Land Use
 

Planning Commission votes for tighter restrictions on short-term rentals

Michael Stein / The Lens

Commissioner Kathleen Lunn, and other commissioners, worried that some of the proposals in the staff report were too strict. Still, the Planning Commission voted unanimously to recommend the proposals to the City Council for its consideration.

After more than three hours of public comment, the New Orleans City Planning Commission on Wednesday voted to recommend tight restrictions on short-term rentals proposed by its staff in a report last month. The proposal now goes to the City Council for its consideration.

The proposed changes would eliminate the city’s popular “temporary” rental licenses, used for whole-home rentals in residential neighborhoods. Under current law, temporary licenses are available to property owners, who do not have to live at the property, and long-term renters. Though the law limits guest stays at temporary rentals to 90 nights annually  — nearly every weekend night per year — the planning staff noted that operators have used the licenses to operate full-time short-term rental properties

Under the proposed rules, operators in residential neighborhoods would have to prove their residency in a housing unit on the same lot as the rental property. Long-term tenants would prove residency with a Louisiana state-issued ID and a secondary form of identification. And those operators would have to remain in the residence they’re renting while guests are present.

The City Planning Commission had less than an hour to ask questions, recommend amendments, and vote to submit a short-term rental study that took its staff more than three months to create.

The vote had already been deferred once a week earlier, so the commission members raced the clock before they had to clear the room for another public meeting.

At 5:06 p.m., as attendees of the next meeting were filing into the council chamber, the commission unanimously voted to approve the recommendations in the study, an overhaul of current short term rental regulations that could significantly curtail the number of rental units in the city.

The Planning Commission kept the proposals in the study largely intact, though commissioners added an amendment that would raise a nightly fee — used for the city’s affordable housing fund — on short-term rentals in commercial districts to $10 from the $8 recommended by the staff. The current fee, for all types of short-term rentals, is $1 per night.

It was a step forward in the City Council’s pursuit of changing the city’s current short-term rental law, which critics say has exacerbated New Orleans’ already challenging housing market, accelerated gentrification, and changed the character of many of the city’s neighborhoods.

But as the commission members’ closing statements illustrated, the debate is far from over.

“After 7 or 8 hours of public comment, more public discussion is needed,” said Commissioner Kyle Wedberg. Three other commissioners — Jason Hughes, Kathleen Lunn, and Jonathan Stewart — said that while they were voting to recommend the proposed regulations to the City Council, they were worried that some of the recommendations could unfairly punish local, small-scale short-term rental operators.

“My vote will be to submit,” Hughes said. “But I do remained concerned that there are people that played by the rules based on what the rules were and made certain investments, and now they’re being punished.”

Commercial licenses, which are now available in nearly all commercial and mixed-use districts,  would see significant changes too. Properties in non-residential areas would be limited to using 25 percent of its units as short-term rentals. There is no cap under current law.

“With an unlimited percentage of the building allowed as STRs, some buildings have become entirely STRs,” the commission’s study said.

Platforms, like Airbnb and VRBO, and operators would be subject to new permitting and disclosure requirements as well as higher nightly fees to fund affordable housing projects.

“We need to be serious about funding enforcement for this,”  Lunn said. “That is critical.”

The study also recommends that the city lift a ban that now applies to most of the French Quarter, other than a seven-block stretch of Bourbon Street. Some commission members, along with several resident speakers, voiced their apprehension about this recommendation as well.

The City Council directed the commission to complete this study last May. Pending the results of the study, the council also placed a moratorium on the most popular type of rental license — the temporary license — in many of the city’s historic neighborhoods where short term rentals were most densely located.

The comments were roughly split between supporters and critics of short-term rentals, with each camp occupying its own side of the chamber.

“For the vast majority of New Orleanians, a house or apartment isn’t an investment, it’s a place to live,” Harry Shearer said. “Some at City Hall may prioritize rising real estate values as a route to increase tax revenues without increasing taxes. Politically, it’s very palatable. But what good is more revenue for services for people who can no longer afford to live here?” (Shearer is a member of The Lens’ board of directors.)

Both sides seemed to agree that it’s harmful for out-of-town speculators to operate dozens of short term rentals throughout New Orleans’ neighborhoods.

“STRs are a way to offset the financial burden of owning properties,” said short-term rental operator Carley Sercovich. “However, what we can’t have is that benefit only being for wealthy commercial landowners taking advantage of it.”

