Significant Wins Accomplished
Last month, the Council took on the first round of regulations to permanently rein in the proliferation of Short Term Rentals (STRs) city-wide. These included the requirement for a Homestead Exemption to rent one’s residential property as a STR, meaning it has to be the home in which you live. This is, by far, the most important component to protecting neighborhoods from being hollowed out by investment speculation and keeping them full of actual neighbors. The Council also extended a prohibition of STRs in the Garden District. Lastly, an attempt to permit STRs in the Vieux Carré Entertainment District around the House of Blues (VCE-1) on Decatur and North Peters was shot down. Though STRs are allowed on the 200 to 700 blocks of Bourbon, the Council decided in a 4-3 vote that the differences were too great between the two zoning districts (there is truly only one Bourbon Street) and that opening up more in the French Quarter would undermine this neighborhood’s desperate struggle to retain and recruit a substantial and healthy residential base. We are proud to have been on the front lines for this win and thank you for doing your part! The Council is expected to sign this motion into ordinance on July 25.
Grandfathering & Economic Incentive Zones?
On June 25, the City Planning Commission reviewed a new study. Part of the study assessed the potential for grandfathering in previously permitted Short Term Rentals in residential areas. These types of STRs, the Temporary permits, were placed under a moratorium in May 2018, and the City Council unanimously voted to eliminate them entirely last month. However, the report advises against this practice, stating it is “fraught with potential complications as there would be issues of ownership changes, new permanent tenants, and potential legal challenges based on the new system.”
The study also looked at allowing multiple STR permits for listings in specific areas of the city, deemed Economic Incentive Zones, to encourage redevelopment of blighted structures and spur economic development along commercial corridors. The study concluded that, while there may be an opportunity in the future to examine ways STR production can be used as a development tool, the city should wait and monitor the effectiveness of the new regulations before opening the door to exceptions. We could not agree more! Only then should these tools be considered, in combination with carefully crafted density restrictions and sunset provisions that would return these units to long-term dwelling opportunities.
This study is being sent to the City Council which can then draft a motion directing the City Planning Commission to create specific text amendments to the CZO.
Commercial Short Term Rentals and Affordable Housing
The City Planning staff will continue to examine the possibility of utilizing Commercial STRs as leverage to provide affordable housing units. The findings of the 2018 STR study included a requirement that would establish a cap on Commercial STR permits at 25% of the total units on a lot and considered the allowance of additional STR permits above that cap if it was equally matched by the creation of an affordable housing unit. Given the findings of the recent New Orleans Inclusionary Housing Study, staff is advising that a similar study be undertaken that would specifically examine levels of project feasibility in matching STR and affordable units.
A Robust Enforcement Package
Yet another package of regulations will deal with enforcement and a new permitting structure. We have long warned that without platform accountability, enforcement will be impossible. The platforms that list the Short Term rentals, like AirBnB and VRBO, have been less than forthcoming with the information necessary to weed out illegal operators. New Orleans is taking the aggressive stance of requiring all platforms to obtain permits with the City and not facilitate the booking of any listing that does not have a valid, city-issued STR rental license. Any unpermitted listings must be removed from the websites. Failure to do so would mean a revocation of their operating permit.
Governmental Affairs Committee Chair and District “C” Councilmember Kristin Gisleson Palmer will present these proposed changes in an ordinance to the City Code relative to enforcement, permitting, and fees for New Orleans’ Short Term Rental (STR) program. Councilmember Palmer is encouraging residents to attend the Governmental Affairs Special Committee meeting on Wednesday, July 17th at 1:00 p.m. inside Council Chambers or contact her office with your feedback. The ordinance is expected to be heard by the full Council on July 25.
Here is a very brief overview of annual permit costs:
Platform permit – $50,000
Residential Type-R permits:
Partial Unit – $250
Small Residential (such as the other half of a double) – $500
Large Residential – $500 (per unit)
Commercial Type-C permits: $5,000
Additional fees will apply if the owner does not operate the rental
More information can be found here.
Stay tuned, there is always more to this tale!
In case you missed it, read the Lens coverage of a woman in the St. Claude neighborhood who resorted to renting out the illegally operating STR across the street from her leading to revocation of its permit.