Residential short-term rentals will expire Aug. 31, a date set by the New Orleans City Council on Thursday as officials attempt to bring all STRs under a common set of laws and comply with a federal ruling.
The ordinance means that all existing residential permits will sunset at the end of August – regardless of the expiration date stated on the permit. The city’s new, landmark rules governing short-term rentals in residentially-zoned areas – approved late last month, after a marathon of contentious public meetings – go into effect on July 1.
People who recently renewed their permits – and will see their year-long licenses cut short – will get a portion of their fees returned, said council president JP Morrell.
“This simply allows those individuals who have re-upped, or gotten a new permit, that when it is terminated prematurely, they will get the prorated amount back, since they aren’t getting a full year of operation,” Morrell said.
Renewing residential short-term rental permits once the new rules start in July will be “strictly prohibited.”
The move could impact roughly 1,200 currently issued permits for residential short-term rentals, according to city data.
On March 23, city council approved a new law limiting STRs to one-per-square-block in residential areas. The rule marks the first time the council has sought to constrain short-term rentals by how many are allowed in a given area.
Before July 1, the city will need to flesh out a lottery system to determine who will get a short-term rental permit when more than one resident wants one on a square block. The Aug. 31 termination date means current short-term rental owners and operators will have a two-month window to apply for permits under the new system – or, can prepare to let their permits expire altogether.
But the square-block rule isn’t hard and fast. Council members added a last-minute “release valve” measure to allow two additional property owners to apply for exceptions to the cap, a move applauded by current short-term rental owners and disdained by critics. The council itself will have a final say on whether or not to grant an exception.
The new square-block limit is the council’s answer to a Fifth Circuit Court of Appeals ruling that found the city’s former short-term rental regime unconstitutional in August last year.
Under the city’s 2019 law, 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. But the court deemed that requirement discriminated against out-of-state owners.
In addition to the square block cap, the council added new requirements that short-term rental operators — either the owner or a tenant — live onsite and resolve potential problems, like noise or trash complaints, within an hour. Both owners and operators will be limited to one STR permit each.
Technically, these new permits will be “non-commercial;” the new rules eliminate the residential category altogether.
The council also added stricter penalties for those who violate the city’s rules. Permits can now be revoked if a short-term rental racks up three “quality of life” violations, like excessive noise or public drunkenness. Operators or owners who have their permits revoked would then be barred from re-applying for up to five years.
