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City Council Reins In Short Term Rentals


 

After a prayer, followed by the Pledge of Allegiance, Star-Spangled Banner, several points of business (including a good-bye sendoff to the superintendent), and a congratulatory regarding charter schools, the City Council began the process of deliberating the latest rules concerning short-term rentals (STRs).

For several years, short-term rentals have been the Wild West of commercialized residential properties, but now the city council is imposing some order.

In New Orleans City Hall, with a packed, passionate, and contentious crowd – many activists, paid advocates, and regular concerned citizens – the City Council passed all resolutions unanimously, potentially curtailing short-term rentals (STRs) in New Orleans. This debate lasted over four hours, during which it looked as if some councilmembers had wandered off, and others were on the verge of falling asleep.

The beginning of the discussion began in December 2016 when the city first established the City’s Short Term Rental program, and in 2018 created a CPC study, along with a 9-month zoning district prohibiting issuances of new temporary renewal licenses in certain zoning districts. At that time, the Council made clear this would not be their last word on the topic of regulating STRs.

According to councilmember Jay Banks, “Let me preface this, my comments, by saying that the idea of short-term rentals, when I started this, I was vehemently opposed to. I was under the belief that short-term rentals killed affordable housing. I now understand that that is not the case. Now, short-term rentals may very well have stabbed it, but it didn’t kill it. We’ve got a couple reasons why we need to have a more comprehensive affordable housing plan. But, short term rentals do allow economic opportunity for local residents. Therein lies the quandary.”

Councilmember Helena Moreno presented “a resolution that addresses the significant problems of short term rentals. Platform accountability, overall enforcement, and inadequate fees to expand affordable housing…It urges increases of fees and fines for the short-term rentals. In particular for short-term rentals that are in commercial areas. So that we can finally capture the necessary dollars needed to quickly expand the market of affordable housing.

“Numerous studies indicate that short term rentals have some impact on the housing market, yet there is only a one dollar fee per night fee that is allocated to the Neighborhood Housing Improvement Fund, also called the NHIF, to expand affordable housing. Last year, that resulted in $482.00 generated from short term rentals. I hate to say it, but that’s a pitiful amount of money being generated to promote and develop affordable housing.” (applause) Instead, she argued that all fees and fines generated from short term rentals be a part of NHIF. “Fees and fines should also be raised. In particular commercial licenses. By doing this, we could capture millions of dollars to help quickly promote and expand development of affordable housing opportunities.”

Although focusing primarily on Airbnb, the new resolutions passed will affect all short-term rentals legally allowed in 2016. However, there is still an enormous problem with STRs following even the most basic rules.

The City Council passed several motions including M-19-4, which makes it clear that there are only two kinds of STR permits: one commercial, the other residential, with the residential permit only allowed in residential zones, and only with a homestead exemption.

The commercial STR permits are aimed only in commercially-zoned and mixed-use districts, creating four categories, one explicitly designed for condos. Other commercial Airbnb’s would require a security plan covering everything from security cameras to landscaping and lighting.

Motion M-19-6 would have the City Planning Commission study ways for the city to have STRs create economic development in specific neighborhoods, with a cap on the maximum number of STRs allowed in those areas. Despite some objections from citizens, it looked likely that some STRs already set up in those areas would be allowed to remain.

The city passed several regulations that would ban residential properties going forward, including apartments and homes, from being turned into STRs, particularly in the Garden District and the French Quarter.

The primary focus and argument were whether STRs were hurting affordable housing and whether that could be turned around to help create further affordable housing.

As the city council pointed out, at the moment, short-term rentals are, when they follow the rules, paying one dollar a night for their guests, back into the city. However, hotels are paying 13%.

District A Councilman Joseph Giarrusso summed it up, “The council’s action today accomplishes two important things; protecting neighborhoods and better law enforcement. When you buy in a neighborhood, you expect to live in a neighborhood.”

