The Daily Catch

Federal Ruling in Louisiana In Favor of Second-Home Owners Spurs Rewrite of Rhinebeck’s Proposed Short-Term Rental Law



The home bearing this elegant Victorian facade is available as a short-term rental in the Village of Rhinebeck, which has separate regulations from those being contemplated for the town (image from VRBO).

A federal appeals court ruling on a short-term rental (STR) law in Louisiana is already reverberating in Rhinebeck,  prompting the Town Board to abandon a key provision in its proposed STR law that would eliminate STR opportunities for second-home owners.

The  appeals court decided on Aug. 22 that the practice of mandating that STR operators only rent out rooms from their primary residence is unconstitutional. 

A three-judge panel sitting on the 5th U.S. Circuit Court of Appeals in New Orleans ruled that short-term rental laws that require STRs to be owner-occupied and rented only in an owner’s primary residence violate the commerce clause of the U.S. Constitution by blocking out-of-state homeowners from the rental market. 

A residency requirement to operate an STR, the justices wrote, “discriminates on its face against out-of-state property owners.” 

STR owners who are renting out rooms in their primary residence will not be impacted by the ruling, and municipalities can still place other restrictions on STRs, such as capping the number of days STRs can be rented out for, banning STRs in certain neighborhoods, and requiring that STR owners hire operators to stay overnight at the rentals during guest stays.

The ruling comes as the Town of Rhinebeck is in the process of crafting its own law regulating STRs. A previous draft of the proposal would have only allowed STRs to operate out of the homes of Rhinebeck residents, while prohibiting second-home owners from becoming STR hosts. 

“The track we were going on is something we can no longer consider,” Rhinebeck Town Supervisor Elizabeth Spinzia told residents at a public meeting Monday night. The town’s attorney, she said, has advised the board to consider the circuit court’s ruling in drafting a new proposed  STR law. She also advised that  STR operators, in future drafts, should not have to be Town residents.

“This leaves us with very little choice,” Spinzia said. “We can either allow unfettered Airbnbs or we can come up with some other parameters to work on.” The Town, she added, can still choose to require that STRs be hosted, meaning the operator is on the premises when guests are staying overnight, but cannot require that the host be the property’s owner or be a Rhinebeck resident. Spinzia said a full draft of the STR law will be unveiled to the public next month. 

While the appeals court’s decision is only binding in the part of the country served by the 5th Circuit, which does not include New York State, the ruling can be used as legal precedent to guide STR rulings in other jurisdictions, including New York, a Nyack land use attorney, Peter Klose, told The Daily Catch this afternoon. The facts and constitutional arguments assessed in the New Orleans case, he said,  “show that discriminatory regulation of short-term rental owners will open a municipality to litigation and potential damages if the law is not carefully tailored to the actual impacts of STRs on a community.”

Meanwhile, the New York State Association of Towns’ legal counsel is cautioning municipalities against passing STR regulations that would award operating permits based on residency requirements. That could violate interstate commerce law, the association told New York towns in an education seminar earlier this month.

The 5th Circuit’s ruling could also open the door for legal challenges to Red Hook’s own STR law which took effect this June. That law also requires that STRs be operated out of primary residences, with the exception of farm stays (read our coverage). 

Klose argued that, if the same legal theory applied to New Orleans were used in New York, “it would appear that Red Hook’s STR law would not withstand judicial scrutiny under the dormant Commerce Clause because a municipality may not “discriminate” against STR operators who are not “primary residents.” However, a legal challenge to Red Hook’s law is unlikely, and the appeals court’s decision is unlikely to have any immediate direct legal precedent for Red Hook’s Short-Term Rental Law, he said. Klose briefly represented a coalition of STR operators fighting against the passage of Red Hook’s STR law last November and December. 

Red Hook Town Supervisor Robert McKeon did not reply to multiple requests for comment via phone and email. 

Meanwhile, the Rhinebeck Town Board is still hammering out a framework for proposed STR regulations. The proposal is expected to require that all STRs be hosted, that they obtain a permit from the town’s zoning officer to operate, and that each property only rent out one STR unit capped at two occupants per bedroom. STRs will be allowed to operate out of family homes, apartments, and on farms, but currently existing STRs will not be grandfathered into the proposed law. In addition, STRs operating in the hamlet of Rhinecliff will require a special use permit and site plan approval from the Town Planning Board (read our coverage). 

On June 27, the Rhinebeck Town Board voted to hire the international monitoring and data analytics firm Granicus to enforce the forthcoming STR regulations. Granicus will collect the address of existing local STRs and set up a 24/7 hotline for complaints lodged against these rentals in Rhinebeck (read our coverage). Red Hook, along with Milan and the Village of Rhinebeck, already pay the firm to monitor their local STRs.

Leave a Reply