On Wednesday, September 27, 2023 the United States District Court for the Eastern District of Louisiana extended its prior temporary restraining order by continuing to enjoin the City from enforcing its Non-Commercial Short-Term Rental laws. At the Federal Court hearing, Judge Ivan Lemelle spent over an hour questioning attorneys on both sides before ordering supplemental briefing, extending the TRO, and setting a new hearing date for November 2, 2023, at 9:00AM. 

The ban on enforcement of the NCSTR laws will remain in place until then.

The ruling likely creates greater uncertainty in the City’s real estate market. The New Orleans City Council has already performed a first reading of an ordinance that would ban all NCSTR’s, and the co-authoring councilmembers have indicated their intent to move forward with a vote on the proposed ordinance immediately. During Wednesday’s hearing, the Court took a dim view of that proposed ordinance, likening it to a child picking up his marbles and going home.



           The hearing was on cross motions for summary judgment in the Hignell v. City of New Orleans case. That lawsuit was filed in November 2019 to challenge the City’s first set of STR laws. Following an appeal, the Fifth Circuit Court of Appeals held in August 2022 that the City’s “residency requirement” was unconstitutional. The City responded by passing an interim zoning district (“IZD”) that prohibited new STR permits. Then in April 2023, the City passed new ordinances that were at issue here. The new laws required an on-site innkeeper and established a lottery system on a one-per-block basis.

During oral argument, the Court took issue with the on-sight operator requirement, suggesting the need for exceptions. Counsel for the City explained the special exception process set out by the ordinance. Counsel for Hignell retorted that giving the City Council “unbridled discretion” to grant or deny exceptions was not an ideal solution.

           In their motion for summary judgment, the Plaintiffs contended that the revised April 2023 laws that established the on-site innkeeper and lottery system were still unconstitutional pursuant to the Commerce Clause and the First Amendment. In response, the City argued that the laws complied with the constitution, and the City was quick to point out that it had followed what it understood to be direction from the Fifth Circuit.

            A few weeks prior to the hearing, Judge Lemelle consolidated a later-filed case, Marquadt v. City of New Orleans, with the Hignell case. The issues in Marquadt are very similar – the plaintiff alleges that she lost her RSTR license when the City instituted the lottery – but her case focuses more singularly on procedural due process.

           Neighborhood groups the Vieux Carré Property Owners, Residents, and Associates, Inc. (“VCPORA”) and the Garden District Association attempted to intervene, but the Court held that their interests were adequately represented by the existing plaintiffs and denied the interventions. Both of the neighborhoods represented by those associations, namely the French Quarter and the Garden District, had been governed by special limitations on NCSTRs.

           The Court set October 20 as the deadline for the Marquadt plaintiff to file a motion for summary judgment and for the parties in the Hignell matter to supplement the record with information regarding the impact of STR’s on affordable housing. Following those filings, response and reply deadlines will apply.

           The Court indicated that it plans to rule from the bench at the November 2 hearing.

           The Court’s decision comes on the heels of what AirBnB, the largest STR platform, has referred to an “de facto ban” that went into effect in New York City on September 5. Meanwhile, the city of Richmond, Virginia, has taken an approach similar to New Orleans, in passing on-sight operator requirements as recently as Monday, September 27.