Thursday, October 20, 2016

Short-term rentals in New Orleans get City Council approval

Posted By on Thu, Oct 20, 2016 at 9:15 PM

click to enlarge At an Oct. 20 New Orleans City Council meeting, opponents of whole-home rentals in New Orleans wore "shame" buttons, with the Airbnb logo replacing the "A."
  • At an Oct. 20 New Orleans City Council meeting, opponents of whole-home rentals in New Orleans wore "shame" buttons, with the Airbnb logo replacing the "A."

Airbnb now has a framework to operate, legally, in New Orleans. After months of debates and public meetings over short-term rentals (STRs), their proliferation, and the impacts they've had in the city over the last several years, the New Orleans City Council on Oct. 20 passed a measure — introduced by Mayor Mitch Landrieu's administration this week — that sets up permits, fees, taxes and an infrastructure for short-term rentals advertised on platforms like Airbnb and VRBO.

The motion prohibits full-time whole-home short term rentals in residential areas — but it will allow whole-home "temporary rentals" up to 90 days a year.

The vote followed a week of compromises laid out by Landrieu's administration, which initially supported the practice of whole-home rentals in residential neighborhoods, but backed off in favor of "temporary rentals" up to 120 days a year, then, ultimately, 90 days. Housing advocacy groups and residents — disappointed with the compromise vote — have demanded the city prohibit all whole-home rentals. Opponents, in red, wearing "shame" buttons and holding up signs, called councilmembers "sellouts"; proponents cheered.

The motion serves as a starting point to amend the city's Comprehensive Zoning Ordinance, the city's massive rulebook for land use through which all property manners adhere. It now will incorporate STRs.

So, what does all this mean?

There are roughly 5,000 STRs in the New Orleans area. Approximately three-quarters are entire homes and apartments. The city is interested in harnessing revenue from those properties, and the industry has agreed to be taxed and regulated — but the city also needed industry approval on their ability to operate while still being able to collect their data and have some enforcement arm.

With the proposed ordinance, rental owners will need to have a license from the Department of Safety and Permits, and all rental types will be prohibited in the French Quarter (though commercial types are allowed in the 200-700 blocks of Bourbon Street).

"Accessory rentals" allow people to rent out a room or half of a double (in a property they own and live in) full time, with a maximum of six guests. "Temporary rentals" with a maximum of five bedrooms and a maximum of four units on the property can be rented up to 90 days a year. "Commercial rentals" with a maximum of five bedrooms and up to 10 guests per unit on the property can be rented out full-time in areas zoned commercial and mixed use.

Renters also will be required to have liability insurance, pay into the city's hotel-motel tax, and pay into the city's Neighborhood Housing Improvement Fund (NHIF). There also will be fees for temporary and commercial rentals that don't have a homestead exemption. Landrieu spokesperson Ryan Berni outlined enforcement steps to the Council; for advertising a STR without a license, penalties may include daily fines, property liens, revocation of permits and discontinuation of electric service.

Berni says the city has worked out a plan for Airbnb and other platforms to share their data through quarterly reports. Opponents are skeptical, as the industry has been reluctant to share data despite similar attempts in cities across the U.S. — and the city will be relying on four-month-old data in a city where STRs continue to mushroom. The companies are happy.

In a statement, Airbnb spokesperson Laura Sanjian the company is "excited that New Orleans will be joining a growing number of cities that have recognized the economic benefits home sharing brings to residents and neighborhood businesses."

"Airbnb is a lifeline for New Orleans’ creatives, seniors and working families, and the City’s commitment to supporting all types of responsible home sharing will ensure they can continue to help make ends meet by sharing their extra space," Sanjian said. "Our hosts are proud to be a part of the New Orleans tourism culture."

"We will be able to use their disruptive technology to disrupt them," said Council At-Large Jason Williams before his vote, "if they don't follow the guidance they lay out."

In August, the New Orleans City Planning Commission produced a lengthy report with recommendations to the City Council on how to regulate STRs. The City Council deferred voting on the motion until today — leaving just a few days left before the report's 60-day window expires, effectively leaving it up to the next administration with no more time for public debate or hearings. This was the first glimpse of Landrieu's "compromise" package.

Berni told Gambit that "it was clear to us there was not a consensus in the last week or so, so we really jumped in with a compromise solution we thought we could pass."

"Our point was: we're not going through another start-from-scratch process," he said. He doesn't believe the recommendations from the CPC would've passed as-is.

