he said the only other alternative is to scrap permits altogether at a time when the city is taking steps to strengthen enforcement.

“We are actually quite upset that we even have to do this at all. But because of the litigation, the way it’s going right now, the options we have are to do it or not have short-term rent enforcement,” Morrell said.

Loggerheads

The 5th Circuit ruling found that the residential residency requirement discriminated against out-of-state property owners and was unconstitutional. The council responded to the decision with a moratorium intended to freeze new applications while it drafts new legislation.

This moratorium included exceptions for current licensees and those with pending applications.

But the plaintiffs who filed the lawsuit that led to the recent appeal ruling were quick to seek a temporary restraining order. They claimed the moratorium retains a licensing regime that had already been ruled unconstitutional.

U.S. District Court Judge Ivan Lemelle dismissed the temporary restraining order last month and ordered plaintiffs and the city council to negotiate in good faith toward a resolution. A hearing on November 16 is scheduled if the case has not been resolved.

Both sides seem to be at loggerheads. The plaintiffs followed Lemelle’s refusal with a motion for declaratory judgment, again seeking to overturn the moratorium. Lemelle put the motion on hold, meaning he could resume it later, but he also made it clear that he disapproves of it being filed in the first place. In his order, the judge said it was “not an act of good faith compliance” with his directive to bargain.

Plaintiffs’ attorney Dawn Wheelahan said there were no negotiations. She said she had tried to open a discussion, but council lawyers responded only to inform her that there would be a new moratorium.

Wheelahan said Friday that the more restrictive moratorium still did not comply with the law, although she declined to specify how she would argue it in court.

“I think they acted in haste,” Wheelahan said.

Wheelahan further argued that restricting residence permits while continuing to allow business permits is unconstitutional and indicated that she would try to have that distinction removed from city law.

“It’s the same use no matter where you put it. A residence in a commercial district is still a residence,” Wheelahan said.