[ad_1]
The New Orleans short-term rental industry was left in legal limbo on Wednesday after a federal judge kept in place a temporary freeze on a new city law, halting city enforcement efforts as scores of new unpermitted rentals operate unchecked.
U.S. District Judge Ivan Lemelle seemed to be leaning towards the city’s defense of key parts of the new law, which limits the number of rentals per city block and requires an operator to live on the premises.
But he declined to rule during a hearing in federal court where city attorneys noted that illegal rentals have “proliferated” across New Orleans since he barred City Hall from enforcing the new law on Aug. 31. Lemelle gave no indication when a ruling might come and suggested more hearings might be necessary.
According to city data, there are currently 5,710 short-term rentals listings on Airbnb and other online platforms, but only about 1,260 active permits.
In the last 30 days, there have been 217 new listings even though the city is not currently accepting new permit applications in residential or commercial zones.
The city’s chief zoning official, Ashley Becnel, said in an interview before the hearing that uncertainty surrounding some aspects of Lemelle’s order has put the city into “a conservative posture,” meaning there has been no enforcement of permit requirements or other rules since the order was issued.
“We’re in a bit of a no man’s land,” Becnel said.
Latest attempt
The City Council made its latest attempt to regulate the controversial industry in March. The law restricted the number of short-term rentals in residential areas to one for every square block, required operators of the rentals to live on the site and barred corporate entities from owning the properties.
The law came in response to an earlier court case in which out-of-state owners of short-term rentals sued the city for rules aimed at limiting licenses to New Orleanians.
Lemelle, who was appointed to the federal bench by President Bill Clinton, initially ruled that the law was constitutional. But the U.S. Fifth Circuit Court of Appeals overturned that ruling, forcing the council to rewrite its law.
The same plaintiffs quickly sued to block the new law from taking effect, and Lemelle’s order blocked the city from “enforcing” the law until the court case played out. City officials say they aren’t sure what rules, if any, are allowable under Lemelle’s ruling. They sought clarity in the hearing on Wednesday, but received little.
A city attorney, Daniel MacNamara, asked Lemelle what leeway the city has to go after unpermitted rentals while the order is in effect.
Lemelle first said the order is “limited to those that have permits,” adding that the city is only barred from revoking existing ones.
“So those who are not operating pursuant to any permit, we can still take action on the illegal activity which they are engaged in?” MacNamara asked.
“I’m not prejudging anything. My order is very specific,” Lemelle replied, before concluding the hearing.
Becnel said afterward that officials would internally discuss how to respond to Lemelle’s guidance.
Lemelle’s leanings
Lemelle didn’t say when he might issue a final ruling, which is anxiously awaited by city officials, short-term rental owners and critics of the industry.
He did signal his agreement with the city’s position on key aspects of the new law, including the live-in operator requirement that is meant to replace a provision in the old law requiring owners to live on site.
Plaintiffs, who are short-term rental owners, amended a complaint they first filed in 2019 against the ownership requirement to claim the operator requirement is also unconstitutional. Lemelle said Wednesday he doesn’t see any problem with it.
He did ask for more information as to whether the operator must live within the rented housing unit, or if, for example, living on the other side of a shotgun double is permitted. The new law requires only that the operator can reside in any bedroom on the lot of record, whether or not it’s in the rented unit, according to the comprehensive zoning code.
Lemelle also said he saw no constitutional violations related to a one-per-square-block limit on new permits in residential areas, nor the lottery system used to award rights on blocks with more than one applicant.
At the same time, Lemelle questioned the wide discretion afforded to City Council members to allow up to two exceptions to the per-block limit, a so-called “relief valve” intended as a concession to permit seekers who are in good standing with their neighbors.
Lemelle also questioned the ban on corporate owners, since limited liability companies and other types of entities are allowed to own bed and breakfasts in residential areas. Lemelle also highlighted that corporate-owned short-term rentals are allowed in commercial zones.
Housing impacts
There was little discussion on how short-term rentals impact the New Orleans housing market, which Lemelle said at a Sept. 27 hearing he wanted to know more about before issuing a ruling.
In its filing, the city cited a report by Jane Place, a housing advocacy group that opposes short-term rentals, showing that 10% of housing units in the Treme neighborhood are listed on AirBnb, with fair-market permanent rents in that neighborhood increasing 19% over the last five years.
Dawn Wheelahan, an attorney representing the plaintiffs, called those findings “propaganda,” and cited previous reports by the City Planning Commission indicating that short-term rentals comprise only 1% to 2% of the city’s housing stock.
Those other figures make it “reasonable to question the motives of those legislating against STRs: it’s half an inch of water and they say they’re going to drown,” Wheelahan wrote in a memo.
Complete record
Lemelle, who chided the parties for bringing up new claims throughout the litigation, scarcely touched on the housing arguments in his questioning on Wednesday, and asked for additional briefings on the operator requirement, City Council discretion in granting permits beyond the cap and bed and breakfast establishments.
Lemelle said he wanted to ensure the 5th Circuit had as much information available to it as possible when it comes time to consider an inevitable appeal to his ruling.
“I want to make this record complete, to not have these open-ended issues. Maybe I’m raising new claims that haven’t been raised before, violating my own directives to you all,” Lemelle said.
[ad_2]
Source link
