The New Orleans City Council took the first step Thursday toward dramatically cutting back on the number of short-term rentals allowed to operate in the city, moving forward with a plan that would require the owner to live on the site of any residential properties being rented to tourists.

The action set the stage for what will likely be months of debate over the first major curtailment of the rules that in late 2016 legalized the practice of renting out homes in the city to tourists through sites like Airbnb and HomeAway.

But while the council acted unanimously on Thursday, the more than 200 people who showed up to argue both sides of the issue and concerns raised by various members of the City Council suggest the debate over short-term rentals in New Orleans is not yet over.

The council advanced a package of regulations that would make it illegal to turn residential investment properties into short-term rentals. It also backed new rules for the growing number of condominium and other large-scale complexes that are turning to tourists, supported bans on short-term rentals in most of the French Quarter and Garden District, and called on city planners to come up a plan to use the allure of profits from the practice to increase the supply of affordable housing.

The proposed rules generally follow the contours of a plan first unveiled by Councilwoman Kristin Gisleson Palmer late last year, though they leave some details up to the City Planning Commission.

“Our job is to provide a place for our residents, and that can’t happen while our neighborhoods are sold to the highest bidder,” Palmer said.

Separately, the council called on Mayor LaToya Cantrell’s administration to come up with enforcement plans and propose fees that could bring in more than $20 million a year to increase the supply of housing to low-income residents.

In general, the council's various actions represented victories for those who have opposed short-term rentals, arguing they disrupt neighborhoods and lead to residents being evicted or priced out of many desirable areas so homes can be rented to tourists.

Short-term rental hosts, however, argue that the practice has provided them with a source of income and led to the development of properties in blighted areas. They also say that changing the rules would hurt those who invested under the current regulations in properties that would not qualify for short-term rentals under the new plan.

But City Council members said the city’s residents and neighborhoods are suffering and need stronger rules to protect them.

“In my mind, we have focused for far too long on making sure New Orleans was great for tourists,” Councilman Jay H. Banks said. “I would like to make sure that New Orleans is right for residents.”

The council’s unanimous support of the measures was something of a surprise. Councilwoman Cyndi Nguyen had proposed significantly less stringent rules last week, and it appeared there was the possibility of a split among council members.

Such a showdown could, in fact, still be in the works. Councilmen Jason Williams and Jared Brossett voted to move ahead with the current proposals, but both expressed concern about the rules and worried they would unfairly penalize those who had made investment decisions based on the rules set out by the previous council in late 2016. Williams and Brossett are the only current council members who were on the body at that time. 

“We have to continue to be diligent or responsible to the people we are elected to serve,” Brossett said. “We also have to be responsible to the people who have lived and abided by the rules and regulations that were put in place two years ago.”

At the time, Brossett was the only council member to vote against the current regulatory structure, saying he favored stricter rules.

Williams said he also had reservations about the new proposals.

"A number of people have invested, and we need more conversations about what the effective date would be and how we transition" to the new rules, Williams said. "I think we also need to make sure what we do today and in subsequent days on the council does not adversely impact the market."

The main portion of the proposed regulations now heads to the City Planning Commission, which must weigh in on them before two more City Council votes can make them official. That process is expected to last through the spring.

The most far-ranging change in the proposed regulations would allow residential properties to be used as short-term rentals only if they are covered by a homestead exemption to prove that an owner lives on the site.

Owner-occupied properties with multiple units would be allowed to rent out up to three units to tourists.

“Whose voices shall we prioritize? My answer is the people that live here,” said Councilman Joe Giarrusso, who noted that many of the messages his office received supporting short-term rentals were from outside the parish or state.

The council's goal is to curtail rentals of entire homes in residential areas, a practice that many argue has forced long-term residents out of several neighborhoods and contributed to the affordable housing crisis. Such rentals have proliferated throughout the city in recent years. In many cases, owners buy and rent out units in multiple buildings.

Non-residentially zoned properties, such as condominium buildings or former corner stores, would fall under a different set of rules. Single condos could be rented out under the same rules as residential properties, while larger-scale projects would be subject to a variety of other regulations that include requirements for security and front-desk services similar to traditional hotels.

Short-term rentals would continue to be banned in most of the French Quarter, and the Garden District would be included in that prohibition.

A major issue that has yet to be worked out is what affordable housing provisions will be included in the final regulations. When she initially proposed her new short-term rental rules last month, Palmer called for requiring commercial properties to include one unit of affordable housing for every unit that would be rented to tourists.

But other council members said that provision was too onerous on developers and would scuttle some projects that were set to include short-term rentals as part of their balance sheet. In the end, the council asked the City Planning Commission — which is already studying affordable housing requirements for large developments — to come up with a plan for using short-term rentals to spur affordable housing development.

In a separate measure, the council also urged the Cantrell administration to come up with plans to improve enforcement of the city's rules. That could include consolidating short-term rental enforcement into a single city department and imposing requirements on online platforms such as Airbnb to share information on their properties with the city.

That provision, crafted by Williams and Councilwoman Helena Moreno, also calls for recommendations on how to raise at least $20 million a year from fees for short-term rentals, with the money to go into a fund for affordable housing.

A final measure approved by the City Council on Thursday calls for the City Planning Commission to study whether specific areas of the city should be subject to different rules.

Various ideas the city instructed the commission to consider include whether the city should waive the homestead exemption requirement or allow existing rental licenses to be grandfathered in for blighted areas in need of development. That report will proceed separately from action on the main regulations.

“The (current rental) program was created several years ago, and many of our residents who have been struggling saw this as an opportunity to take care of their family,” said Nguyen, whose district includes large economically hard-pressed areas. “They followed the rules and I don’t think they should be penalized.”



Follow Jeff Adelson on Twitter, @jadelson.​