City Planning Commission, Oct. 3, 2018

On Oct. 3, the New Orleans City Planning Commission voted to send recommendations from its staff report on short-term rentals to the New Orleans City Council.

After nearly 10 hours of public comment and discussion, the New Orleans City Planning Commission unanimously approved recommendations in a staff report that could drastically change the landscape of short-term rentals in New Orleans.

The CPC’s latest staff report recommends getting rid of the current “temporary” rentals category entirely — that type allows people to rent out their properties for up to 90 days a year on platforms like Airbnb, which the CPC argues effectively takes them off the housing market when its intent was to allow local owners to rent out their home for up to three months out of the year.

It also would replace “accessory” rentals with two categories of rentals that would require a person live on-site.

Commercial-type rentals would remain but those buildings would have a cap of 25 percent, or one unit, whichever is greater, that could be used for STRs.

Those recommendations now will be weighed by the City Council, which has promised tougher restrictions on STRs on their members’ respective campaign trails and in May voted unanimously on a moratorium on new permits and licenses for temporary rentals, deferring to the CPC’s report and debate over new rules — which will likely continue through 2018.

In its recommendations to the City Council in 2016, as City Hall prepared to legalize STRs, the CPC argued that STR operators should have a homestead exemption in order to rent out their properties. That was dropped in the City Council’s ordinance, which critics argue has opened the door for speculative investment from out-of-town owners that drove up property values and taxes and lured landlords to put their properties on a more-lucrative STR market.

The CPC staff report said those “temporary rentals” were “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.”

In 2016, the CPC proposed the three rental types to City Council, with a 30-day cap on temporary rentals; that later was bumped up to 90 days, and city councilmembers’ efforts to impose homestead exemption requirements ultimately failed. (Jared Brossett was the only councilmember to vote against those laws; Guidry came close to a “no” vote, adding that zoning laws are a promise to residents that they live in residential neighborhoods, and that "it's the city's responsibility to protect that investment and keep that promise.”)

Now the CPC has sent another round of recommendations to the city’s legislative body.

After a late start on Sept. 25, the CPC heard several hours of public comment before deciding to defer its decision to Oct. 3. After four hours of comment and discussion today, the CPC ended up sending the report to the Council with only minor additions.

But today’s “yes” votes aren’t necessarily an endorsement of the CPC’s staff proposals.

Commissioner Jason Hughes said he remains “concerned that people played by the rules based on what the rules were,” after city officials signed off on STR legislation last year. “Now they’re being punished to a certain extent.”

“We had some residents that invested and were good actors,” said Commissioner Jonathan Stewart, adding that he hopes the city will focus efforts in other areas of the city like the Lower 9th Ward where “we can give people a long-term incentive to invest in short-term rentals.”

The CPC staff report suggested increasing increasing nightly fees of $1 up to $8 to support the city’s affordable housing fund. The CPC voted unanimously to increase it to $10.

The CPC staff also recommends capping commercial STRs at 25 percent of a building, or one unit, whichever is greater.

Commissioner Kyle Wedberg suggested changing the unit measure to overall square footage, in the event that the City Council decided to add affordable housing requirements to commercial STR development. The CPC shot that proposal down.

With those minor tweaks after two weeks since the arrival of the CPC staff’s report and recommendations, the CPC has largely left the rule changes in the City Council’s hands.

STR proponents also took issue with the staff report’s use of “anecdotal” reporting to illustrate some of the impacts of legalizing STRs, particularly their impact on the housing market and proliferation in historic core neighborhoods.

The report says 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.”

Eric Bay with STR group Alliance for Neighborhood Prosperity said “sound policy recommendations need to be formed with solid evidence and clear understanding,” adding that “onerous and restrictive bans” will lead to more problems.

The meeting also shed more light on the economy around STRs that has bubbled up with its legalization, from housekeeping to concierge services — operators who bought several properties to turn into STRs, and the people they hire to run and care for them and the people staying at those properties.

STR developers and operators also said they’ll sell their properties if the proposed rules are approved, which could flood the market and significantly impact property values, or they’ll fight the issue in court; one woman said putting her STRs on the long-term rental market is not enough to support her bills.

Critics pointed to the consequences of buying properties based on speculated revenue from STRs, or as a means to support a note and pay taxes, and the resulting economic bubble from that industry.

Cynthia Scott, who lives next to a whole-home rental near the Fairgrounds, said she’s more concerned about the loss of residents displaced by STRs than an economy “that didn’t exist until a year ago.”

“We need to protect our residents,” she said.

“You’ve heard a lot about money and the economy but not much about neighborhoods and the fabric of our neighborhoods here,” said Harry Shearer, who added that for most New Orleanians, a “house or an apartment isn’t an investment, it’s a place to live.”

Though the city is enjoying higher property tax revenue, residents aren’t necessarily seeing a better quality of life, he said.

“What good is more revenue for services for people who can no longer afford to live here?”