Land Use
 

Council freezes most common type of short-term rental licenses in residential neighborhoods

The New Orleans City Council voted Thursday to halt the issuance of the most common type of short-term rental license, which allows tourist rentals of entire homes in residential neighborhoods.

It’s the first major rollback — though a temporary one — of the year-old law that legalized and regulated rentals via services like Airbnb, VRBO and HomeAway.

The council voted unanimously to direct the City Planning Commission to hold a public hearing on the proposal, which bans the issuance of new and renewed temporary licenses in the Central Business District and in historic neighborhoods that have seen the highest concentration of short-term rentals.

The ban affects the most popular neighborhoods on Airbnb, including Faubourg Marigny, Bywater, Treme, Mid-City and much of Uptown.

Councilwoman Kristin Gisleson Palmer, the lead sponsor of the motion, said she believes the proliferation of short-term rentals is making the city unaffordable for residents.

“Too many people in this city are now living in gutted neighborhoods,” Palmer said.

The motion approved Thursday was significantly scaled back from what she offered earlier this week. That one would have applied to new and renewed temporary licenses, which allow whole-home rentals in residential districts for 90 days a year, and new commercial licenses, which allow year-round rentals in commercial and mixed-use districts.

The council decided to drop the ban on commercial licenses, except in limited circumstances. They also shortened the ban from one year to nine months.

Councilwoman Cyndi Nguyen offered an amendment that would have allowed New Orleans residents to continue to obtain and renew as many temporary permits as they want, including in the neighborhoods affected by the proposal.

She said she was concerned about people who had spent money on renovations in order to offer their homes as short-term rentals, and are now dependent on the income.

“These are also residents of the city of New Orleans,” she said, responding to comments from people who criticized out-of-town investors in short-term rentals.

She withdrew her amendment, though, and voted for the ban.*

Planning commission will vote on proposal

The planning commission will have to vote on the proposal before sending it back to the council. While it’s pending, city employees will not accept applications or issue temporary short-term rental licenses in the affected areas. That starts immediately.

People can ask the City Planning Commission for an exemption, which would have to be approved by the council.

Palmer said hosts can honor bookings for dates after their permit expires if they can show the reservation was made before the motion passed.

A limited group of new commercial licenses will be banned as well: those that are on the first story of multi-story buildings that have or are permitted to have residential units on the upper floors.

Through her spokesman Beau Tidwell, Mayor LaToya Cantrell declined to comment on the proposal. Councilman Joe Giarrusso told The Lens the council forwarded the motion to the City Attorney’s Office last week but had not discussed it with Cantrell.

Whether she supports it or not, Cantrell can’t veto today’s action because it was passed as a motion, not a law. After it goes through the planning commission, the council will have to vote to add it to the city code, at which point Cantrell will have an opportunity to weigh in.

Airbnb sent a letter to the council on Wednesday urging councilmembers to vote against the ban. The company said it was introduced hastily and without public input, and it would hurt residents who rely on short-term rentals to supplement their income.

“What we need is continued conversation, not backdoor policies passed without review,” Airbnb Public Policy Director Laura Spanjian said in a statement attached to the letter.

HomeAway also opposed the motion. In a letter, Ashley Hodgini, the company’s government affairs manager for New Orleans, urged the council to delay the vote.

Hodgini suggested that the timeline be shortened to six months and be revised to exclude renewals of temporary licenses.

HomeAway has said the city hasn’t cooperated with the company on its effort to help ensure that users follow the law. According to a May 15 letter addressed to Cantrell, HomeAway offered to require users in New Orleans to enter their city license numbers before registering. The city did not respond to the offer, according to the letter.

HomeAway recently announced that, for the first time since the city’s short-term rental law went into effect, it will respond to administrative subpoenas seeking information on hosts suspected of violating the law.

Philip Minardi, a spokesman for HomeAway’s parent company Expedia, told The Lens on Thursday that the company still plans to do so.

Public weighs in on affordability, neighborhood fabric of city

Thursday’s vote followed a presentation by Breonne DeDecker, program manager for Jane Place Neighborhood Sustainability Initiative. She said short-term rentals have exacerbated gentrification and contributed to rising rents — though they’re not solely responsible.

“Many, many housing units are being redirected toward Airbnb and short-term rental use,” she said. One block of Kerlerec Street, she said, has 16 short-term rental permits, authorizing 40 bedrooms and 74 tourists.

