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Imani Jacqueline Brown, a board member of Jane Place Neighborhood Sustainability Initiative, holding a sign in support of restrictions on short term rentals at a New Orleans City Council meeting in May 2018.

Buying properties in residential areas for use only as short-term rentals, the strategy that fueled the industry’s growth in New Orleans and changed the makeup of some neighborhoods, would be banned under a policy that will come up for initial consideration by the City Council next week.

A major rewrite of how the city regulates homes rented out to tourists through sites like Airbnb and HomeAway would also maintain the ban on short-term rentals in the French Quarter and expand that prohibition to the Garden District.

The proposal is expected to be formally unveiled Thursday. A source familiar with the plan discussed its contents on Wednesday.

Details of the plan are still being worked out, including exactly how to handle rentals in condominium buildings, apartment complexes and commercially zoned properties in mainly residential areas.

But what has been worked out so far would represent a dramatic reduction in the number of legal short-term rentals across the city. More than half of the 4,850 properties licensed under the city’s rules earlier this year would likely be barred from operating under the new regulations.

How many of those properties would try to go on operating without city permits is an open question.

The most wide-ranging aspect of the proposal would require any property used as a short-term rental in a residential neighborhood to have a homestead exemption verifying that the owner lives on the site. That would limit the practice to owners renting out one or more rooms in their own home or, for example, half of a double house when they live in the other half.

That change would eliminate the licenses that now allow entire homes to be rented out for up to 90 days a year, whether or not anyone lives there full-time.

Such rentals are the most common type in the city and have been in the cross-hairs of critics who argue that they allow investors to amass multiple properties, reducing the supply of housing for residents and often leading to neighborhoods emptied of most residents and overrun with hordes of partying tourists.

Since taking office in May, Councilwoman Kristin Gisleson Palmer, has been working on updating the current rules, which first legalized short-term rentals in the city in 2017.

While the new rules were being worked out, the City Council prohibited the city from issuing new licenses for such whole-home rentals, causing the number of those properties operating legally to drop by 1,000 from a peak of about 2,500.

The portions of the proposal dealing with short-term rentals in commercial properties, including both large complexes and former neighborhood stores, were still being hashed out Wednesday. However, the plan will likely treat those two types of commercial properties differently and include requirements that properties that include short-term rentals also must set aside units for affordable long-term housing.

Commercial rentals have seen explosive growth in the Central Business District since the practice was legalized, with some companies filling entire buildings with short-term rentals. Housing advocates have argued that requiring those companies to also provide affordable units could help ease the cost of housing in the city. 

Those proposed changes largely line up with plans endorsed by the City Planning Commission and pushed for by short-term rental opponents, though the commission’s recommendations would also allow renter-occupied units to be offered to visitors.

The council's proposed plan would also maintain the ban on renting homes to tourists in most of the French Quarter and add a new prohibition on such rentals in the Garden District.

The Garden District has never been one of the more popular spots for short-term rentals in New Orleans. At its peak, only 31 units were registered there, representing less than 1 percent of all rentals in the city. By contrast, the CBD had at its peak more than 17 times that many authorized short-term rentals.

However, Garden District residents have been lobbying for a total ban in their neighborhood.

One element missing from the proposal is a requirement for data sharing by the platforms that offer short-term rentals, to ensure they are not listing unlicensed properties and that other laws are being followed. Such regulations are being worked on but will be introduced separately, according to the source familiar with the plan.

The plan is expected to face strong opposition from short-term rental owners and platforms, who have largely argued against restricting licenses to homestead-exempt properties.

They have argued that additional restrictions will hurt residents who make money off of short-term rentals and will result in numerous property owners flouting the rules, just as hundreds or thousands of them did in the past when almost all such rentals were illegal.

“We've long been committed to working with the city leaders to find fair, reasonable regulations for short-term rentals, but this proposal was crafted in a backroom without input from key stakeholders like hosts who rely on home sharing and short-term rental platforms,” an Airbnb spokeswoman wrote in an email after being informed of the proposal. “We urge the council not to rush this through."

The introduction of the proposal will set off a long series of hearings and votes before it can be adopted into law.

The council is expected to take up a preliminary motion next week that would instruct the city's planning staff to draft the rules into a formal ordinance. That ordinance would then have to go before the City Planning Commission. Another council vote would then be required to adopt the rules into law.

Some council members had hoped to have the new regulations finalized before the state Legislature goes into session in the spring, fearing that if the city's rules remain in limbo it would provide an excuse for state lawmakers to step in with a law that would override any rules passed by local governments.

The current timeline would likely see the final vote on the regulations take place around the start of the next legislative session in early April.



Follow Jeff Adelson on Twitter, @jadelson.​