Federal Judge Delays Ruling on Legality of New Orleans Short-Term Rental Regulations

New Orleans' Latest Attempt to Regulate Short-Term Rentals Faces Uncertainty

The fate of New Orleans' newest regulations on short-term rental platforms like Airbnb remains unclear after a federal judge delayed ruling on a lawsuit challenging the rules. U.S. District Judge Ivan Lemelle said he needed more data on the impact of short-term rentals on housing affordability before deciding if the law passes constitutional muster.

The New Orleans City Council passed the regulations in March to replace an earlier law that was struck down by an appeals court last year. The new rules impose stricter limits, including capping permits at one per residential block, requiring on-site operators, and banning corporate owners.

But, a group of short-term rental operators quickly filed a lawsuit claiming the regulations violated their constitutional rights. In August, Judge Lemelle issued a temporary restraining order blocking the city from enforcing the law. At a hearing in early October, Lemelle extended the order until at least November and called for more evidence on questions he had.

Key Areas of Concern

In particular, Lemelle focused on two aspects of the regulations:

1. The requirement that short-term rental operators must live on-site. This replaced a previous owner-occupancy rule that was found unconstitutional. But Lemelle worried the new operator rule could make compliance difficult for single-family landlords and make their units less desirable to tourists.

2. The limit of one short-term rental permit per residential block. Lemelle questioned why this cap applied only to short-term rental permits and not other types.

Before making a final ruling, the judge asked both sides to provide more data and analysis on these issues and how the overall regulations impact housing affordability and availability. Lemelle hinted that he saw constitutional problems but said he didn't want to "rush into a decision."

What Happens Next

The additional filings from the city and rental operators are due by late October. Lemelle scheduled a new hearing for November 2nd when he could issue a ruling on whether the law can take effect or if parts of it need to be rewritten.

If Lemelle finds the regulations unconstitutional either in whole or partially, it will mark the second short-term rental law passed by the New Orleans City Council to be struck down by a court. Some council members have threatened to ban short-term rentals if this latest version doesn't survive judicial review.

But Judge Lemelle appeared skeptical of that approach, saying shutting down short-term rentals completely was "not that easy."

The temporary restraining order remains in place for now, so the city cannot enforce the new regulations. That means short-term rental operators can continue operating as they have been.

But the long-running fight over how to regulate the industry in New Orleans continues. Until Judge Lemelle issues his ruling, short-term rental platforms, hosts, and customers face ongoing uncertainty.

Both critics and defenders of short-term rentals anxiously await the judge's decision to see if the new rules can take effect or if the contentious process of re-regulating the industry has to start over.