Land Use
 

As the New Orleans City Council calls for a study of short-term rentals, here’s what we know so far

April Leigh

April Leigh used to live in this house. As the busiest tourist season of the year approached, she said she wanted vacationers to know how short-term rentals are changing the neighborhood. So she spray-painted this message.

Since Airbnbs became legal in New Orleans in April 2017, some residents have complained their neighborhoods have been overrun with tourists wheeling suitcases to houses once occupied by long-term tenants.

Airbnb proponents, meanwhile, want to expand into the French Quarter, which is off-limits, and lift restrictions on how often properties can be rented.

Thursday, the City Council directed the City Planning Commission to study the effects of the short-term rental law, with an eye toward changing it.

“There’s a difference between locals sharing their properties and corporations buying up homes or entire apartment buildings and turning them into hotels,” said Councilman Jason Williams. He sponsored the motion, along with Councilwoman and Mayor-elect LaToya Cantrell and Councilman Jared Brossett.

Though short-term rentals were illegal until April 2017, the city did little to enforce the law, and the number of listings on short-term rental sites exploded. Now, thousands of properties are licensed for nightly rentals. The city collects fees for licensing them and for each night they’re occupied.

When the law passed in 2016, it was hailed as a national model for cooperation between cities and home-sharing platforms such as Airbnb and VRBO. But critics, including neighborhood groups and advocates for low-income housing, have said the law is too permissive.

Though the law prohibits Airbnbs in most of the Quarter, it does not limit how many licenses one person can have or how many rentals can be on a single block. It doesn’t require license holders to live at their rental properties.

The City Planning Commission called for a 30-day annual rental limit for entire homes in residential neighborhoods, but the council approved a 90-day cap.

“Commercialization of our neighborhoods with these short-term rental disruptions are deteriorating the very fabric of our city,” Brossett said at Thursday’s council meeting.

He voted against legalizing the practice in 2016. “I still do believe stricter regulations and the homestead exemption should apply,” he said.

Under the motion, which passed 5-0, the Planning Commission has been directed to look at all of those issues and more. It has four months to finish the study.

Breonne DeDecker, program manager for the Jane Place Neighborhood Sustainability Initiative and a critic of the law, said she’s concerned that the motion calling for the study doesn’t mention housing affordability or the availability of rentals for long-term residents.

The planning commission and the council “should be asking if the current ordinances are putting the needs of tourists in front of the housing needs of residents … and how to protect vulnerable New Orleanians who cannot economically compete with tourists for housing,” she said.

The Lens has tracked the the implementation of the law for a year, mapping each license application and talking to residents in affected areas. Here’s what we’ve learned so far.

How many Airbnbs are in New Orleans?

As of Friday morning, the city has issued 4,423 short-term rental licenses.

That’s more or less in line with estimates from before they were legalized. In early 2016, the City Planning Commission estimated there were 2,400 to 4,000 short-term rentals operating illegally in the city.

The city issues three types of licenses: temporary, accessory and commercial. Two of those — temporary and commercial — allow property owners and managers to rent entire houses or apartments to tourists.

Commercial properties can be rented year-round. The city places a 90-day annual limit — most weekend nights of the year — on temporary licenses.

Of the licenses issued so far, 3,185 — 72 percent —are commercial or temporary, allowing for so-called “whole home” rentals for at least 90 days per year.

The third type of license, accessory, allows homeowners to offer part of their houses year-round if they prove they live there. This provision applies to half-doubles, which critics say is a loophole that allows a common type of rental property to be used as a full-time hotel.

It’s unclear from city licensing data how many accessory license-holders have taken half-doubles off the long-term rental market, because accessory licenses are also issued to people who rent a spare bedroom.

Nor is it clear just how many short-term rentals are operating illegally. According to Inside Airbnb, New Orleans now has 5,215 listings on that platform alone. Eighty-three percent of them advertise full homes or apartments.

Where are they?

