“Natural persons” allowed 1 STR/SQ block

By Christopher Tidmore
Contributing Writer

On Thursday, March 23, with only Councilmembers Eugene Green and Oliver Thomas opposing, the New Orleans City Council voted to limit short-term rentals in residential areas to one per square block, decided by a lottery system, starting July 1. However, the members also approved an amendment that would allow the City Council to approve additional residential STRs on a case-by-case basis.

The vote sought to rewrite rules, passed in 2019 by then-Councilwoman Kristen G. Palmer, which sought to limit STR proliferation by generally requiring a homestead exemption to host a residential short-term rental for an online app such as Airbnb. That requirement was overturned by a three-judge panel of the 5th Circuit Court of Appeals in New Orleans in August stating that the 2019 ordinance illegally discriminates against out-of-state property owners. In particular, Judge Jerry Smith of Houston wrote that restricting licenses to city residents violates the commerce clause of the U.S. Constitution by shutting others out of the market.

In contrast, the new law seeks to duplicate the rules in other cities, substituting the homestead exemption provision with a requirement that operators – who may be owners or tenants – live on the same lot as the short-term rental. The ordinance also demands that operators must “resolve” complaints from neighbors or guests within one hour, although the actual meaning for that mandate remains unclear. Owners and operators must obtain separate permits, with only one allowed per individual. Moreover, they must be “natural persons,” not corporate entities. That provision promises to spark further litigation. The plaintiff’s attorney in the existing federal case, Dawn Wheelahan, contended that mandate violates the U.S. Supreme Court’s Citizens United decision. She declared that she will ask the court to strike it down.

Under Thursday’s ordinance, residential STRs are limited to one per square block, but the Council approved an amendment, sponsored by Councilman Freddy King, allowing for two additional permits within a square block, for a maximum of three. Property owners must individually apply to increase the caps, and then follow protocols for notifying their neighbors. The council would then ultimately decide whether to grant the exception. King, whose District C includes high concentrations of short-term rentals in Faubourg Marigny and Bywater, argued that his exceptions sought to placate deeply entrenched factions.

The new law focused on residential permits. The Council will take up a rewrite of commercial permits later in the year.

This article originally published in the March 27, 2023 print edition of The Louisiana Weekly newspaper.