Eyes on the council

Now that the City Planning Commission has forwarded the recommendations, the ball is in the City Council’s court. It will now have to decide whether to accept or reject the proposals and have them drafted into an ordinance. The council may also choose to modify the proposals.

But even if the council does adopt the recommended regulatory structure, there could be significant alterations. Commission Chair Robert Steeg referred to the study as a “baseline document.” For some short-term rental critics, this is an unnerving prospect.

When the existing short-term rental law was created in 2016 under the administration of former Mayor Mitch Landrieu, the City Planning Commission produced a similar study. The council eventually voted in favor of the licensing framework designed by the commission, but tacked on some key changes. It’s these changes, says the 2018 commission study, that caused many of the problems the city has experienced since.

The most significant revision in 2016 was to the temporary licenses. “The Temporary Short Term Rental license was intended to be a minimally impactful short term rental type that is only utilized during major events, such as Mardi Gras, or Jazz Fest for permanent residents,” says the commission’s 2018 study.

But then the recommendations were altered. “The limit on the number of days per year was increased from 30 days to 90 days, and perhaps more significantly, the Temporary Short Term Rental was no longer required to be someone’s occupied dwelling unit, which allowed every dwelling unit to potentially become a short term rental without any limits on density,” the study says.

Temporary licenses quickly became the most popular category. In April, prior to a freeze on temporary licenses in some neighborhoods, they made up more than 50 percent of the roughly 4,500 active licenses in the city.

“The Temporary Short Term Rental license type has become a de-facto whole-home rental,” the study concludes.

The changes

Trying to correct what it sees as a misstep by the former City Council, the City Planning Commission now recommends getting rid of the temporary license altogether. The only authorized residential permits would fall under what is currently called an accessory license.

“There is general consensus that the Accessory Short Term Rental is the least problematic type since there is a requirement for a Homestead Exemption and the property owner is present during the time of the rental,” the study says.

These licenses would be marginally expanded and rechristened as “residential licenses.” And they would be split into two categories: whole-unit and partial-unit. Partial-unit licenses would allow homeowners and renters to offer up spare rooms. To allow renters to participate, the operators would have to prove their residency with a Louisiana state-issued ID and a secondary form of identification, instead of a homestead exemption.

Accessory licenses were partially designed for homeowners who want to rent out unoccupied half-doubles. Under the commission’s proposed regulations, these would fall under the residential whole-unit category. This category would expand to include three- and four-plexes, but only allow one licensed unit per lot.

Some residents have noted that the new regulations would restrict resident’s ability to rent out homes for periods of heavy tourism such as Mardi Gras or Jazzfest — the original intention of the temporary permits. In response, the commission’s study gives the council an option to create a special event permit, which would only last for 14 days. Residents would have to indicate on their application the exact dates they were applying for and would be eligible for two permits each year.

The commission’s staff is not recommending this option, however, pointing to to the distortion of temporary licenses in 2016 as a cautionary tale. Enforcement of this permit, it says, would be difficult.

The third category of recommended license — commercial — would have new restrictions as well. The study suggests a complete ban of commercial rentals in some of the “least intensive neighborhood business districts,” including some commercial zones in the city’s most popular areas for short-term rentals, like Bywater and Faubourg Marigny.

In the remaining commercially zoned areas of the city, commercial permits would be restricted to one unit or 25% of all units per lot, whichever is greater. Short-term rentals would also be banned on the first floor of residential multi-story buildings in many commercial districts.

For some, the recommendations are too prohibitive.

“More failed policy and onerous and restrictive bans will not solve one problem, they will only create several more,” said Eric Bay, president of the Alliance for Neighborhood Prosperity, a pro-short-term rental group. “We need to allow those who have invested financially, with sweat and personal equity, to continue to operate.”

But after the unforeseen negative impacts of the 2016 law, some commission members view the restrictions as necessary to avoid leaving exploitative loopholes.

“I think we’ve suffered from enough unintended consequences,” said Wedberg.

Help us report this story     Report an error    
The Lens' donors and partners may be mentioned or have a stake in the stories we cover.
About Michael Isaac Stein

Michael Isaac Stein covers New Orleans' cultural economy and local government for The Lens. Before joining the staff, he freelanced for The Lens as well as The Intercept, CityLab, The New Republic, and Pacific Standard. He was recently awarded a fellowship from the Heinrich Boll Foundation, which he used to report on water scarcity, division, and colonialism in Cyprus.