The New Orleans City Council passed a sweeping overhaul of the city’s short-term rental rules on Thursday, attempting to rein in a practice that has spread throughout the city’s neighborhoods in recent years.

The new rules limit short-term rentals in residential areas to owner-occupied properties, place caps on rentals in commercial and mixed-use buildings, and ban them outright in most of the French Quarter and the entire Garden District.

Those restrictions would be enforced in large part by requirements that platforms such as Airbnb and HomeAway remove listings that violate the city's rules.

The new rules, which will go into effect Dec. 1, are significantly more restrictive than existing regulations, which were put in place by the previous council in 2016. But the council stopped short of some provisions sought by many short-term rental opponents, most notably by calling for more study on a proposal that would have required large-scale rental operations to include some affordable housing units.

Opponents of short-term rentals also blasted the council's decision not to freeze issuing permits until the new rules go into effect, warning it would lead to a "gold rush" of operators hoping to get grandfathered in before caps on large-scale commercial operations go into effect.

The council passed the series of changes unanimously, though some members noted this would not be the end of the discussion.

“This is just the beginning of a larger conversation about sustainable tourism,” said Councilwoman Kristin Gisleson Palmer, who has overseen the effort to overhaul the rules. “The economic hardships too many of our residents face show we are not doing enough to address these inequities.”

Residents calling for more restrictions on short-term rentals filled the council chamber Thursday, but, perhaps due to the more than year-long review process that’s already transpired, they were fewer in number than in the past. Only a handful of short-term rental owners showed up to make their case.

The opponents focused their arguments on the impact they said short-term rentals have had on the city, including a loss of affordable housing, rising property tax bills and evictions of longtime residents that are forcing people from the city.

Both Airbnb and Expedia, the two major platforms in the short-term rental market, criticized the new rules after the vote. But both companies said they are committed to working with the city as the new rules are implemented.

The council began working on changes to the rental rules just after taking office last spring, after campaigns that in some cases largely focused on restricting the practice.

Short-term rentals were already widespread in New Orleans but exploded in scale under the ordinance passed in 2016. Up to 8,500 are now operating throughout the city according to some estimates, though fewer than 2,500 are officially licensed.

Because a moratorium on some new licenses that has been in place for more than a year closely matches the requirements in the new rules, it’s likely the number that would be able to operate under the rules is similar to the number now legally operating.

The main change in the rules will allow short-term rentals to operate in residential areas only if the owner lives on the site and has a homestead exemption to prove that it’s their primary home. Those owners would be allowed to rent out up to three units on their property to tourists.

Under the current rules, owners can rent out any properties they own, leading to a proliferation of operators who bought up properties as investments specifically to use as short-term rentals. While the rules included restrictions on how often such properties could be rented out, those rules were difficult to enforce and were essentially ignored.

The new rules keep in place a ban on short-term rentals in most of the French Quarter and add a new ban in the Garden District.

All of those elements of the proposal had been largely agreed on by council members months ago. How to handle commercial properties, from condos and apartment complexes in the Central Business District to corner stores in other neighborhoods, became the focus of the debate on Thursday.

Large-scale operations will continue to be allowed in the CBD and smaller-scale commercial and mixed-use areas in other parts of the city.

New applications for such “commercial” short-term rentals would be limited to 25% of the units in a single property. There had been a last-minute push by some council members to eliminate that cap, at least in certain areas of the city, but that effort was dropped before Thursday’s meeting.

However, city staffers said those limitations would not apply to existing short-term rental units. If a property is already more than 25% short-term rentals, the units above the cap would be considered legal nonconforming uses and can keep their licenses as long as there is not more than a six-month gap in their operations.

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That will mean the roughly 1,150 commercial units now in operation across the city would be unaffected by the changed rules.

Critics expressed anger that some properties would not be forced to scale back their operations to comply with the new rules. And many argued that, when combined with the nearly four months it will take for the new rules to go into effect, that could allow firms to swoop in and stockpile licenses before the cap takes effect.

However, Safety and Permits Director Zachary Smith said he does not believe there would be a significant spike in applications ahead of the new rules going into effect.

“We obviously don’t know what the market will do, but these are the rules that we have on the books,” Smith said. “We have not seen what I would consider to be an extraordinary amount of applicants.”

Crescent City Land Trust Executive Director Julius Kimbrough warned the policy could create a situation where “multimillionaire property owners are able to dominate the business.” The months before the rules go into effect will “create a gold rush, and creating a gold rush is not good public policy,” he said.

Affordable housing advocates also decried the elimination of a proposal to require that short-term rentals in commercial buildings be matched one-for-one with units of affordable housing.

Council members said they would look into the issue further and could come back at a later date with regulations tying short-term rentals to affordable housing.

The council also approved a ballot measure Thursday that would add a 6.75 percent tax to the bill of short-term rental guests. Voters will have to approve the measure on the November ballot.

That tax was approved by the state Legislature as part of Mayor LaToya Cantrell’s infrastructure deal with the hospitality industry this year. The proceeds will be split, with the city getting 75 percent and New Orleans and Co., a tourism marketing organization, getting the rest.

In addition to that tax, and an existing tax collected on short-term rentals that is put toward enforcement efforts, the council also approved an increase in the per-night fee that will be charged. Currently set at $1 per night, that fee will go up to $5 per night on residential rentals and $12 on commercial rentals.

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Key elements of New Orleans’ new short-term rental rules:

Short-term rentals will be allowed in residential properties only if they have a homestead exemption. Each of those properties can rent out up to three units.

In commercial and mixed-use properties, only 25% of a building will be allowed to be used as short-term rentals going forward. However, in buildings that are already over that cap, the additional units can remain in operation.

No short-term rentals will be allowed in most of the French Quarter or in the Garden District.

Platforms such as Airbnb and HomeAway will be required to remove illegal listings.

Short-term rentals that violate the rules, including regulations about disturbing neighbors, can have their licenses revoked.

An 8.45 percent tax and a $1 per-night fee are already assessed on short-term rentals. The new rules will increase the nightly fee to $5 for residential rentals and $12 for commercial rentals. Voters will decide in November whether to add an additional 6.75 percent tax on top of those.

Editor's note: This story was updated on Aug. 9, 2019, to fix incorrect information about the per-night fees that will be charged to guests staying at short-term rentals. The per-night fee for commercial rentals will be $12.