At a meeting on Dec. 20, the New Orleans City Council will consider adding a slew of new restrictions to the city’s existing short-term rental law. The motion, submitted by Councilwoman Kristen Palmer, would most likely lead to a significant reduction of short-term rentals.
Palmer’s proposal is based largely on a study by the City Planning Commission released earlier this year. But she does not go as far as planners in curbing the industry, particularly when it comes to short-term rentals in non-residential districts.
Perhaps the most notable part of Palmer’s proposal would be a de facto ban on whole-home rentals for single-unit residential properties — the most controversial rental-type in the city’s heated, years-long debate.
Currently, property owners and tenants can get “temporary” licenses allowing them to rent out full residential homes for up to 90 days per year.
Palmer would eliminate this type of license. Under the new policies, only property owners with homestead exemptions could operate residential short-term rentals. And the owners would be required to stay at the property when guests are present.
Residential operators would be able to rent up to three units on their property, meaning that a four-plex in a residential neighborhood could maintain three whole-unit short-term rentals.
The proposal would also create three categories for short-term rental permits in commercial and mixed-use districts. “Single unit” commercial permits would be similar to residential permits, but for properties in commercial and mixed-use zoning districts, including condos and single-family homes. The permit would require a homestead exemption.
“Small scale” commercial permits would allow properties with four units or less to use the entire building for short-term rentals, except the first floor, which would be reserved for commercial use unless the first floor is already being used for residential.
“Large scale” commercial permits would be for properties with five or more units. These buildings would only be allowed to use 30% of their units as short-term rentals, and would have to add one affordable housing unit for each short-term rental.
The proposal would also maintain the near-total ban of short-term rentals in the French Quarter — other than a seven-block stretch of Bourbon Street — and expand the ban to include the Garden District.
Last May, the City Council put a “freeze” on temporary licenses — the most popular short-term rental permit — in many of the city’s historic neighborhoods, an attempt to pause the industry’s rapid expansion. In the meantime, the Council directed the City Planning Commission to study the issue and recommend changes to the short-term rental law passed during the Landrieu administration.
Critics of Landrieu-era rules say they exacerbated the city’s affordable housing crisis and contributed to gentrification by allowing large-scale speculators to buy hundreds of homes to convert into scattered hotels.
The City Planning Commission study was released in September, and in October, commissioners officially recommended a new regulatory structure that would significantly curtail the prevalence of short-term rentals. This new motion from Palmer incorporates some of those recommendations. But the commission’s study — while calling for an end to the French Quarter ban — also recommended more restrictive rules on commercial rentals than Palmer is proposing.
City planners would have banned commercial licenses altogether in low-intensity commercial and mixed-use districts. And it called to cap short-term rentals in high-intensity commercial districts to 25 percent of residential units. But unlike Palmer’s motion, the planning study did not call for an affordable housing requirement as part of high-intensity commercial short-term licensure.
Even if the motion passes, Palmer estimates that it will take another three or four months to implement the changes. The motion would send the proposed policies to the City Planning Commission for its consideration. Then, the City Planning Commission has to release a study, hold a public hearing, and vote on the study’s recommendations. Only after that would the Council be able to vote to codify the changes into the city’s Comprehensive Zoning Ordinance.
”The Palmer ban – crafted in a backroom without input from key stakeholders like hosts and short-term rental platforms – would devastate New Orleanians who operate short-term rentals to support their families.”—Airbnb
The moratorium put in place by the Council expires on July 24, 2019. If the proposed changes aren’t finalized by then, the Council would have to vote to extend temporary ban.
Within minutes of Palmer’s announcement on Thursday, short-term rental platforms were already expressing their dissatisfaction, calling the proposal “The Palmer Ban.”
“The Palmer ban – crafted in a backroom without input from key stakeholders like hosts and short-term rental platforms – would devastate New Orleanians who operate short-term rentals to support their families,” short-term rental platform Airbnb said in a statement.
“Unfortunately, the extreme proposal released today does not reflect that widespread desire and takes the conversation around fair and effective policies in the wrong direction,” read a statement from HomeAway, another rental platform.
On the other side of the coin, Breonne DeDecker, the program manager at The Jane Place Sustainable Housing Initiative and a longtime critic of the Landrieu administration’s short-term rental law, said she was at least a bit encouraged by the plan.
“I think these are some good steps in the right direction, especially when it comes to reigning in the intense speculation that we’ve seen in our residential housing market over the past few years,” DeDecker said. “We’re really excited to see a homestead exemption mandatory in neighborhoods.”
But DeDecker is worried about the virtually unlimited “small-scale” commercial permits.
“Theoretically, we could lose all neighborhood residential housing in these commercial corridors,” she said. “It’s a big deal to lose this level of housing along these commercial corridors that have great transportation and amenities.”
According to Palmer’s chief of staff, Andrew Sullivan, the small-scale commercial permits are in part intended to spur economic growth and increase the “livability and walkability” of those neighborhoods.
“Because we’re reserving the first floor for retail or some institutional use, we’re going to reactivate a lot of corner stores and boutiques and things where you might not be able to make the numbers work unless you have an STR up top,” he said. “But the whole neighborhood benefits from that establishment being open.”
”Theoretically, we could lose all neighborhood residential housing in these commercial corridors.”—Breonne DeDecker, Jane Place Neighborhood Sustainability Initiative
The biggest missing piece of the legislation, according to DeDecker, is a lack of new oversight and enforcement procedure. Currently, platforms like Airbnb and HomeAway are required to submit monthly reports on host activity. But the hosts are not identified by name, address or license number. If the city suspects someone is breaking the rules, it has to subpoena the platforms for that information.
Jane Place has repeatedly pushed for more robust data-sharing from the platforms — reporting that would include full host information. The group has also pushed for a requirement that platforms themselves have licenses to operate in the city, licenses that could be revoked if they fail to share host data or allow unlicensed hosts to operate in the city. The Planning Commission study also recommended better data-sharing requirements and platform licensure.
“That is going to be the critical piece of making this work,” DeDecker said. “New Orleans can pass all the rules about short-term rentals they want, but unless there’s a way to actually make sure that illegal short term rentals can’t be booked on these platforms, we will not actually be able to manage this ongoing expansion.”
”Platform accountability is a big piece of this.”—Councilwoman Kristin Palmer
Palmer says the issue will be taken up in the new year.
“Platform accountability is a big piece of this,” she said. “We’re in the process of forming the paper on that.”
She said that enforcement and data sharing requirements for platforms like Airbnb and Homeaway will be modelled after successful oversight in San Francisco and Santa Monica. She says that those laws have withstood legal challenges in California all the way up to the state supreme court.
Palmer added that over the next four months, there will be plenty of opportunities for residents to voice their opinion.
“If we get a little push back from different sides that’s OK,” she said. “But if we can hit the most important points, then we can make the most change for good. We’re trying to protect the integrity of our neighborhoods, that’s what we’re trying to address. And with this, we’re taking a significant number of STRs out of the interior neighborhoods.”