New Orleans hits pause on STRs in commercial districts

The New Orleans City Council has banned new short-term rental (STR) permits in the Central Business District, and other areas zoned for commercial use, for one year. The City Planning Commission expects to release a report in September with recommendations for the council on further action for commercial STRs.

According to the city’s short-term rental registry, almost 1,200 short-term rentals are currently permitted to operate in the city’s commercial areas, with 560 pending applications.

In March, the City Council passed a new ordinance for short-term rentals in residential zones that goes into effect July 1. Under those rules:

• Each operator can have only one STR permit.
• Permits are limited to “natural persons,” not corporate entities.
• Operators must live on the same lot as the STR unit.
• STRs are limited to a maximum of three per city square (four city streets that form a square).
• Up to two more STRpermits per city square may be issued to operators who individually apply for a special exemption, requiring neighbor notification and comment as well as City Council approval.

Short-term rental permit holders must also resolve complaints within one hour; include permit numbers in advertisements; have at least $1 million in commercial general liability insurance; and follow rules on quiet hours, occupancy limits, safety, and more. Short-term rental platforms such as Airbnb and Vrbo cannot post listings that don’t have a valid permit number from the city. 

Operators who violate the rules can be fined a minimum of $500 per offense — with each day considered a separate offense — and their permits can be revoked. Hosts with “sustained violations” can be banned from operating a short-term rental for four years.

All current residential STR permits will expire August 31. New residential STR permits will be distributed via a lottery that will include existing permit holders, scheduled for August 14. 

A group of short-term rental operators filed a lawsuit against the city in May challenging the constitutionality of the new residential ordinance. It’s not clear yet how that case will affect the law.

New Orleans vacation rentals are also subject to lodging taxes that include Louisiana state sales tax and several city taxes, including sales tax, a short-term rental occupancy fee, occupancy privilege tax, and a short-term rental equalization occupancy tax. STR operators in New Orleans are required to register and file lodging tax returns with city and state tax authorities.

Airbnb collects both city and state taxes on behalf of its hosts. Vrbo also collects city taxes for hosts in New Orleans, but does not collect Louisiana state taxes. Hosts are required to collect and pay taxes that are not collected by their platform, and they must register and file lodging tax returns even if taxes are being collected on their behalf.

MyLodgeTax can help short-term rental hosts in New Orleans simplify and automate lodging tax compliance. See our Louisiana Vacation Rental Tax Guide for more on short-term rental taxes in the state. If you have tax questions related to properties in New Orleans, drop us a line and we’ll get back to you with answers.