After a long debate today, the New Orleans City Council set in motion a process that will dramatically change the City of New Orleans’ short-term rentals laws. By a unanimous 7-0 vote, the Council passed a motion to establish the following changes:

• Homestead Exemption Requirement: In residential areas, STRs will only be allowed on properties containing a homestead exemption. A property with a homestead exemption will be allowed to have up to 3 separate STR units. This is a major change from current law. Homestead exemptions are essentially a property tax abatement on primary residences. Because a person can only have one primary residence, this change will dramatically limit STRs in residential areas.
• Commercially Zoned Areas: In commercial areas, the permit system will differentiate between four types of properties: single unit, small (1-4 units), large 1 (5-49 units), and large 2 (50+ units).
• Permit Fees: Although not part of the motion voted on today, the Council is planning on changing permit fees, with the goal of generating $20 million per year in the Neighborhood Housing Investment Fund, which is to go to affordable housing needs in the city. The current version they are working with appears to allow real estate developers to apply for fee offsets if they build affordable units on a 1:1 basis with STRs.

What’s Next: Today’s motion does not officially change the law. Instead, it triggers the City Planning Commission review process. Because the motion seeks to change the City of New Orleans’ Comprehensive Zoning Ordinance, it must go through the City Planning Commission review process. Once that process is complete, an ordinance will be introduced. The City Council will then vote on the ordinance in a regular Council meeting. Thus, if you want to make your voice heard on this issue, you have at least two more public hearings, at the CPC and then at the City Council, where you can participate.

In the coming months, the Council will also be addressing laws related to the businesses, like Airbnb, who provide an online platform for owners of STRs to advertise and book their properties.

For more information on short-term rentals, land use, zoning or real estate, contact Natalie K. Mitchell in our office.