A Guide To Orleans Parish's New Short-Term Rental Rules
With Mardi Gras right around the corner, the demand for short-term rentals ("STRs") in New Orleans will rise considerably in the coming weeks. Given the upcoming demand, owners of STRs in New Orleans should be made aware of the new regulations on STRs that recently went into effect.
New Orleans has been regulating short-term rentals since 2016, but on December 1, 2019, even stricter regulations were enacted. Below are a few of the major changes from the earlier regulations that existed prior to December 1, 2019.
A. New Categories of Permits. The following permits have replaced the formerly existing Accessory, Temporary and Commercial Permits.
a. Owner Permit. Owner permits allow a property owner to use a dwelling unit it owns as an STR, so long as that person owns a 50%+ interest in the property and otherwise satisfies the requirements for an Owner permit. Owner permits are divided into two categories: residential and commercial. Residential permits are similar to the formerly existing Accessory permits. There are three sub-types of residential permits: Partial-Unit, Small and Large. A Partial-Unit permit allows an owner to short-term rent bedrooms in the same dwelling unit in which the owner lives. A Small Residential permit allows an owner to short-term rent one separate dwelling unit on the same property at which the owner lives. A Large Residential permit allows an owner to short-term rent up to three dwelling units on the same property at which the owner lives.
Whether an owner should apply for a Residential or Commercial permit depends on the zoning district in which the applicable property is located. Properties in commercial or mixed-use zoning districts are eligible for a Commercial permit, but may also be eligible for a Residential permit if they meet ownership and homestead exemption requirements. Properties in residential zoning districts are eligible only for Residential permits. The type of Residential permit an owner should apply for depends on the type of building (i.e., single-family homes, duplexes, multi-unit buildings, etc.). Before any property is used as an STR, however, the owner must apply for and receive an Owner permit and associate that permit with a valid Operator permit.
b. Operator Permit. An Operator permit is a permit that allows a person to operate or manage one or more STRs. Every STR must have both an Owner permit and an Operator permit associated with it. Owner permit holders may act as their own operators or may designate another operator. Once a person obtains an Operator permit, he or she can then use that permit to manage any STR in Orleans Parish. There is no limit to how many STRs a single operator can manage. However, additional permit fees may apply.
c. Platform Permit. An STR platform is a portal, listing service, website or business through which a person, other than an STR owner, collects or receives a fee for facilitating a booking transaction (an agreement between an STR guest and an STR owner with respect to an STR). The most commonly recognized platforms are online services such as Airbnb and VRBO. For any service or platform to legally facilitate a booking transaction for an STR, the platform must apply for and receive an STR Platform permit. Platforms are now obligated to ensure all listings include both Owner and Operator Permit numbers as identified by the host and to remove listings the City has identified as illegal within seven days of notification.
B. Limitations on STRs.
a. The new regulations create strict limitations on the types of permits that can be issued in a zoning district. Some restrictions are applicable to entire zoning districts, while others are applicable only to certain types of dwelling units. Therefore, it is difficult to provide a general description of these limitations. Below are summaries of the broader limitations.
b. No STRs are allowed in the Garden District, which is described as the area bounded by the centerline of St. Charles Avenue, the downriver side of Jackson Avenue, the centerline of Magazine Street and the downriver side of Louisiana Avenue.
c. No commercial STRs are allowed in the RIV-3 Bywater Sub-District or the RIV-4 Marigny Sub-District.
d. Except for the VCE Vieux Carre Entertainment District, which is described as Bourbon Street from Iberville Street to St. Ann Street, no STRs are allowed in the Vieux Carre. The Vieux Carre is described as the area bounded by the Mississippi River, Iberville Street, N. Rampart Street and Esplanade Avenue.
e. In residential districts and the HU-B1A and HU-B1 Neighborhood Business Districts, HU-MU Neighborhood Mixed-Use District, S-LM Lake Area Marina District, MU-1 Medium Intensity Mixed-Use District and MU-2 High Intensity Mixed-Use District, only one large residential STR is permitted per block face.
C. Additional Limitations on Commercial STRs.
a. Commercial STRs are prohibited on the first floor of a multi-story structure that contains or can contain residential uses on subsequent floors, but this limitation is not applicable to:
i. Buildings that are single- or two-family dwellings;
ii. Single-story buildings; or
iii. The CBD Central Business Districts (except when the building is new construction or a substantial improvement), the EC Education Campus, MC Medical Campus, LS Life Science or M-MU Maritime Mixed Use Districts or MI Maritime Industrial Commercial and Recreational Subdistrict.
b. No more than 1 unit or 25% of the total units on a lot or single building constructed across lot lines, whichever is greater, shall be permitted as a commercial STR, but this cap is not applicable to:
i. The VCE Vieux Carre Entertainment District;
ii. Buildings fronting Canal Street between the Missisippi River and Rampart Street; or
iii. The EC Educational Campus, MC Medical Campus or LS Life Science Districts or the MI Maritime Industrial District Commercial and Recreational Subdistrict.
D. Permit Fees. Permit fees have increased under the new regulations, but are still owed annually.
Residential STR – Partial: $250
Residential STR – Small: $500
Residential STR – Large: $500
Commercial STR: $1,000
STR Owner/Operator: No Cost
STR Operator, Single Residential Unit: $150
STR Operator, Single Commercial Unit: $1,000
STR Operator, Multiple STR Unit: $1,000
STR Platform: $10,000
Transitional Rules. Applications for STR licenses that were substantially completed and submitted to the Department of Safety and Permits before December 1, 2019 will be reviewed under the regulations in effect at the time of the submission. And, due to the complexity of the new regulations, the Department of Safety and Permits did not start instituting enforcement actions against hosts not having an Operator permit until the first of this month. Existing STR licenses issued before December 1, 2019 are valid until their expiration, and current licenseholders may honor bookings made before their existing license expires.
Conclusion. Given the major changes from the earlier regulations, and the complexity of the regulations, it is important to consult a competent, experienced lawyer for assistance when owning or operating an STR or considering the ownership or operation of an STR in New Orleans.