For the third time since 2016, New Orleans is gearing up to overhaul its laws governing short-term rentals, like those listed on platforms like Airbnb. And City Hall is under a fast-approaching deadline to pass new rules, set by a federal court.
The changes could impact over 2,300 currently permitted STRs, according to city data – particularly the 1200 or so in residential areas. That doesn’t account for any STRs operating illegally, without a city permit.
Here’s a breakdown on how we got here, what options the city is considering, and what comes next.
So, why is the city writing new rules again?
Back in 2019, the city passed a suite of regulations aimed at reigning in short-term rentals in New Orleans. One of the key provisions in the 2019 laws was a residency requirement. STR owners in residentially-zoned areas needed to prove they lived at the residence they rented out on platforms like Airbnb and Vrbo, by showing they had a homestead exemption for it – essentially proving the building was their primary residence.
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 later that year, a group of STR owners filed a lawsuit against the city, challenging the new rules. And this past August, the U.S. Fifth Circuit Court of Appeals – widely recognized as a particularly conservative court – decided that the city’s STR residency requirement was unconstitutional, deeming it “discriminated against interstate commerce.”
Primary residence requirements are actually a pretty common way other American cities have regulated STRs, from Charleston, South Carolina, to Washington, D.C. to Seattle. But the Fifth Circuit’s decision has put New Orleans under pressure to pass a new STR law: one that still “prevent[s] nuisances, promote[s] affordable housing, and protect[s] neighborhoods’ residential character,” all of which the court has said are legitimate local goals.
The new rules can’t revolve around a residency requirement, though. And City Hall is under a tight deadline — set by the court — to pass a new law by March 31.
Wait, I thought I heard about an STR ban. What’s that about?
After the court’s decision came down, in August 2022, the city council passed a temporary moratorium on new residential STR permits – which means if you haven’t gotten a residential permit in the past, you can’t get one now. The idea behind the ban was to put new applications on pause as the city crafts new laws, so that once they’re passed, all STRs can operate under the same set of rules.
Many STR owners whose permits are set to expire soon can still get renewals, though. There’s more information about eligibility on the Short-Term Rental Administration’s site.
In November, the council also considered removing the residential permit type altogether, along with rescinding existing permits, but ultimately tabled both of those measures.
What options is the city looking at for new rules?
The city is considering a laundry list of possible alternative rules, 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, like the CBD.
STR owners and operators – who have shown up to recent public meetings en masse – have generally advocated for a way to continue legally operating their STRs in residential areas.
Rebecca Jostes is the chief marketing and expansion officer for Rare Space Hospitality Group, which operates about two dozen STRs across the city, primarily in the St. Roch/Marigny/Seventh Ward area and Central City/Uptown. That means she handles operations for the actual owners of STRs.
She favors an option the city has put forth that’s technically already on the books: requiring that owners of STRs in residential areas be “natural persons” rather than business entities like LLCs, essentially mandating that they own the property in their own name.
She worries that caps by block or neighborhood could box out STR owners who already have city permits.
“My homeowners, they’re looking at how they’re going to be able to pay the mortgage. And the short-term rental side of it was a huge part of how they were going to make ends meet,” Jostes said.
But some STR critics, including affordable housing advocates, hope to see the city pass a more restrictive set of laws – like confining STRs to specific commercial areas.
“Outside of the Central Business District and the commercial parts of the French Quarter, we don’t see any benefit to allowing short-term rentals in the rest of our neighborhoods,” said Maxwell Ciardullo, director of policy and communications at the Louisiana Fair Housing Action Center.
That’s because the proliferation of STRs in historically Black and Brown neighborhoods – particularly those near the French Quarter, like the Tremé and the Seventh Ward – have ramped up displacement of long-term residents and converted housing over to tourist use, Ciardullo said. To boot, many visitors don’t spend their money in those neighborhoods; Ciardullo pointed to listings on Airbnb that tout how short an Uber ride is to downtown, and reviews from visitors who describe these neighborhoods as “sketchy” or “ghetto.”
Beyond limiting where STRs can operate, Ciardullo also suggested ways to leverage STRs to subsidize affordable housing, like allowing a limited number of STRs as an incentive to developers of affordable housing units, and requiring a conversion fee when a long-term rental is flipped to become an STR.
For STR owners who could lose their permits if the city passes more restrictive laws, Ciardullo said there’s a perfectly profitable alternative – especially as long-term rents have skyrocketed.
“Anyone who is short-term renting would do just fine renting to our residents,” he said.
What about enforcement?
For years, the city has faced criticism for its lax enforcement of the 2019 STR laws. The new rules under consideration won’t deal directly with how they’re ultimately enforced – City Planning Commission staff made that clear during a public webinar on Jan. 5.
That said, the city has scaled up its effort to crack down on illegal STRs over the last several years. City Hall now uses a data scraping software to find illegal listings, along with a citizen reporting portal, and has budgeted for more inspectors in 2023.
What are the next steps in the rule re-write process?
On Jan. 18, the City Planning Commission will release a preliminary report with recommendations for the new STR regulations. Public comment can be submitted by email to cpcinfo@nola.gov until 5 p.m. on Jan. 17th.
The CPC will hold a public meeting about the report a week later on Jan. 24.
After that, it’ll be updated and passed on to the City Council for consideration.
Disclaimer: New Orleans Public Radio reporter Carly Berlin previously worked for the Louisiana Fair Housing Action Center as an Investigations Fellow through a service corps program.
