The New Orleans City Council took a first step toward cracking down on illegal short-term rentals Thursday, as local governments across the country mull how to respond to a growing cottage industry sparked by rental websites like Airbnb and VRBO.
It was a relatively modest step: The council voted unanimously to sharpen the definition of “transient vacation rentals” in the city code.
Among other small changes, the amended law makes clear that anyone renting out a dwelling for less than 30 days at a time — 60 days in the French Quarter — is breaking the law unless they run a licensed hotel, motel or bed-and-breakfast.
The old ordinance said properties qualified as transient vacation rentals only if owners rented them out for shorter periods “over the course of one or more years,” a vague stipulation that made the law difficult to enforce.
“There are a growing number of unregulated, illegal and sometimes very problematic short-term rentals,” council President Stacy Head said. “We’ve got to put together a comprehensive way to regulate and, at times, restrict and certainly harness tax dollars from them.”
Discussion before the vote extended a debate that’s been going on for months, in New Orleans and elsewhere. A growing online industry is connecting tourists with homeowners who find they can make more money renting out their property one weekend at a time, rather than signing extended leases.
During events like the Jazz and Heritage Festival, when the city’s hotel rooms become scarce, the potential windfall for short-term renters can be huge.
But the trend has irked bed-and-breakfast owners. Perhaps half a dozen showed up at the council Thursday complaining of unfair competition. They said they have to pay taxes and follow the rules, while illegal renters do not.
“Small businesses that operate within the confines of the law are being penalized,” said Bonnie Rabe, head of the Professional Innkeepers Association of New Orleans.
There also are concerns about what illegal rentals are doing to neighborhoods. Residents have complained about visitors — often bachelor parties — making excessive noise at all hours.
Frances Swigart, who owns a home in the French Quarter, said one group of guests next door recently aimed a firework into her courtyard; another group of young men came by to ask her tenants where they could find the best strippers.
“They are unaccountable to neighbors,” Swigart said. “They are unaccountable in terms of fire safety.”
Meanwhile, some property owners and others who support the growth of short-term rentals have begun to organize themselves. Members of a group called the Alliance for Neighborhood Prosperity argued that the practice should simply be legalized and regulated.
They pointed to the opportunity for locals to earn money and for visitors to get a more authentic look at the city, as well as a growing incentive for property owners to fix up blighted housing stock.
“Legalize them, regulate them and tax them,” said Jim Uschold, a member of the alliance, suggesting the city has other means of cracking down on rowdy guests. “Late-night parties and noise are already violations.”