The New Orleans City Council is poised to impose a citywide cap of one short-term rental license per residential block — without allowing for any future exceptions, under a measure introduced this week.
The city’s short-term rental law limits short-term rentals to one per square block, with applicants awarded licenses through a lottery. The cap was established in an attempt to rein in the industry, which some affordable housing advocates have blamed for squeezing the long-term housing market in many neighborhoods.
A last-minute addition to the law, proposed by Councilmember Freddie King and approved by the council last year, allows property owners on blocks where licenses have already been granted to apply for a special exception to the cap — following a lengthy review process overseen by the City Planning Commission.
But a motion, set to be introduced on Thursday (Sept. 5), would put in place a one-year pause — called an “interim zoning district” — on considering further exceptions. The pause appears set to pass, with all seven council members adding their names as sponsors.
A second motion would direct the City Planning Commission to conduct a public hearing in order to evaluate and review the short-term rental law, in order to determine whether to remove the exceptions permanently.
“The goal [of the exceptions process] was to provide relief to individuals who had been operating legally under the previous law or aspired to do so and lost the lottery,” said Councilmember JP Morrell. “It was never meant to be a forever thing. It was meant to be that triage in the conversion into the lottery process.”
The proposal comes amid scrutiny of the special exception process, which has drawn hundreds of applications and created a significant workload for the city, leading the City Planning Commission to engage an outside contractor to conduct the reviews
Critics have argued that the special exception process is rife with inconsistently applied standards and minor inaccuracies. As a consequence, councilmembers have largely made their own determinations as to whether to grant an exception in their district, frequently approving those licenses against the recommendation of the City Planning Commission.
The interim zoning district proposal is expected to go to a full council vote on Sept. 19. Morrell says that this timeline provides an opportunity for those who want a special exception to still apply for one before the motion passes.
“So the way it’s going to work is after tomorrow, there’s still a two-week tail to start the process,” Morrell said. “And as long as you start the process in that two-week period, you essentially get to finish it.”
Councilmembers say that the pause and evaluation are necessary to address the proliferation of short-term rentals across the city and ensure that the purpose of the original regulation – to limit short-term rentals to one per block – remains intact.
“I am a proponent of both economic development and affordable housing,” Councilmember Lesli Harris told Verite News over email. “However, short-term rentals must be regulated to help address the ongoing housing crisis we have in New Orleans. This new Interim Zoning District should help those with legal residential STRs continue their operations within the confines of the law while addressing our housing/community needs.”
‘Those people who truly needed it should have applied for it by now’
The pause on short-term rental special exceptions is the latest in the long saga of the city attempting to mitigate the impact of short-term rentals on the city. Critics of short-term rentals, typically hosted on sites like Airbnb and Vrbo, have long argued that absent regulation short-term rentals risk cannibalizing the market for long-term rental units and affordable homeownership.
Previous efforts to regulate short-term rentals were criticized for either being too lax, such as the 2016 regulations put in place under Mayor Mitch Landrieu, or too strict, such as the city’s 2019 rewrite — requiring all applicants to show proof that they lived in their rental properties — that was overturned for illegally discriminating against out-of-town investors, a federal appeals court ruled.
The current regulations, originally developed in 2023, sought to address both concerns, creating an open lottery system paired with robust enforcement against illegal actors. Though the regulations were initially challenged in court, a federal judge ultimately gave the go-ahead to the city to proceed with its most recent short-term rental regulations, so long as it made minor modifications as to who was allowed to participate.
The new law includes a relatively strict cap but allows for some flexibility through the exception process. King said he lobbied to include the exceptions to protect small-time operators who need the income from short-term rentals.
“My goal was basically to help those who needed short-term rentals to supplement income and to make ends meet,” King told Verite News. “And I believe those people who truly needed it should have applied for it by now… I think it has been a success.”
However, both Morrell and King said that they were seeing abuse of the special exception process ramp up in recent weeks.
“What we’re beginning to see now is people who are purchasing properties, and they’re immediately pursuing an exemption, which kind of goes back towards the concern that we had in the public had about not having a proliferation of short-term rentals,” Morrell said. “Like the exceptions were really meant to be an exception and not the rule.”
As it stands, current applicants and license holders will not be impacted by the new motion. Those who currently have licenses to operate will continue to retain those licenses. Additionally, those who have already submitted their applications will proceed in the special exception process and, if they are granted a license, will still be able to use it.
“If you’ve already applied for one or been granted one, that remains in place,” King said.
According to a report given by the City Planning Commission in July, the city has received over 300 applications total for a special exception. Over the last two months, the City Council has already granted 40 special exceptions. The agenda for Thursday (Sep. 5) includes 57 more special exceptions up for discussion.