Land Use
 

Affordable housing group says fears about Airbnb’s effect on New Orleans housing have come true

April Leigh

This message was spray-painted by the former tenant of this house in Central City. An affordable-housing group released a report saying the proliferation of Airbnbs is contributing to rising housing prices.

Airbnb proponents say locals use short-term rentals to manage high housing costs in New Orleans.

But 18 percent of people who hold short-term rental licenses or manage them for others control about 45 percent of listings in the city, according to a study released Wednesday by an affordable housing group.

And about four out of five listings on Airbnb are for entire homes rather than spare bedrooms, bolstering opponents’ arguments that the city’s year-old law encourages property owners to convert houses and apartments into mini-hotels throughout the city.

The report, “Short-Term Rentals, Long-Term Impacts,” concludes that concerns about the proliferation of Airbnbs have largely been borne out since they were legalized a year ago. It suggests the law prioritizes tourists, hosting platforms and real-estate speculators above residents.

“Short-term rentals are removing rental housing from a market that is already in crisis,” said Jane Place Neighborhood Sustainability Initiative Program Manager Breonne DeDecker in an interview. Her group opposes the expansion of Airbnbs.

Some of the largest increases in rents have occurred in areas with large numbers of short-term rentals, the report says.

“When we have public policies that facilitate the unfettered conversion of housing to tourism, that’s when we have a problem,” she said.

The report uses data from Inside Airbnb, which periodically scrapes Airbnb listings in New Orleans and other cities.

Airbnb spokeswoman Laura Rillos said in a written statement that the study “relies on unreliable scraped data to make false conclusions about our community when the reality is the vast majority of New Orleans hosts are sharing the homes in which they live.”

“We remain committed to working with the City of New Orleans to ensure home-sharing continues to strengthen the local economy, while protecting long-term housing and neighborhood character,” she said.

The city’s licensing system makes it hard to suss out just how many short-term rentals are for a bedroom rather than an entire home, in part because one type of license is used to permit the rental of a bedroom as well as half of an owner-occupied double.

According to city licensing data, 72 percent of about 4,300 city licenses allow for rental of an entire home.

The city council recently called for a comprehensive study of the short-term rental law.

The Jane Place report calls for a sweeping overhaul of the law. Among its recommendations:

  • License-holders must own the property and have a homestead exemption. Current law allows renters to obtain short-term licenses, and there’s no residency requirement.
  • Each person should be allowed to obtain just one “whole-home” license.

Eric Bay, who heads up the pro-short-term rental group the Alliance for Neighborhood Prosperity, said his organization is working with City Hall and Airbnb opponents such as Jane Place.

Bay’s group has proposed expanding short-term rentals in the city and doubling the 90-day cap for whole-home rentals in residential areas.

Law hailed as a model for working with Airbnb

Short-term rentals were illegal in New Orleans for decades, but the city did little to enforce the law as Airbnbs multiplied in recent years. In December 2016, the city council passed an ordinance legalizing and regulating the market.

The law was hailed as a model of cooperation between cities and hosting platforms. Airbnb agreed to allow hosts to apply for a city license through its website, and it collects fees on behalf of the city.

“Partnerships with the platforms are essential to make this work both from a tax collection and zoning and code enforcement perspective,” said Mayor Mitch Landrieu’s spokesman Craig Belden.

Since the law went into effect, the city has collected $480,000 from a $1 nightly fee, which is directed to affordable housing; $980,000 in licensing fees; and $269,000 in fines, of which $68,000 has been paid, according to Belden.

Airbnb has worked with the city to remove about 3,000 unlicensed listings, Rillos said.

Under the law, hosting platforms are required to submit monthly reports on bookings. That’s supposed to keep hosts within the annual rental limit, though the city has to issue a subpoena to get the names or addresses of particular hosts.

Before the law was passed, opponents called for strict restrictions, including requiring properties to have a homestead exemption and limiting the number of short-term rentals on each block. The City Planning Commission recommended limiting whole-home rentals in residential zoning districts to 30 days per year.

But the Landrieu administration proposed a cap of 120 days per year for residentially zoned whole-home rentals. Ultimately, the council allowed for 90 days, nearly every weekend night per year.

Monthly reports submitted to the city by Airbnb — which DeDecker provided along with her report — show that some properties subject to that limit had already booked close to 60 nights by the end of February.

The law also allows entire houses and apartments in commercial and mixed-use districts to be rented to tourists every day of the year, even when those properties are located in mostly residential neighborhoods.

And with an accessory license, there is no annual limit on renting out half-doubles — a common type of long-term rental property in the city — provided the host owns the house and lives on one side.

Many people offer multiple listings

Jane Place found that a small number of large-scale operators control an increasing number of short-term rental properties in the city.

