After months of legal uncertainty over the city of New Orleans’ short-term rental laws, a recent federal court order will once again allow officials to investigate and fine those operating illegally.
The Feb. 28 ruling by U.S. District Judge Ivan Lemelle, striking down most of a lawsuit that challenged city restrictions on rental operators, came about six months after a temporary injunction paused all city enforcement of STRs. That order put the latest version of the city’s short-term rental law, passed by the New Orleans City Council last year, in limbo.
In the meantime, unlicensed short-term rentals have been allowed to proliferate. As of Monday, there were 936 permitted short-term rental units in New Orleans, but an estimated 6,250 short-term rental units were operating, according to data provided by the city.
Of the legally operating units, about 215 were located in residentially zoned areas, which were the focus of the 2023 regulations and the lawsuit. But Mayor LaToya Cantrell’s administration expects that number to grow.
The city will now be able to restart its enforcement efforts. And in spite of past tension with the council over the administration’s willingness to shut down illegal operators, council members who spoke to Verite News since the ruling said they were optimistic.
Lemelle’s ruling comes after years of back-and-forth between the city and the courts over what kinds of regulations it can put in place on the widespread market of short-term rentals, typically listed as vacation rooms or homes on sites like Airbnb and VRBO.
Housing advocates say that STRs have cannibalized the housing market, encouraging outside investors to purchase properties within the city and convert them into vacation homes instead of affordable housing for local residents. But some property owners have pushed back, saying that renting their homes to tourists provides a necessary revenue stream in a city where the cost of home ownership continues to rise.
“We’ve been fighting from the beginning to stop corporations from taking over our residential neighborhoods, and this ruling vindicates our efforts to protect New Orleanians,” Councilmember Helena Moreno said in a statement. “The ruling upholds and endorses our reasonable regulations on STRs we instituted last year.”
The ruling found that the city could enforce a rule limiting residential short-term rentals to one per city block – which property owners get by entering into a lottery. The judge slightly expanded the types of applicants who could be permitted, including some previously excepted categories, like inheritance trusts. Corporations are still not allowed to enter.
The city conducted its first lottery last year just weeks before Lemelle issued the injunction, putting winners’ permits on hold. The ruling will now allow the city to begin issuing licenses to winners of the first lottery round.
Those permits will be valid until June 30, 2025. The city says that revised license certificates will be issued to reflect this.
“The STR Administration is in the process of issuing the permits from the first round of the lottery and expects the [non-commercial short-term rental] number to grow significantly,” Cantrell Press Secretary John Lawson said in an email. “It is changing constantly as applicants pay for their licenses.”
The city plans to open applications for another round on June 1, with a lottery expected to take place on July 1, according to a Feb. 29 announcement on the Short Term Rental Administration’s website.
Councilmembers optimistic about enforcement
The Department of Safety and Permits continued to receive complaints during the injunction. With the injunction lifted, the city can now investigate those complaints and present cases for adjudication, and it is prepared to do so.
The Department of Safety and Permits currently employs 13 workers dedicated to STR enforcement, including analysts, inspectors, supervisors, and an administrator. They also plan to hire for an additional 5 vacancies.
“The reason you have seen no enforcement is that the fully funded office we had in charge of enforcement was basically told, ‘Don’t enforce anything,’” Councilmember JP Morrell said. “Those same people are still there, ready to enforce. And I would imagine over the coming days, as the city attorney’s office goes through the judgment, they are immediately going to ramp back up enforcement.”
Even prior to the injunction, there were concerns over whether STR enforcement would be strident enough.
Cantrell’s administration previously came under criticism for dragging its feet on cracking down on illegal operators, as well as the mayor’s 2020 decision to hire a former manager of a short-term rental company to head the Office of Business and External Services, overseeing the officials in charge of short-term rental permitting and enforcement. (That official, Peter Bowen, was fired in 2022 following an arrest for allegedly driving drunk.)
And after Lemelle halted enforcement last year, Cantrell said the city should have kept in place its original 2016 short-term rental law, which was widely criticized as being too lax.
But for now, members of the City Council said they expected strong short-term rental enforcement from the executive branch going forward.
“My office worked regularly with the Mayor’s team in drafting the new law last year, to make sure the Administration would be capable of administering, overseeing, and enforcing the strengthened residential STR rules,” Councilmember Lesli Harris said in an email. “So, I am confident that the Administration is ready to conduct robust enforcement.”
While complaints from neighbors can prompt investigations, the bulk of enforcement will likely come through data shared by Airbnb, the largest short-term rental platform. Under the regulations, the city asks Airbnb to share backend data on its New Orleans listings, including the address and permit numbers of each listing. Airbnb, however, pushed back against the city’s efforts to compel it to provide data on its listings last year.
The company did not respond to a request for comment by publication time on Tuesday (March 5).
According to a February 2023 report by Jane Place Neighborhood Sustainability Initiative, a housing justice nonprofit that has organized against unregulated STRs, 75% of all Airbnb listings in New Orleans are illegal, meaning that they do not have a permit.
“If you look at the sheer number of listings currently on Airbnb, it’s two or three times at least more people being listed than permits exist,” Morrell said. “Those people will get taken down immediately because they have no standing or wherewithal to have a rental under any circumstance.”
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