The New Orleans City Council soon will take its final step toward overhauling the local rules for short-term rentals (STRs). Like previous moves to restrain vacation rentals, the council’s latest deliberations reflect just how difficult it is — politically and legally — to regulate an industry that has upended hospitality and real estate markets worldwide.
In May, the council limited STR permits in residential neighborhoods to owner-occupied homes with homestead exemptions. That could eliminate thousands of previously permitted STRs owned by out-of-state investors. Those changes have not yet taken effect. The council gave itself 90 days to finalize related ordinances dealing with enforcement and fees — and STR proponents have challenged the new regs in court.
The council also must decide how best to deal with online platforms used by STRs.
New Orleans already has fewer licensed STRs than it had under an ordinance adopted by the previous City Council in 2017. The current council, which took office in May 2018, quickly barred renewal of many STR licenses and began studying ways to tighten the rules on those that remain.
Soon after New Orleans enacted its initial STR regs in 2017, out-of-town speculators began buying up large swaths of properties in historic neighborhoods, prompting cries for reform from residents. The current council appears poised to follow the lead of two California cities — San Francisco and Santa Monica — that have crafted regulations requiring STR platforms like Airbnb to keep unlicensed STRs off their sites. So far, the California laws have survived court challenges.
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“There’s a lot of political pressure from a vocal minority [in support of STRs], but at the end of the day, a majority of citizens want to protect neighborhoods,” says District C Councilwoman Kristin Gisleson Palmer, who has led the charge to tighten STR regulations. “I’m not without sympathy for those who followed the laws as originally written, but the previous council stated from the dais that these rules would have to be revisited. We have found that after a year of unchecked growth we need to change the rules. I also feel bad for those who have been pushed out or who can no longer afford their tax bill. This is about protecting neighborhoods and the vast majority of folks.”
Every nuance of this debate is a political powder keg. Local STR license holders say the rentals have helped the economy and enabled them to afford (and, in many cases, upgrade) their properties, whereas opponents say STRs have driven up real estate prices and pushed locals out of historic neighborhoods that created the culture tourists come here to enjoy.
For Ada Phleger, the last straw was the fourth short-term rental that opened on her block.
A sure sign of the escalating fight: a new ad campaign by a coalition of local anti-STR groups called “It’s Time, New Orleans.” The group posted a 30-second ad featuring longtime Treme resident and Urban Conservancy board member Amy Stelly, who says short-term rentals have disrupted her quiet neighborhood. “But even worse is what Airbnb is doing to housing costs,” Stelly says in the ad. “My adult children are living at home because they can’t afford rent. It’s time for New Orleans to hold Airbnb accountable.”
The council is expected to finalize its STR reforms later this month or in early August.