The New Orleans City Council on Thursday took another step to rein in short-term rental permits in commercial areas, passing a temporary ban along some busy corridors abutting residential neighborhoods.
The motion, which passed unanimously, aims to close a loophole that critics say lets investors build what are essentially hotel suites next door to full-time residents. It prohibits renewal for a more than one quarter of the New Orleans' 1,200 commercial short-term permits, although permitting officials said they will make exceptions for those issued within the past six months.
The ban is expected to remain in place at least as long as the council hammers out a new set of rules governing short-term rentals.
Where it applies
It applies to a single zoning designation, HU-MU, which encourages retail alongside living spaces, including within the same building. The designation covers a handful of corridors, including parts of Canal Street and Carrollton Avenue in Mid-City, Louisiana Avenue in the Milan area and Newton Street in Algiers. Other pockets with that designation are scattered throughout New Orleans.
“My office regularly gets complaints about commercial short-term rentals in the middle of neighborhoods, because HU-MU zoning abuts residential areas all over the city,” said District B council member Lesli Harris, the lead sponsor.
Excluded from the ban are most thoroughfares in Faubourg Marigny and Bywater, including St. Claude Avenue, where tensions over tourist housing are roiling. That exclusion represents a “glaring hole that will remain to be exploited,” said Maxwell Ciardullo, policy director for the Louisiana Fair Housing Action Center.
Ciardullo, who otherwise praised the ban, called on District C council member Freddie King to initiate an extension in Marigny and Bywater. King did not respond to messages concerning his position on including St. Claude Avenue in the ban.
Existing commercial ban
The ban comes as the council enters crunchtime to meet court-imposed deadline of March 31 for a new law governing popular tourist housing in residential areas.
The 5th U.S. Circuit Court of Appeals in August struck down a residency requirement for owners in residential areas, and the council is fine-tuning revisions that instead limit the number of residential permits within geographically defined areas.
While council members have zeroed in on the residential part of the law, they have promised to take up the commercial part of the law next. They took a preliminary step last month by freezing commercial permits in parts of the Lower Garden District, Irish Channel and Central City.
Harris took up that measure after Central City real estate developers ditched plans to build affordable housing on the former Brown's Dairy site, and instead sold the parcels to commercial short-term rental investors. Unlike the ban passed Thursday, that prohibition did not restrict permit renewals.
Giarrusso said the new ban builds on a prohibition in the existing law on commercial short-term rentals in other mixed-use zones.
“I see this as potentially being aligned with what we’ve done already in trying to stem the proliferation of short-term rentals into areas that have qualities of being like commercial, but are also significantly residential,” Giarrusso said.
Some commercial owners have found a way around that ban, which includes about six blocks on the lake side of North Claiborne Avenue in Treme and the 7th Ward. There were 15 active commercial short-term rental permits in that area as of Thursday, according to city data.
They include 10 individually permitted units in a multi-family building in the 1400 block of North Claiborne Avenue. The owner obtained the permits in November by applying for “legal non-conforming use” status, which was available because the history of permitting in that location predates the 2019 law, Mayor LaToya Cantrell’s administration said.
Hundreds of owners have similarly evaded the council’s temporary ban last year on new residential permits, which it passed with the same legal instrument it used Thursday, called an “interim zoning district.”
That was possible because of an obscure pandemic-era Louisiana law that effectively allowed renewal of all residential permits that expired after February 2020. That law has no bearing on the new commercial ban, but New Orleans zoning laws still allow non-conforming use status for permits dating back six months, according to the administration.
It is not clear how many of the 318 permits affected by the new ban will be eligible for non-conforming use.