New Orleans may tighten laws on short-term rentals in some commercial properties as the result of a dispute over proposed Airbnb rentals above a former Zara's grocery on Prytania Street. 

The New Orleans City Council voted last week to begin the process of amending the city's rules. 

“I am offering this motion in response to what has been an outpouring of concern about the ease of acquiring a commercial short-term rental license,” Councilwoman LaToya Cantrell said Thursday. “I believe (the City Planning Commission) should look into this matter, and this is the first step toward that.”

Liz and Robby Blum bought the former Zara’s at 2042 Prytania and announced plans to renovate it into a new, upscale grocery in 2015. That idea drew widespread support, but as the renovations proceeded, their listing of five upstairs apartments on the Airbnb short-term rental website drew some neighbors’ complaints.

While the store was closed during the renovations, the property lost its grandfathered permission to operate as a grocery store in a residential neighborhood, reverting to residential zoning, and the owners needed a zoning change to restore the right to have a grocery.

However, the zoning they requested — neighborhood mixed-use — would also have allowed the current short-term rentals to become a permanent aspect of the property, so the city planning staff recommended that the property be rezoned as a neighborhood business, which would allow the grocery but not alcohol sales or the short-term rentals.

In August, after hearing from supporters of the grocery and opponents of the short-term rentals, the City Planning Commission decided to accept their staff’s recommendation and sent the matter to the City Council for final approval.

On Thursday, Cantrell acknowledged the complexity of the issues involved.

“This has been one of the most complicated cases that we’ve had in a very long time,” Cantrell said. “When this was originally presented to the neighborhood, the majority was in full support of a grocery store with the sale of alcohol. The contention is not from that use, but the expansion of what are existing temporary short-term rentals on the upper floors of the structure.”

Under residential zoning, apartments may be rented out on a short-term basis for no more than 90 days per year. None of the neighbors want those five apartments to be allowed to operate as commercial short-term rentals year-round, Cantrell said — thus creating opposition to the mixed-use zoning that would allow alcohol sales when the neighbors would actually support alcohol sales.

“This zoning change has become a battle about short-term rentals,” Cantrell said.

Ultimately, she proposed a multi-part solution:

  • Rezone the Zara’s building to neighborhood business, not mixed-use, which allows the grocery store with no alcohol sales.
  • Propose a change to the mixed-use zoning law to make short-term rentals a “conditional” use, requiring specific City Council approval, rather than a “permitted” use that is automatically allowed.
  • Finally, rezone the building again from neighborhood business to mixed-use, allowing the alcohol sales after the short-term rentals have been restricted within the zoning category.

Neighbors in nearby Prytania Street row houses generally praised Cantrell’s compromise solution but said they will likely seek more operating conditions on the business before the final vote for the full mixed-use zoning.

The owners were satisfied with the decision as well, despite the length of time it took to find it, said Nicole Webre, the owners’ representative.

“I appreciate this compromise,” Webre said. “It’s a true testament to how much the neighbors do care about their homes, and how much my clients care about the neighborhood, to want to work on a compromise. I’m glad that we’re on that path.”

Fritz Westenberger, who described himself as a potential tenant and operator of an organic grocery in the space, said that ensuring alcohol sales at the site is crucial to the building actually becoming a grocery once again.

“No one in that business would consider opening a small specialized market without the ability to sell wine or packaged liquor,” Westenberger said. “These items have the high profit margins to offset the expenses of a business that needs time and money to figure out its model.”

Liz Blum, the property's co-owner, also thanked Cantrell’s office for its months of work toward the compromise. Cantrell in turn praised her for her patience and her investment, and said she would do all she can to expedite the rest of the city’s actions.

“When a council member submits a motion, it goes through a much swifter process,” Cantrell said. “That’s one of the reasons why I wanted to offer the motion, because time does matter, and you have spent a lot of it.”

The council voted 7-0 in favor of the initial neighborhood business rezoning Cantrell proposed, allowing the owners to begin seeking a grocery store tenant without alcohol sales.

Cantrell then proposed two more motions — both unanimously passed — directing the City Planning Commission to begin work revising the mixed-use zoning to restrict short-term rentals and then to rezone Zara’s yet again to mixed-use with alcohol sales.

Each of those changes will require City Council approval after the commission’s deliberations.