Short-term rentals are distributed throughout the city, but as The Lens and HuffPost found in a report last year, they’re heavily concentrated in a handful of neighborhoods. Though the French Quarter is mostly off-limits, some Airbnbs continue to operate there without licenses.

The Alliance for Neighborhood Prosperity, a pro-Airbnb group, wants the city council to open up the entire Quarter to Airbnb and loosen other regulations.

The highest densities of licensed short-term rentals are in historic neighborhoods near the Mississippi River on the city’s East Bank.

When The Lens and HuffPost analyzed city licenses last fall, we found that one in 10 residential addresses in Faubourg Marigny was a licensed Airbnb. In Treme, Bywater and the Central Business District, it was 6 percent.

On one block in Treme, 10 of 16 residences were licensed Airbnbs. Some large apartment buildings in the Central Business District have dozens of them, and the sales pitch for some developments includes being Airbnb-friendly.

Full-time, commercial licenses have been issued throughout the city, as The Lens reported in June. Those licenses are allowed only in nonresidential districts, but that includes properties zoned commercial and mixed-use in otherwise residential neighborhoods.

That restriction has spurred owners of some residentially zoned properties to ask the city to rezone them so they can legally run full-time Airbnbs. That led Cantrell to seek a limited rollback of commercial licenses, though it wouldn’t apply in some of the most popular neighborhoods for short-term rentals.

How has Airbnb affected those neighborhoods?

In some popular neighborhoods, landlords can make more renting a house to tourists for a dozen nights per month than doing it full-time to a resident. The average rental for a whole-home rental is $218 a night, according to Inside Airbnb, but tourists pay a premium during major events like Mardi Gras and Jazz Fest.

Critics say this removes housing from the long-term rental market, displacing tenants, encouraging speculation by investors and driving up housing costs.

Last summer, Marigny homeowner Peter Horjus got an updated assessment for his property taxes. His run-of-the-mill, 2,000 square-foot shotgun double was valued at $427,000, nearly doubling his tax bill. (The assessor’s office dropped it slightly when he appealed, shaving $500 off his bill.)

“Home buyers are often taking into account the significantly higher revenue they can get using a house commercially as an STR [short-term rental] rather than a residential rental,” he wrote, “which makes a half-million dollars for a double shotgun no longer seem like a poor investment.”

This week, the state Senate approved a proposed constitutional amendment that seeks to blunt the effect of rising property taxes, including those stemming from short-term rental speculation, NOLA.com/The Times-Picayune reported.

Studies have found that even a small number of short-term rentals in an area can lead to noticeable increases in rents. However, a 2016 Loyola University study found that Airbnb did not have a discernible impact on rents in New Orleans.

The hottest Airbnb neighborhoods have grown whiter and wealthier than the city as a whole, according to an analysis by The Lens and HuffPost.

Even before Airbnb was legalized, real estate prices in the city had been on the rise for years. The Data Center reported that as of 2016, 35 percent of New Orleans renters were “severely cost-burdened,” meaning they spent more than half of their household income on rent. That rose from 24 percent of renters in 2004.

The Lens has found some evidence of displacement. Just before Mardi Gras, we reported on a small Bywater apartment building whose residents were being kicked out. The property owner was in the process of converting all four units to full-time Airbnbs.

That story was spurred by an act of vandalism — or protest, depending on your point of view.

April Leigh spray-painted the message “This Airbnb displaced 5 people” on the sidewalk outside her former home, a shotgun double in Central City.

Last spring, her house was sold. She and the other tenants were kicked out soon after.

Several months later, the owners applied for two short-term rental licenses, one for each side of the house, that allow them to rent each side for 90 days a year.

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About Charles Maldonado

Charles Maldonado covers the city of New Orleans and other local government bodies. He previously worked for Gambit, New Orleans’ alternative newsweekly, where he covered city hall, criminal justice and public health. Before moving to New Orleans, he covered state and local government for weekly papers in Nashville and Knoxville, Tenn.