NO.shorttermrental.092618.007.JPG

City Planning Commission listen to people speak at City Hall in New Orleans, Tuesday, Sept. 25, 2018. The CPC staff released a report on their short-term rentals study and proposed new changes and regulations.

After several hours of public comment during the first hearing in the next round of debates over the future of short-term rental rules in New Orleans, city planners said they may want to consider attaching affordable housing requirements to some short-term rental development.

But the City Planning Commission will hold off on sending the New Orleans City Council its recommendations for those rules — based on an extensive report and proposals from the CPC staff — until next week. The CPC’s deadline to hand over those recommendations is Oct. 5. The commission will hold a special meeting to mull those recommendations on Oct. 3.

The meeting got off to a rocky and late start — there weren't enough members for a quorum at the meeting's scheduled start time of 1:30 p.m. Sept. 25.

So the commission — and the packed crowd inside City Hall — waited several hours for commissioners to arrive before the meeting could get to the STR portion of the agenda.

Adding an affordable housing component to STR development has been suggested by several housing advocacy organizations in an attempt to offset what they say — and what the CPC's latest staff report largely confirms — has been the removal of potential homes from housing stock for locals to support tourist housing, from neighborhoods in and around the city’s historic core to multi-unit buildings in commercial spaces.

In the CPC staff’s latest report issued earlier this month, it suggests that buildings with commercial STRs — which currently are available year-round in commercially zoned areas — should be capped at 25 percent of the building, or one unit, whichever is greater.

Critics say that plan could effectively guarantee or establish a de facto zoning for STRs in commercial spaces, or that it would kill current arrangements where STRs account for more than 25 percent of a building.

Though he says the CPC’s staff recommendations are a “good start,” Maxwell Ciardullo with the Greater New Orleans Fair Housing Action Center says the CPC staff proposal is a “giveaway" of commercial units that’s likely to “displace a lot of tenants.”

The city’s commercials corridors “aren’t that distinct from the neighborhoods they run through,” he said. “These are parts of our neighborhoods and should be treated as such.”

Ciardullo said the CPC should consider a one-for-one match for affordable housing in the CBD, which has a dearth of affordable units while being connected to downtown service jobs and transit hubs.

Among its proposals, the Greater New Orleans Housing Alliance also suggests commercial STRs in certain areas include a requirement that creates affordable housing on a one-to-one match.

“While the proliferation of short-term rentals in New Orleans may prove to have a negative impact on the availability of housing units for long-term residents, many of those residents faced challenges that negatively impacted their ability to live in safe, quality, affordable housing prior to the emergence of a significant short-term rental market,” the group said in a statement. “As such, any new policy must definitely result in an overall net gain in housing that is affordable.”

Commissioner Kyle Wedberg said he likes the idea of “the conversion of some of these existing units into affordable housing” to “[balance] out a building with affordable units and STR units.”

Commissioner Kathleen Lunn said those STRs may end up providing the “leverage for what we really need here.”

"It could be greater than a one-to-one,” Wedberg said. “It seems like there’s a marriage there.”

Adding those requirements would put some developments in a bind — developers behind 1100 Annunciation condos already are advertising the project as “short term rental approved.” (Developers called the 25 percent cap “arbitrary” and its enforcement “daunting at best.”)

Though the CPC staff report doesn’t explicitly link the city’s affordable housing crisis to STR proliferation, it does conclude that there is “sufficient anecdotal evidence that STRs have exacerbated an already difficult market,” especially in historic core and historic urban zoning areas and in the CBD, “neighborhoods where concentrations of STRs have been greatest.”

The CPC staff reported 4,210 active licenses as of May 23, 2018 — more than 65 percent of STRs were in the historic urban and historic core neighborhoods.

That month, the City Council agreed to press “pause” on the issuance and renewals of “temporary” licenses, which allow STR operators to rent out their properties for up to 90 days a year. More than half of STRs were “temporary” types.

That license type was “intended to be a minimally impactful short term rental type that is only utilized during major events,” the report says. Instead, “the lack of a permanent resident requirement, the generous 90-day limit, and the absence of density restrictions has led to a proliferation of temporary STR licenses.”

Temporary rentals enabled “de-facto whole-home [rentals], with no permanent resident or owner present. This can lead to quality of life issues, such as noise, loss of neighborhood character, and other impacts ... These negative impacts are exacerbated in residential areas, where most of the temporary licenses are located.”

That license type also encouraged intensive speculation in the housing market, with people legally allowed to purchase properties strictly for STR use, leading to higher property taxes in many neighborhoods that hadn’t seen those kinds of overnight investments, which housing advocates argue pushed up rents and led to further displacement.

The CPC staff recommendations do away with the temporary type and introduce two rental types that mandate the operator live on-site.

STR critics also have repeatedly demanded the city introduce a mandatory homestead exemption requirement for STR operators.

Breonne DeDecker with Jane Place Neighborhood Sustainability Initiative said attaching that requirement would best protect neighborhoods from further speculation, prevent displacement, and be more cost effective to enforce.

This week, the Louisiana Tax Commission is expected to adjust rules and definitions for short-term rentals — which could influence whether homestead exemptions are the ticket for ensuring local residents and not companies with multiple listings are participating in STRs.

CPC director Robert Rivers explains that the tax commission could determine whether STRs are defined as a commercial use, which could make them liable to be taxed at higher rates — and exempt from homestead exemptions.

If that’s the case, the CPC would likely turn to other metrics to anchor STRs to locals.

That homestead requirement, or similar residency requirement, and the potential permanent disabling of “temporary” rentals has frustrated operators, who say they can’t get a return on their investments by putting them on the long-term rental market, or selling them. (“Who bought rental property without a real intent to make a profit?” asked Brenda McGee.)

Wedberg stopped short of explaining the sticker shock of buying residential properties for commercial use (“the zoning has existed for reasons”), and critics pointed to the consequences of that kind of housing speculation and the resulting housing bubble.

Several French Quarter residents support the CPC staff’s proposal to lift the ban on STRs in that neighborhood, a “discriminatory” policy they argued has excluded property owners from participating in STRs while real estate in the neighborhood has gone down.

Opponents of that proposal say the price drop is effectively a market correction — lower home prices have made the area more affordable — but it also protects a tourist-heavy area from more inundation. That’s a concern echoed in other neighborhoods, and the CPC staff suggests that lifting the French Quarter ban could alleviate STR pressure in surrounding areas.

“Things that are characteristic of neighborhoods are neighbors,” Wedberg said. “It’s important to get this as close to right as we can.”