The expanded ban, which was passed unanimously, could begin as soon as Nov. 3 and remain in effect for as long as a year. It represents the council's latest attempt to deal with a bombshell 5th Circuit Court of Appeal ruling in August that struck down a central provision of the city's 2019 short-term rental law.
Once formally enacted, the new moratorium will immediately squash more than 600 pending permit applications, more than half of which have been approved but not yet issued because the fee hasn't been paid, according to data provided by Mayor LaToya Cantrell's administration.
At-Large City Council member JP Morrell said Thursday the council is committed to earlier pledges to adopt a new short-term rental law by March, which would then allow new permits to be issued. But he said that the timeframe will require "us really putting our noses to the grindstone."
"I think this council is very committed to, in March, passing a short-term rental ordinance that respects people, especially those people who are small operators who are trying to get by, and also protects the integrity of neighborhoods," Morrell said.
Squeezing Mom and Pop
The primary difference between residential and commercial short-term rental permits is a provision of city law that the 5th Circuit deemed unconstitutional: residential permit holders must live in the properties they rent, as evidenced by a homestead exemption. Owners in commercially zoned areas like the Central Business District are free to group units in larger complexes that essentially operate as boutique hotels.
"All the deep-pocket people are in the game, but the mom and pop are pushed out," said 7th Ward resident Morgan Clevenger, describing the impact of the moratorium before the council on Thursday.
There are also an unknown number of illegal short-term rentals that lack permits but continue to host visitors. Previous estimates have suggested they far out number legal ones. A year ago, technology firm Granicus tallied about 6,500 unique New Orleans rentals listed on platforms like AirBnB. That was more than triple the number of valid permits at the time.
Morrell acknowledged that law-abiding, local homeowners who rent out portions of their properties for extra income are most likely to bear the brunt of the moratorium. But he said the only other alternative is to do away with permits altogether at a time that the city is taking steps to beef up enforcement.
"We're actually quite upset that we have to even do this at all. But because of litigation, the way that's currently going, the options we have before us are to do this, or to have no short term rental enforcement," Morrell said.
Loggerheads
The 5th Circuit ruling found that the residential residency requirement discriminates against out-of-state property owners and was unconstitutional. The council responded to the ruling with a moratorium intended to freeze new applications while they devised a new law.
That moratorium included exceptions for current permit holders and those with pending applications.
But plaintiffs who brought the suit that led to the recent appellate decision quickly petitioned for a temporary restraining order. They claimed the moratorium retains a licensing regime that had already been ruled unconstitutional.
U.S. District Court Judge Ivan Lemelle denied the temporary restraining order last month and directed the plaintiffs and the City Council to negotiate in good faith toward a resolution. A Nov. 16 hearing is scheduled if the matter hasn't been resolved.
The two sides appear to be at loggerheads. Plaintiffs followed Lemelle's denial with a motion for declaratory judgment, again seeking to strike down the moratorium. Lemelle stayed the motion, meaning he could take it up later, but he also made clear that he disapproved of it being filed in the first place. In his order, the judge said it was "not an act of good faith compliance" with his directive to negotiate.
The plaintiffs' attorney, Dawn Wheelahan, said there have been no negotiations. She said she tried to open a discussion, but the council's attorneys replied only to inform her that there would be a new moratorium.
Wheelahan said Friday the more restrictive moratorium still doesn't pass legal muster, though she declined to elaborate on how she will argue that in court.
"I think they acted hastily," Wheelahan said.
Wheelahan further argued that restricting residential permits while continuing to allow commercial ones is unconstitutional, and indicated she would try to get that distinction eliminated from the city law.
"It's the same use, no matter where you put it. A residence in a commercial district is still a residence," Wheelahan said.
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