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Proposal to rescind residential STR permits is withdrawn; New Orleans officials mull over next steps

A short-term rental in New Orleans.
Carly Berlin
A short-term rental in New Orleans.

The New Orleans City Council took steps toward overhauling the rules governing short-term rentals like those listed on Airbnb at its Thursday meeting, but stopped short of banning permits in residential areas.

Two measures on the agenda for Thursday’s meeting would have effectively banned short-term rentals in neighborhoods across the city: one ordinance would have removed the residential short-term rental permit type altogether, and another would have rescinded residential STR permits that were already issued.

But the council instead deferred the first ordinance to a future meeting, and withdrew the second “in order to concentrate all resources on crafting the new STR regulations,” according to a city council press release on Thursday.

They also forged ahead on the process of re-writing the city’s STR rules, passing a motion that directs the City Planning Commission to begin a thorough review of the city’s existing laws and consider new ones. It’ll be the third time the city has re-written its short-term rental regulations since 2016.

The move comes after a federal appeals court deemed that a key provision in the city’s existing law was unconstitutional.

Council Vice President JP Morrell said he and his fellow council members had planned to consider a rewrite of the city’s rules regardless – but the legal challenge has added urgency.

“Obviously this council would have preferred more time to be able to digest and work through what a short-term rental law change would look like,” Morrell said at Thursday’s meeting.

The last time New Orleans passed laws to reign in short-term rentals was in 2019. One of the central pieces of the city’s rules was a requirement that STR owners in residential areas live at the residences they rent out on platforms like Airbnb, by showing they have a homestead exemption for the property.

That provision was meant to limit what many critics saw as one of the most harmful impacts of STRs: out-of-town investors buying up whole homes across the city to rent out to tourists.

But in August, the 5th Circuit Court of Appeals ruled that the homestead exemption provision violates the commerce clause of the U.S. Constitution by discriminating against out-of-state property owners.

The same month, the council passed a motion that temporarily froze applications for new STRs in residential areas. In October, the council passed a second, expanded moratorium that halted permit renewals for existing, residentially-zoned STRs, replacing the first one. Short-term rentals in commercially-zoned areas like the Central Business District are not impacted by the temporary moratorium.

Ahead of Thursday’s meeting, council members and the city attorney both said the city’s moratorium is meant to phase out the use of the residency requirement as the city crafts new laws, giving the city a “fresh start” when new rules are adopted.

Council members have said repeatedly that they plan to pass new regulations in March 2023.

Thursday’s motion represents one of the first steps toward drafting new laws. The council directed the City Planning Commission to thoroughly study the city’s existing regulations and give recommendations for new ones, and to hold a public hearing about possible changes. It also asks the CPC to take into account not just residential permits, but commercial ones, too.

The motion also lays out considerations for potential new guidelines, from capping the number of STRs that would be allowed on a given block-face, to outright banning STRs in certain zoning districts, to deeming STRs a “fundamentally commercial use” that should only be allowed in commercial zones.

Some residential STR owners expressed frustration at Thursday’s meeting, saying they abided by the city’s rules for years, and are now worried about losing vital income.

“This is really frightening, to be honest with you,” said Morgan Clevenger, a residential short-term rental owner in the Seventh Ward who said the pandemic and Hurricane Ida wiped out her business.

Other commenters, including neighborhood association representatives and housing advocates, said they’re optimistic that the city will write stricter regulations that protect affordable housing and stem displacement of longtime residents.

“A lot of the businesses in our neighborhood that do benefit from short-term rentals would probably benefit more if they had full-time residents,” said Allen Johnson, president of the Faubourg Marigny Improvement Association.

The next step in the STR rule drafting process will be a public meeting held by the City Planning Commision. Find meeting alerts here.

Carly Berlin is the New Orleans Reporter for WWNO and WRKF. She focuses on housing, transportation, and city government. Previously, she was the Gulf Coast Correspondent for Southerly, where her work focused on disaster recovery across south Louisiana during two record-breaking hurricane seasons. Much of that reporting centered on the aftermath of Hurricanes Laura and Delta in Lake Charles, and was supported by a grant from the Pulitzer Center.

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