The "new" New Orleans City Council is wasting no time trying to rein in the city's runaway short-term rental (STR) problem. STRs were a major issue in the citywide elections last year, and voters across the city expressed dissatisfaction with the ordinance adopted by the previous council.
The existing ordinance sets up three classes of STR permits — "accessory," "temporary" and "commercial" — with different rules for each. By far the category creating the biggest headache for locals is the temporary classification, which covers more than half the permits issued by the city. Many of these STRs are whole homes as opposed to a spare bedroom.
STR critics say allowing whole-home rentals has led to out-of-town investors buying large swaths of historic neighborhoods, driving up property values and pricing locals out of their homes because of increased assessments. Many also complain that STRs bring transient and often disruptive visitors into quiet residential neighborhoods.
The city is supposed to enforce a 90-days annual "cap" on temporary STRs, but many locals express doubts about the efficacy of City Hall's enforcement efforts.
On May 24, the council unanimously adopted several motions presented by District C Councilwoman Kristin Gisleson Palmer, most notably one that imposes a moratorium on temporary STR permits in many parts of town. Existing permit holders can continue to operate until their permits expire, but no new or renewed temporary permits will be issued while the moratorium is in place, Palmer says.
To implement the moratorium, the council adopted an interim zoning district that comprises large sections of town. In those sections, no new or renewed temporary permits will be allowed.
"It's not the entire city, but it tracks the areas where we're seeing the greatest concentration of temporary STRs," Palmer told me after the council's action. "Most important, there will be no new permits or renewals of existing permits for 'temporary' STRs, which comprise most of the whole-home rentals. And it's effective immediately."
The moratorium does not affect "accessory" permit holders, Palmer says, because those are owner-occupied STRs, which generally are not perceived as a major problem. Those STRs also do not have an annual cap.
"Commercial" STRs can continue, but the emphasis will be on upper floors of multi-story commercial buildings. Palmer said many of the downtown buildings on Canal Street that have retail shops on the first floor but little or no apparent use of the upper floors could be prime examples of how a new STR ordinance could "incentivize" redevelopment without hurting existing neighborhoods. Like the accessory permits, commercial STRs have no annual cap.
The key to successful regulation of commercial STRs is for the council to avoid spot zoning in residential neighborhoods — turning noncommercial properties into commercial uses in order to create unlimited STRs where they clearly don't belong.
The moratorium will remain in place for up to nine months while the City Planning Commission broadens the terms of its study of how best to regulate STRs going forward. Palmer and other council members anticipate adopting a new STR ordinance after the commission's study.
What's clear so far is that the existing ordinance isn't working. The new council seems determined to do better. Time will tell.