Key Takeaways

  • The 9th Circuit ruled July 20 that Hood River’s short-term rental residency ordinance is constitutional
  • Ten out-of-state homeowners had appealed after losing before a U.S. District Court judge last April
  • The ruling gives Oregon, Washington, California and six other western states firmer legal ground for similar STR residency rules

A federal appeals court just closed the door on out-of-state investors hoping to run unhosted vacation rentals in Hood River, Oregon — a city about 60 miles east of Portland.

Three judges on the 9th U.S. Circuit Court of Appeals ruled on July 20, that the city’s short-term rental ordinance does not violate the Constitution, delivering a defeat to the sort of patchwork STR rules investors have been fighting nationwide.

The city’s ordinance, amended in 2024, requires a home intended for short-term rentals to be occupied as the primary residence of the owner or a local tenant under a lease for 12 months or longer.

After that requirement is met, the owner or long-term local renter can then lease the home to short-term tenants.

Ten out-of-state homeowners had appealed after losing before U.S. District Judge Adrienne Nelson last April, arguing Hood River’s residency mandate unfairly locks non-residents out of the vacation rental market, according to Columbia Gorge News.

The Oregon town sits along the Columbia River Gorge, roughly an hour east of Portland, and has become a target for vacation-rental investors drawn to its wineries and river recreation.

The ordinance, passed in 2016 and amended in 2024, requires short-term rentals to be occupied either by the title holder as a primary residence or by a local tenant under a lease of at least 12 months.

The panel rejected the Dormant Commerce Clause challenge, finding that the policy applies equally to out-of-state plaintiffs and local residents living in a second home, negating any violation of the constitutional provision barring laws that favor in-state interests.

Court says lost STR profits aren’t a constitutional burden

The judges wrote that losing “a preferred, more profitable method of operating” does not amount to a “substantial” or “significant” burden on interstate commerce.

They acknowledged finding a long-term tenant willing to accommodate short-term rentals could be difficult, but noted the plaintiffs’ attorney, Christopher Michel, offered no evidence proving that difficulty.

Related: New York county drops short-term rental tax break

The ruling leans on precedent.

Hood River modeled its amended ordinance on the policy disputed in Rosenblatt v. City of Santa Monica, a similar dormant-commerce-clause case the 9th Circuit found constitutional in 2019.

City officials have said the goal is preserving neighborhood quality and ensuring year-round housing availability for local workers.

The decision covers Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon and Washington, giving cities across the circuit stronger legal footing to defend residency-based STR rules against similar challenges.

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