Ten out-of-state homeowners took their fight with Hood River over short-term rentals to a three-judge Ninth Circuit panel on Tuesday, arguing that the city's licensing rules effectively shut them out of the vacation-rental market. Their lawsuit says the ordinance, amended in 2024 so that most vacation homes can be rented short-term only if they are the owner's primary residence or are occupied by a local tenant on a 12-month lease, treats nonresident owners differently from locals. Judges Susan P. Graber, Jennifer Sung and Richard R. Clifton pressed both sides with questions about where the line falls between protecting local housing and burdening interstate commerce.
The city tightened its rules in July 2024, requiring that a home used as a short-term rental be either an owner-occupied primary residence or rented to a local tenant under a lease of at least 12 months, according to the City of Hood River. In 2025, U.S. District Judge Adrienne Nelson rejected the owners' Dormant Commerce Clause challenge, concluding that the ordinances do not bar out-of-state owners from taking part in the vacation-rental market, as explained by Justia.
During oral argument, plaintiffs' attorney Christopher Michel told the panel that "the discrimination here is stark" and urged the court to revive the lawsuit, according to OregonLive. Representing the city, attorney Matthew E. Malmsheimer defended the ordinance as a tool to preserve housing supply and neighborhood quality of life. The panel gave both sides time to test those competing narratives before taking the case under advisement.
Circuit precedent frames the dispute
The appeals fight leans heavily on Rosenblatt v. City of Santa Monica, a 2019 decision from the Ninth Circuit that upheld certain residency-style limits on home-sharing aimed at protecting housing and community character. Hood River and its supporters argue that the city's rules fit within that framework and target the concentration of vacation rentals in order to keep long-term housing available for residents.
Local housing stakes
Short-term rentals make up a noticeable slice of Hood River's housing landscape. Market tracker AirDNA lists roughly 336 active listings in the city, and local advocacy groups say investor-owned vacation homes have squeezed the supply of long-term rentals. Thrive Hood River, a community organization, has backed tighter controls on investor-owned units and cast the current ordinance as a response to those pressures.
What happens next
The Ninth Circuit has said it will issue a written ruling in the coming months, according to OregonLive. A win for the homeowners could unsettle residency-based short-term rental programs in other resort and gateway towns. If the panel affirms the lower court instead, cities may feel more confident using residency and long-term-tenant tests as housing-policy tools.
Legal implications
The core legal question is whether residency and long-term-tenant tests stay within the bounds of legitimate local land-use regulation or cross into unconstitutional discrimination against interstate commerce. The Ninth Circuit's Rosenblatt decision gave municipalities some room to maneuver, but a split among federal appeals courts means this panel's opinion could significantly influence how far local governments may go in restricting investor-owned vacation rentals.
