For many residents of New Orleans, any sense of hospitality toward short-term rental users has run out. On Aug. 8, the New Orleans City Council addressed the community’s concerns and unanimously passed new ordinances that will more strictly limit and regulate short-term rentals.
The new rules affect both residential and commercial units. Councilwoman Kristin Gisleson Palmer took the lead on the amendment to the ordinance that continues the ban on short-term rentals in the French Quarter and Garden District, as well as requires residential short-term rentals be owner-occupied with proof of a homestead exemption and caps commercial short-term rentals at 25 percent of the units. The second ordinance amended by Palmer, Councilwoman Helena Moreno and Councilman Jay Banks outlines the procedures, permits, fees, regulations and enforcement of the short-term rental rules.
The short-term rental amendments are scheduled to take effect Dec. 1, 2019. Until that time, the current short-term license issuance and enforcement rules will remain in effect. There was no “freeze” passed, and the issuing of licenses will continue between now and then, giving would-be abusers of the new rules three months to apply for and receive licenses that will be grandfathered in.
The city will be relying heavily on short-term rental platforms such as Airbnb and HomeAway to regulate their users themselves. They will be required to remove illegal listings and collect taxes and fees from the rental operators.
Currently, there is an 8.45 percent tax and $1 nightly fee charged to short-term rentals. The new rules passed by the city council increase and differentiate the nightly fee to $5 for residential units and $12 for commercial units. The council also approved a ballot measure for November that could add another 6.75 percent tax to short-term rental users.
Approved by the Louisiana legislature, the proposed new 6.75 percent tax is part of an infrastructure investment deal that has the city receiving 75 percent of the revenue and tourism marketing group New Orleans and Company receiving the remaining 25 percent. New Orleans voters will decide on the new tax at the polls Nov. 16.
For residential units, the homestead exemption requires the owner/operator of the short-term rental to live on the premises and limits the total number of short-term rental units on the property to three. The move is designed to prevent single entities from purchasing multiple houses and renting them all as short-term operations.
For commercial and mixed-use properties, there was no rule passed that requires a certain percentage of the commercial units be rented as affordable housing, but the 25% cap is meant to restrict the density of short-term rentals in one building. It will be interesting to see how this rule impacts the growing need for affordable long-term rentals in the Central Business and Warehouse Districts.
One property to keep an eye on is the mixed-use development at the former Charity Hospital. The company created to manage the redevelopment, 1532 Tulane Partners Inc., has shared on its website that it has an agreement in place with Sonder, a commercial short-term rental company, for 150 of the 392 residential units planned for the building. Only 75 of the total units are reported to be reserved for “marketing to middle income or work-force users.”
To stay informed on the city’s regulation of short-term rentals, you can visit the city’s website. To report a violation of the current or new short-term rental rules, you may do so online here or by calling the city’s One Stop Shop for Permits and Licenses at (504) 658-7100.
