Many property owners in New Orleans are familiar with the City’s rule that in order to operate a short-term rental (“STR”) in a residential neighborhood, the property owner must first demonstrate to the City that they reside on the premises. This rule was created to limit the spread of STR’s in those residential neighborhoods. The City enforces the provision by requiring the homeowner to provide the City’s STR Department with a copy of their homestead exemption covering that property.
On August 22, 2022, the United States Court of Appeals for the Fifth Circuit, in Hingell-Stark v. City of New Orleans, threw a wrench in that process, holding that the requirement of residency is unconstitutional.
The Court, in examining the STR ordinances, held that the “residency requirement” violated the dormant Commerce Clause; that it was discriminatory against interstate commerce on its face; and that its goals could be achieved by other means.
The Fifth Circuit, the federal appeals court which sits in New Orleans and hears federal cases arising from lower federal courts in the states of Louisiana, Texas, and Mississippi, vacated summary judgment that had been issued in favor of the City on the issue.
In short: the days of the STR residency requirement in New Orleans may be numbered. If you would like to discuss navigating the ever-changing STR landscape, please contact Graham Williams for more information or a consultation.