The countless hours of public comment and debate over the regulation of short-term rentals in New Orleans has felt for many like déjà vu, as city officials and residents prepare for more public hearings after more than half a decade spent on the issue.
Through new administrations, a growing affordability crisis and the ramped-up proliferation of tourist housing, the arguments made inside City Hall to the bodies responsible for the infrastructure and enforcement of short-term rentals have remained largely the same.
On Jan. 10, the New Orleans City Council unanimously voted to put wheels in motion to begin scaling back the number of entire homes in residential areas used for tourist housing, but months of discussion will follow.
New Orleans city planners will consider new, stricter rule changes for short-term rentals after the City Council’s unanimous passage of a plan that could limit renting out on platforms like Airbnb only to people who live on their properties.
The measures also direct the City Planning Commission to consider restrictions for rentals in commercially zoned buildings, increasing fees, adding stronger enforcement mechanisms, and to determine whether commercial short-term rentals can be leveraged for affordable housing.
After more than four hours of debate, the votes will begin another contentious round of public hearings over the future of short-term rentals in the city, adding to the more than five-year debate over their proliferation and role in affordable housing, gentrification and displacement as real estate developers and speculative buyers continued to buy property exclusively for tourist housing, while officials eyed ways to curb the so-called unintended consequences of rules that went into effect in 2017.
“While not the sole cause of housing issues in the city, it is undoubtedly clear” that the proliferation of whole-home rentals have inflated housing prices and contributed to rising costs of housing, said District C Councilmember Kristin Gisleson Palmer, who proposed the new regulations.
That pattern squeezes long-term renters out of neighborhoods, Palmer said, in a “city defined by neighborhoods, defined by people living there.”
The New Orleans City Council took the first step Thursday toward dramatically cutting back on the number of short-term rentals allowed to oper…
What city planners may end up returning to the City Council are recommendations that have been introduced to them before.
The new proposals call for a prohibition of short-term rentals in most of the French Quarter and Garden District. City planners argued against neighborhood-specific exemptions in its initial January 2016 report (“the staff feels that we should treat similar areas equally and having different regulations in similar neighborhoods runs counter to that argument. As a result, there is no need to prohibit short term rental in certain neighborhoods, because the proposed short term rental regulations will be effective in all neighborhoods”).
Residents also fear rather that neighborhood-wide restrictions will spill rentals into nearby areas, rather than corral them into commercial zones or eliminate them from those areas altogether. But neighborhood groups in those areas argue that those kinds of protections protect already tourist-dense areas, and that prohibitions should also be offered to other neighborhoods.
The 2016 report from city planners also suggested that rentals “should not adversely affect the residential character of the neighborhood.”
A March 2018 report from Jane Place Neighborhood Sustainability Initiative — produced before Palmer’s moratorium on new licenses and permits and renewals later that spring — found that nearly 20 percent of short-term rental operators in New Orleans control nearly half of all listings.
That report found a 135 percent increase of short-term rentals since 2015 — whole-home rentals comprised 82 percent of that rental stock, which when made available for more than half the year under limitations in place under the current laws, are still “exclusively used as vacation housing for tourists, as the units are off-market for half of the year and, therefore, unavailable to residents.”
The group supports a homestead exemption for rentals — which at least a majority of the current body of the City Council appears to support.
District D City Councilmember Jared Brossett is one of two current councilmembers — along with Council President Jason Williams — who sat on the City Council during the previous debates with the current legislation, which Brossett voted against.
“Short-term rentals are eroding our character," he said in 2016. "Without (requiring the owners to have a) homestead exemption, I can't support what's being proposed.”
But on Jan. 10, Brossett said the new proposals “also have to be responsible to the people who have lived and abided by the rules and regulations that was put in place two years ago.”
Homestead exemption requirements are back on the table, for now. In its 2018 report, city planners also recommended scrapping current short-term rental types in favor of requiring owner-occupied rentals.
“We can’t preserve the character and culture of New Orleans if we displace people who bring character and culture to life,” Palmer said.
