New Orleans City Council Proposes Total Ban on Residential Short-Term Rentals

The short-term rental saga in New Orleans may soon come to a dramatic end if the City Council moves forward with plans announced this week. Council members said they will introduce legislation to completely ban short-term rentals in residential areas across the city.

This drastic proposal comes in response to a federal judge temporarily halting enforcement of the city's prior short-term rental regulations last week. Those rules, passed in March, would have allowed limited short-term rental permits - just one per city square block, with up to two exceptions per block.

But, a lawsuit from short-term rental owners seeking to overturn the new regulations got in the way. Judge Ivan Lemelle instituted a restraining order on enforcing the rules until he can rule on their constitutionality on September 14th.

Frustrated by the legal challenges, council members took a hardline stance in statements Wednesday: “Enough is enough.” They expressed unwillingness to negotiate further with an industry "that refuses to be regulated."

The proposed total ban needs just four votes to pass at the next council meeting on September 21st. But attorneys for the plaintiffs promised to fight the ban as well, likely forcing further legal battles ahead.

This back-and-forth comes after the city had already gone through the process of determining permit recipients under the prior rules. A lottery was held in August, and the city began granting permits to the winners. But the judge's order forced them to halt this permitting last week. A planned October 2nd lottery was also canceled.

For now, the city said it will not accept or act on any short-term rental permit applications, whether in residential areas or commercial districts. Hundreds of applications already received will be put on hold unless the restraining order is lifted.

The city was already temporarily banning any new short-term rental permits in commercial and mixed-use areas. The council expects to pass long-term regulations for commercial short-term rentals this fall. But the debate over residential rentals clearly remains contentious.

As other tourist-heavy cities like San Francisco have fought their own battles against short-term rental companies like Airbnb, New Orleans is the latest to experience a bitter divide. Critics argue short-term rentals deplete housing supply and disrupt neighborhoods in this heavily tourism-dependent city.

But owners say they provide income from visitors that supports local businesses and jobs. Banning residential short-term rentals entirely could devastate some owners' livelihoods.

The council attempted to strike a balance with the previous rules passed in March. But after over a year of drafting regulations, the new permitting system was blocked before it could even take effect.

Now, New Orleans may be on track to follow in the footsteps of Santa Monica, California, which infamously banned short-term rentals of under 30 days in 2015. That pioneering move sparked lawsuits, too, but the ban was ultimately upheld in court.

It remains to be seen whether New Orleans' outright ban could actually withstand legal challenges. The coming weeks will determine if the city's short-term rental saga ends with a sweeping prohibition or yet another round in an ongoing legal battle.