New short-term rental applications on pause as New Orleans Council decides next steps
The New Orleans City Council has enacted a temporary moratorium on permitting new residential short-term rentals as the city heads back to the drawing board to craft new regulations aimed at curbing the controversial industry.
The Council adopted a motion at a special meeting on Monday that effectively pauses new short-term rental applications for residential units for six months. The move comes after a federal appeals court ruled last week that a key piece of the city’s existing regulations was unconstitutional.
The existing ordinance governing short-term rentals, passed in 2019, bans “whole-home” rentals in residentials areas by requiring that permit holders have a homestead exemption for the lots they list on short-term rental platforms like Airbnb. That means the owner must live onsite.
But the 5th Circuit Court of Appeals in New Orleans ruled that the provision violates the commerce clause of the U.S. Constitution by discriminating against out-of-state property owners, according to NOLA.com. The ruling didn’t immediately gut the city’s regulations, but lays the groundwork for a district judge to do so.
At-large Council member JP Morrell said the recently passed pause means that over the next six months, all residential permits will be phased out; in the meantime, the City Planning Commission and the Council will draft new laws.
“We want to make sure that all permits are under the same regime,” Morrell said.
Enforcing the city’s 2019 ordinance has arisen as a key problem since the rules were adopted, with an unknown number of unlicensed short-term rentals operating at any given time. Morrell noted Monday that the freeze on new applications could give the Department of Safety and Permits time to work through a backlog of illegal short-term rentals “and possibly get them dealt with before we come out of the other side of this.”
The Council also introduced an ordinance requiring that short-term rentals have conspicuous signage with their permit information, which Morrell said is aimed at aiding enforcement and allowing neighbors to have contact information for short-term rental owners.
These changes don’t impact commercial or mixed-use zoned areas, which have different permitting requirements.
According to a 2018 report by the Jane Place Neighborhood Sustainability Initiative, the proliferation of short-term rentals contributed to an increase in New Orleans housing costs more broadly, as more units shifted from residential to tourist use.