"I don't think there was a real consensus on where to go," he said. "As you could tell today, there were various points of view, and trying to accommodate as much as possible and not just a handful or specific group of neighborhoods but as much as the city as possible, and try to make it clear and easy to understand so we can enforce it."

The administration will work to update placeholder language in the ordinance and begin a hiring process for the enforcement end. The City Council will hear from the administration during budget hearings, which begin next week, about funding the department — which Berni anticipates being self-sustained with permits and fees from the STRs at roughly $1 million.


Opponents — particularly whole-home renting and the current landscape of unregulated and unenforced "bad actors" — frequently booed as the Council considered what opponents believe is collusion with an industry that has defied the laws already in place banning those types of rentals. After months of debate, study and public input, they feel ignored.

"The shift of whole-home rentals solely into the temporary category at the last minute  — after the community has spent years organizing and talking about a specific legalization scheme set up and put forth by City Planning — undermines the process and is so disrespectful to the community," said Breonne DeDecker with the Jane Place Neighborhood Sustainability Initiative. "City government letting a corporation write its own regulations behind the back of other legislators and behind the back of community activists who have spent months thinking through these processes and the way of legalization being proposed to us — they've undermined all of that in one fell swoop."

District D Councilmember Jared Brossett offered the only "nay" vote.

"Short-term rentals are eroding our character," he said. "Without homestead exemption, I can't support what's being proposed."

Brossett criticized the "changing character" and commercialization of neighborhoods as housing costs continue to rise. New Orleans is in a housing crisis, he said, and the city has not addressed the housing taken off market with the proliferation of short-term rentals.

The City Council even admitted it left a lot off the table. Stacy Head lamented having to lose caps on the number of STRs per block. Susan Guidry said there were things in the ordinance she didn't want to vote for. LaToya Cantrell said it's not perfect. Williams admitted he's voting against his self-interests: "If I did what was best for my block, I'd vote against whole-house rentals."

Still unclear is whether the softening of the types of allowed rentals could allow mixed use developments and commercial areas to turn over to STRs. New Orleans listings on Airbnb top hundreds of dollars a night. With the option to operate full-time up to 90 days a year, residents fear those properties effectively are off the long-term rental market — landlords can make a killing in a week, particularly during peak tourist seasons, rather than relying on month-to-month payments.

Ahead of the meeting, the Greater New Orleans Housing Alliance issued its recommendations, demanding temporary rentals be limited to only 45 days a year. Any more "would provide the financial incentive to operate many homes as STRs year-round."

"No matter how many times you start whittling down the number of days," DeDecker told Gambit, "the incentive is still there to convert housing into short-term rentals."

The Housing Alliance also urged for "ironclad" enforcement "that doesn’t divert precious resources from addressing our other housing challenges," while companies should "bear responsibility for ensuring that STR listings comply with local rules."

"Short-term rentals are just one factor out of many that may negatively impact our housing supply," the Housing Alliance statement read. "The city should follow the CPC recommendations for temporary units — limiting the numbers in blocks — and cap the overall number of temporary rentals that shall be allowed a maximum of fifteen permits to 2,500. The city should also cap the number of permits issued to individual owners to six."

The Alliance also proposed transaction fees to benefit NHIF, and continued to reiterate that the city also focus on the needs of its long-term residents.


In July, District A Councilmember Susan Guidry was among the first to respond to Gambit's questionnaire canvassing the Council and Landrieu about their positions on STR. (Brossett — who voted against today's motion — was first: "The appropriate regulatory enforcement mechanisms need to be in place before short-term rentals are allowed to legally operate in New Orleans, if the Council so chooses. I do believe there are places where short-term rentals will work, but I also have many concerns regarding this issue including the effects on the affordability of housing, preserving the integrity of neighborhoods, prioritizing adequate housing inspections, ensuring public safety, and preventing the commercialization of residential neighborhoods as a result of whole house short-term rentals.”)

Guidry was clear: In addition to prohibiting whole-house rentals, "I am also in favor of requiring owner-occupancy and homestead exemptions."

In an amendment offered before the motion, Guidry proposed homestead exemption for all STRs. It failed to pass.

"I brought the homestead exemption on," she said. "It's something I've been promising the public all along."

The amendment was planned, with Council support, she said, until Landrieu's plan appeared before the Council. "Nobody told me," she said. "Mr. Berni, can you tell me otherwise?"

An amendment requiring a conditional use process also failed. Cantrell and Guidry argued that would open each STR's application up to the public; the conditional use would effectively be permanent, however. In all, every amendment failed with the exception of one: STR permit holders are required to display their permit.

The City Council will be back to face the full ordinance in the coming weeks.

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