“I don’t think any given block should be mostly short-term rental, so clearly there is a problem,” Council President Jason Williams said. “When we allowed short-term rentals to be legalized or codified, we knew there was a problem then.”

Councilman Jay Banks, who voted for the ban, said short-term rentals are only a piece of the city’s affordability problem. “We have not yet developed a solid affordable housing development plan,” he said.

He said he will create a task force to identify where and how affordable housing can be developed.

New Orleans has issued about 4,600 short-term rental licenses as of this week, according to city data. Others have continued to operate illegally, including in the French Quarter, where short-term rentals are mostly banned.

About 2,400 of those licenses fall under the ban.

DeDecker pointed to several downtown apartment buildings where most units have been converted to licensed short-term rentals. Many are operated by out-of-town short-term rental management companies.

“That’s not an apartment building. That’s a hotel,” DeDecker said.

Earlier this year, her group issued a report critical of the city’s short-term rental law, finding it had done little to lessen the negative impacts of short-term rentals, including rising rents and the displacement of residents.

“I personally think that Airbnb is the worst thing to happen to New Orleans since Katrina,” said Megan Kiefer, one of many people who spoke in favor of the ban. She said short-term rentals have become a nuisance in her neighborhood, Bywater, attracting large parties of loud, disruptive vacationers.

“I was up until three in the morning Monday night because a short-term rental near me has a hot tub,” she said. “New Orleans is a place for people to live in and enjoy. Only secondarily is it a place for people to visit and enjoy.”

Meg Lousteau, a short-term rental opponent and director of Vieux Carré Property Owners, Residents and Associates, said a real estate agent criticized the French Quarter after a glut of properties recently went on the market.

“I said, ‘Great,’” Lousteau said. “That means that real residents will soon be living there. … Think of what can happen in Treme, Marigny, Irish Channel, Central City, and other neighborhoods that have been affected by this.”

Victor Pizarro, who owns long-term rental properties, said the only people to argue in favor of short-term rentals are people making money from them.

“I haven’t heard anyone saying, ‘Hey, I don’t have an STR, and I think it’s great,” Pizarro said. “Being able to be New Orleanians in New Orleans is at risk so that a very small number of people can make a lot of money.”

While most speakers favored the ban, dozens came out to oppose it, saying without the income they earn from short-term rentals, they couldn’t afford to renovate their properties or live in their homes.

Lloyd Kelly, a short-term rental operator who has a temporary license, said a ban on temporary licenses, but not most commercial licenses, would disproportionately affect African-American short-term rental operators.

“The majority of black people in this city that are benefiting from this have the temporary licenses, and you’re taking them away from us,” he said. “You need to tell my children why they can’t eat because, ‘Oh, we’re concerned about the neighborhood.’ I guess they’re not part of the neighborhood.”

Eric Bay, the head of the pro-Airbnb group Alliance for Neighborhood Prosperity, warned that not only will people’s livelihoods be taken away, the move could spur hundreds or thousands of property owners who rent on Airbnb to put their houses up for sale.

That would depress property values city-wide, he said. “Property taxes will be decimated if over 3,000 homes flood the market,” he said.

Councilwoman Palmer criticized for applying for short-term rental

Bay also suggested that at least one council member has an interest in a short-term rental property, which he said was a conflict of interest. That led Palmer to acknowledge that she did apply for a short-term rental license for a house she owns in Algiers, but she withdrew her application.

City records confirm she withdrew it, but say the application had been approved and the license appears to have been active for some period of time.

Bay sent an email Thursday showing Palmer’s license. “Is this a conflict of interest?” he wrote. “Or simply a way to crush her competition? … Will her permit get renewed?”

Assuming the ban is in place when Palmer’s permit is up for renewal, the answer would be no, even if she hadn’t withdrawn her application. The house is located in a neighborhood that will be covered by the ban, and the application was for a temporary license.

“I would have been voting against myself,” she said.

The council also voted to rescind an ongoing City Planning Commission study of short-term rentals and replace it with another study. The study underway was open-ended; planners have now been directed to look at four model cities that have adopted stricter regulations on short-term rentals.

The City Planning Commission has 60 days to hold a public hearing on the study. The study, and any recommendations for changing the city’s laws, must be completed and presented to the council within 120 days.

*Correction: This story originally said Councilwoman Cyndi Nguyen voted against the ban. She voted for it. (May 24, 2018)

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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.