Dawn Hebert, a New Orleans East resident, said, talking about short-term rentals said, “I’ve heard of different reasons of why it should be allowed such as local investors, but you need to realize, we are the investors in our neighborhoods.” Adding, “Also, if the house is rented out, isn’t that a business? And we do not allow that in most of our neighborhoods. Another issue I’ve heard is blighted house would be remediated. We in New Orleans East have been fighting for years to remediate blighted properties. Code enforcement is the problem. Not us.” She continued, “Presently there are short term rentals in the neighborhood causing issues for the neighbors. Which, again, is not being addressed by any type of enforcement.” Adding, “So I’m basically asking that the ordinance be to ban short term rentals in single house family neighborhoods.”

Joanna Debinski, a sixteen-year resident of New Orleans commented, “I want to say thank you, because something you’ve done, has already impacted my block, when you didn’t allow for the renewal of the whole home Airbnbs, that whole home Airbnb on my block that had been terrorizing my block actually got shut down…For the first time in ten years, I have neighbors,” she said to applause.

She added, “I work at Daughters of Charity. I provide primary care for poor people in this city. They are not represented in this room right now. I want you to not forget them, okay, because they are so important to this city.” Choking back emotion, she continued, “And they live paycheck to paycheck. Most of them don’t own a house. Let alone multiple houses that they are having to decide what they’re gonna do with them. They rent the houses that people turned into Airbnbs, so please. I know you’re listening to all of us and I appreciate that, but remember the voices that are not in this room right now.”

As pointed out by the city council’s Jay Banks, the objective of the hearing was to compromise, with something for everyone. No one would be entirely happy because, he said, “STRs are not going away.”

Chris Cochran, a resident of Willow Street said, “I think what we’re really looking for,  and what Mr. Banks had stated, is a compromise for all…I just feel that there is a compromise out there where we can use this as Miss Moreno said, to raise funds and to also push the economic development through commercialization of STRs in certain areas. And we also need to limit it in residential areas. We don’t want it to take over. I think what’s proposed today limits that on the commercial end to help push what you want to do. We all want this for our city. And we all need that compromise to see that. And the only thing about the grandfathering in is that the people that did invest when it was made legal by the council, we should not have the rug pulled out from under us.”

Among differing viewpoints, many made the argument that in the “sharing economy,” they did not intend to take over entire neighborhoods with Airbnb’s, but are trying to supply themselves with an extra source of income. Along with that, several contentious arguments came from people who supported STRs, including many owners who said that they had taken bad neighborhoods and blighted properties, and turned them into successful STRs that helped beautify the area.

Many argued that there was no connection whatsoever between the rapid growth of STRs and the shortage of affordable housing. Many STR owners were especially displeased with the idea that people who rented the pieces of properties would have to live at them, creating an unfair burden.

Arguments against STRs ran the gamut: from people being kicked out of their long-term rentals, to create more opportunities for STRs; the massive artificial inflation of the property value and corresponding taxes of neighborhoods; to people being forced to sell their homes and downsize so they could find a place that they could actually afford to live in. There was also discussion of the destruction of the neighborhood’s and city’s culture.

Marcia McWilliams said, “I live in New Orleans East. And the majority of New Orleans East is a community of subdivisions, of single-family homes. Some residents of New Orleans East have lived here for thirty years and are now concerned about the short-term rentals coming into their neighborhoods.” Worrying that, “…when they come, they’re going to come with loud parties, loud music, loitering, littering; they don’t really know these people and they are concerned.” She added, The investors are those of us, who came back (from Hurricane Katrina) and invested in our homes. Therefore in New Orleans East and my area, they do not want the short term rentals.

In San Francisco, the very place where Airbnb started, the average one-bedroom apartment is now over $3,600 a month.

With the city council regularly asking people whether they were paid to speak here or not, the meeting dragged on. Councilmembers seemed to grow weary, and with a large number of people remaining to comment, the City Council suspended the rules, allowing only people with comment cards on STRs, without any other comment being allowed this meeting. One of the first commenters at the podium, Miss Washington, smiled, saying, “I’m going to sue you.”

Off to a good start. More to come.


Michael David Raso has worked as a writer, editor, and journalist for several different publications since graduating from the University of Louisiana at Lafayette.

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