Forty-four percent of city licenses are connected to people with more than one license or to managers who oversee more than one property, the group found. That includes Bay, who is listed as the primary contact on 14 short-term rental licenses, though only two of those licenses are issued in his name.

Some of those operators hold multiple licenses themselves, according to Lens research. Others manage properties for local license-holders, including some who hold hold a single license. That points to a growing industry of companies and entrepreneurs whose business is to make it easy for property owners to Airbnb their houses.

For example, Bay appears to manage three units in a building in the 700 block of Esplanade Avenue, but the licenses for those units are held by three different people.

Jane Place reports that the city’s top 10 Airbnb hosts had about 11 percent of listings on the platform — 568 as of March, including licensed and unlicensed properties.

The top hosts include out-of-town management companies like San Francisco-based Sonder and Stay Alfred, based in Spokane, Washington.

Rillos said that according to Airbnb’s data, 77 percent of hosts in New Orleans who offer an entire home for rent have just one such listing. Seventy percent say hosting has helped them afford to stay in their homes, she said.

Most tourist rentals are for entire homes

Using data from Inside Airbnb, Jane Place found that 82 percent of Airbnb listings in the city are for entire houses or apartments. The report doesn’t include similar data for VRBO, the other major platform.

The overall number of Airbnb listings has increased by 135 percent since 2015, according to the report. The number of listings for entire houses or apartments has increased by 233 percent.

On average, those listings were available for rent 174 nights per year, the report says. It doesn’t say how often they actually were rented.

A monthly report from the city, which Jane Place provided to The Lens, shows that about 4,700 New Orleans listings averaged about 11.5 booked nights in February. An October 2017 monthly report from HomeAway/VRBO.com showed an average of about 4.5 nights.

Neither report shows which listings were for entire homes and which were for spare rooms.

Jane Place said its analysis of listings and licenses demonstrates “that there are operators who are developing scattered-site hotels composed of residential units that have been taken off of the housing market and redirected for tourist use.”

Rillos disputed those figures. She said the company’s data show 64 of New Orleans hosts share their primary residence.

“Entire home listings in New Orleans include boutique hotels and bed and breakfasts,” she said. “Some are reserved for visiting family and friends, and wouldn’t be available for long-term tenants otherwise.”

Correlation between desirable Airbnb neighborhoods and rising rents

The report finds a correlation between rental increases and concentrations of short-term rentals. Most of the city’s top neighborhoods for short-term rentals have seen rents skyrocket in recent years.

And the potential for larger profits incentivizes landlords to convert long-term housing into de facto hotels, the report says.

In the Seventh Ward, the average rent for a two-bedroom house or apartment is $1,000 per month, according to a 2016 report by the New Orleans Redevelopment Authority. That works out to about $32 per night. The current nightly rate for an entire home in that area is $202, according to the report.

It’s not uncommon to see real-estate listings advertise potential short-term rental profits.

Rillos pointed to a 2016 Airbnb-funded study that found short-term rentals had “no discernible impact” on rent prices.

But the Jane Place report contends that short-term rentals may be creating a domino effect. Houses are taken off the long-term rental market, pushing up rates for the remaining rentals in an area. Renters move to less expensive neighborhoods, putting pressure on rents there.

“While neighborhood impacts vary, what happens in one neighborhood affects other neighborhoods — middle-income residents priced out of a rapidly gentrifying neighborhood might end up moving to a lower-cost neighborhood,” the report says.

Meanwhile, the city’s demand for affordable housing outstrips its supply, according to city and Census data.

Group recommends ways to curtail Airbnbs

Jane Place suggests forcing rental platforms to obtain permits in order to operate in the city. That’s similar to how the city regulates ride-sharing platforms like Uber and Lyft.

In order to maintain their permits, companies like Airbnb and VRBO would have to remove all unlicensed listings and share the identities of all operators with the city.

Belden said the city “does not have the legal authority to extend our jurisdiction over web-based platforms such as Airbnb.com.”

The report also says monthly rental reports shouldn’t be anonymized. It says the current arrangement allows license holders to get around the 90-day annual cap by booking some nights on one platform and some on another.

Belden said the city is working with the platforms to improve data-sharing and agreed that more information should be made available.

Finally, the report recommends raising the fee for affordable housing from $1 per night to 15 percent of the nightly booking price.

DeDecker said she’s been in contact with sitting and incoming city council members about her research. She declined to comment on their reactions.

“A number of the concerns expressed in the report are shared by the mayor-elect,” Mason Harrison, spokesman for Mayor-elect LaToya Cantrell, wrote in an emailed statement.

He noted that Cantrell, who’s finishing out her council term, sponsored a resolution directing the City Planning Commission to study the effect of short-term rentals on the housing market.

“She continues to work toward striking the right balance on this issue,” he wrote, “so that the right regulations are in place that protect the cultural fabric of neighborhoods and the city as a whole.”

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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.