The proposal that began with Palmer’s office would end the current license types and introduce a residential license — which would be limited to people who have a homestead exemption — and create four types of commercial licenses. The City Council also directed city planners to consider how the city can leverage commercial rental development for affordable housing.
A separate resolution tasks the mayor’s office and the city’s Department of Safety and Permits with drafting stronger enforcement measures, including data sharing from the platforms with the city, requiring the platforms to maintain a license to operate in the city, and increasing per-night booking fees into the city’s Neighborhood Housing Improvement Fund to generate at least $20 million annually. (Those fees currently are set at $1 a night. They collected roughly $482,000 last year.)
Another motion also directs the CPC to study the feasibility of economic development incentive zones with looser short-term rental regulations to spur construction in blighted areas. It also asks the CPC to consider a grandfather clause for existing short-term rentals that would otherwise be ineligible from renting without a homestead exemption under the new rules.
Critics say those kinds of carve outs would prime lower-income areas for gentrification.
Operators say they’ve followed the law under the current regulations, and new restrictions will effectively prohibit them from using their properties for tourist housing. Owners without a homestead exemption or with multiple properties say they rely on short-term renting to defray rising property taxes and living expenses. (Eric Bay, former president of the Alliance for Neighborhood Prosperity, compared the new rules to construction of a border wall.)
“They followed the rules,” said District E Councilmember Cyndi Nguyen. “I don’t feel they should be penalized.”
Despite some concerns among several councilmembers over those proposals, the City Council didn’t break its unanimity in support of the three latest measures.
District B Councilmember Jay Banks, who also supported the motion to consider grandfathering in existing rentals, added that the city has for far too long focused on making “New Orleans great for tourists.”
“At the end of day I would like to make New Orleans right for residents,” he said.
Recently unveiled plans for 200 short-term rentals on Canal Street would also have to be matched by affordable housing units under a proposal …
Noticeably missing from the motion that passed the City Council is a requirement that larger commercial rentals also match construction of each unit to creating a unit of affordable long-term housing — a one-to-one match proposal echoed by affordable housing advocates.
Palmer previewed her proposal late last year, after city officials gave the thumbs up for short-term rental company Sonder to construct commercial rentals along Canal Street, part of an effort that officials see as a way to attract new retail to the street while filling in blighted and vacant upper floors.
But Palmer’s early draft of the proposal would’ve required those units also be matched with affordable rentals in an area employing thousands of hospitality jobs with few housing options.
In an interview late last year, Palmer said the city’s housing crisis has isolated the city’s majority African-American population and pushed it further from those jobs, “segregating folks who don’t have the means and opportunities further from where the jobs are,” Palmer said.
As part of the package that passed Jan. 10, the City Council is instead asking city planners how to leverage short-term rentals for affordable housing.
City planners recently reviewed plans from Mayor LaToya Cantrell's administration for so-called inclusionary zoning rules, which possibly could mandate affordable housing creation in the construction of certain new developments. Advocates argue that mandatory affordable housing construction, paired with a one-to-one match with commercial rentals, could begin to chip away at the thousands of needed affordable units.
Cashauna Hill, director of the Greater New Orleans Fair Housing Action Center, recommended commercial rentals with more than five units be required to match construction with affordable housing. “There’s frankly no reason to let platforms and speculators get away with more in New Orleans,” Hill said.
Jeffrey Schwartz with Broad Community Connections also warned that short-term rentals not be seen as a proxy for addressing the affordability crisis.
“The crisis in affordable housing is the crisis we should deal with first,” said Elizabeth Cook. “[Operators] can rent to locals … We’re talking about repairing our neighborhoods, damaged and devastated by [short-term rentals], Road Home and the destruction of public housing.”
Physicians with Crescent Care and Daughters of Charity also pointed to the affordability crisis as a public health issue — one in which the city’s working poor, and the more than half the population that rents, isn’t able to address during hours-long weekday debates inside City Hall.
Williams said he’s “still deeply concerned an outright ban could drive all short-term rentals to the black market and not stop the proliferation.”
“That makes me very nervous,” said Williams, adding that he wants to ensure “what we do today and subsequent days does not adversely impact the market.”
“We have not gotten to a period or exclamation mark on this.”