The ever-changing landscape of short-term rentals (STRs) in New Orleans continues to evolve, however, a landmark decision by U.S. Federal District Judge Ivan Lemelle to uphold the City’s contentious new regulations governing residential STRs has provided some (temporary) clarity for property owners, renters, and investors alike. The group of plaintiffs challenging the City’s new set of regulations, which were passed in March 2023, is set to appeal Judge Lemelle’s decision up to the 5th Circuit Court of Appeals.

Key Provisions of the STR Regulations

Central to the ruling are several key provisions that promise to reshape the way short-term rentals operate within the city limits. Among the upheld regulations is the implementation of a “one-per-square-block” limit, designed to curtail the proliferation of STRs in residential neighborhoods. This measure aims to strike a balance between preserving the character of these communities and addressing concerns over housing affordability and neighborhood disruption.

In addition to the density cap, the court affirmed the use of a lottery system to allocate permits in cases where multiple applicants vie for permits in the same block.

Another significant aspect of the upheld regulations is the prohibition of corporate ownership of STR properties. By restricting ownership to individuals or entities with a direct stake in the community, the city aims to foster a more sustainable and equitable STR ecosystem, where property owners are personally invested in the well-being of their neighborhoods.

Now that Judge Lemelle has affirmed the validity of New Orleans’ new set of regulations governing short-term rentals, the spotlight shifts to the city itself to implement and enforce these rules effectively. While the court’s decision provides legal clarity, the responsibility now lies with municipal authorities to ensure robust enforcement mechanisms are in place. This task involves not only issuing permits and overseeing compliance but also responding promptly to complaints and addressing any potential violations. Effective enforcement is crucial in safeguarding the integrity of the regulatory framework and upholding the city’s vision for sustainable and harmonious neighborhood development.

Compliance with Applicable Laws

In the wake of this ruling, property owners and investors are advised to review their STR operations and ensure compliance with all applicable laws. Consulting with legal professionals well-versed in real estate law can provide invaluable guidance in navigating the evolving landscape of short-term rentals in New Orleans and beyond. As the industry continues to evolve, staying informed and proactive remains the key to success and sustainability.

Contact Henry Opotowsky with any questions you may have.

Filed under: Commercial Real Estate, Industry News, Residential Real Estate
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