NOLA Ban on New Commercial Short Term Rentals - Updated

Council Members Morrell and Harris have introduced a one-year ban on new licenses for Commercial Short Term Rentals (“CSTR”) and Hostels, which is scheduled to be voted on at the next Council meeting, on June 8th.  See Agenda Item 66a and 66b (link).

The ban, put forward in Motion No. 23-208, would establish an Interim Zoning District (“IZD”) that would apply across the entire city.  Both the original version, M-23-208 (link), and the amendment, M-23-208 Amendment (link) are now available online. 

The Council does not Want New STRs while the City Planning Commission Studies Changes to the Regulations for Commercial Short Term Rentals.

With this ban, the Council is looking to stop new Short Term Rentals (“STRs”) during the period that it has given the City Planning Commission to study what changes to make on the regulations concerning Commercial Short Term Rental licenses.  Recall that the Council is overhauling the City’s regulations of Commercial Short Term Rentals now that it has finished passing the new rules for the Residential Short Term Rentals.

There’s concern over apartment buildings being converted to STRs, but the IZD will likely have consequences for small investors. 

In support of this Motion, Members Morrell and Harris cite, “a noticeable uptick in the conversion of apartment complexes from long-term housing to transient housing.”  They also complain that “commercial short-term rental developments are bypassing zoning regulations aimed at addressing the proliferation of commercial short-term rentals by designating the development as a hotel or other transient lodging but then advertising the units exclusively as short-term rentals.”   (NOLA.com reported about one deal to convert long term housing to STRs that happened right by city hall, link.)

While this proposed ban on new commercial Short Term Rentals might be aimed at big developments, it will affect single unit buildings and small-scale investors just the same.  If you own a property in New Orleans with the zoning that would allow it to be a Commercial Short Term Rental, there are at least two key restrictions that this ban would create:

1. You will not be able to obtain that Commercial Short Term Rental license if this ban passes. 
   
   
2. Any buyer of the property will not be able to buy that property and obtain a CSTR license.  This is true even if you currently operate a CSTR at that property. 

Amendment to Exempt Already-Permitted Projects has been Proposed.

As originally written, this ban would have applied to projects that had already obtained a building permit based on plans showing that the project would be used as a Short Term Rental. The result would have been that in-progress projects would no longer be allowed to receive licenses to operate as a STR.  See New Orleans City Council Motion No. M-23-208.   

Just before the last City Council meeting, however, C.M.s Morrell and Harris proposed an amendment to exempt already-permitted projects.  See Amendment to Motion M-23-208 (May 25, 2023).  The amendment also ensured that the ban did not apply to new hotels or motels. 

A limit of timeshares is also proposed in the Amendment to this Motion. 

The Amendment to M-23-208 also proposes to limit the development of Timeshares by instituting a cap of no more than one or 25% of the total dwelling units to be permitted to be included in a Timeshare Plan within a Timeshare Building.  And there is an exception in the Central Business District for areas with CBD-5 zoning providing that Timeshare Buildings will only be permitted if there are 10 or more dwelling units, such that Mandatory Inclusionary Zoning is triggered and Affordable Housing Units are required. 

When will this Motion be heard?

The proposed ban will be heard and voted on at the next New Orleans City Council meeting on June 8th, 2023 at 10:00 a.m.  You can find the agenda for the upcoming meeting at this link:    

To contact your City Council Members about this motion, you can find their information at https://council.nola.gov/councilmembers/.

To schedule a consultation with the Stow Firm about how this ban would affect your Short Term Rental business, contact us.