The New Orleans City Council on Thursday cleared one of the final hurdles to overhauling the city’s short-term rental laws, including new provisions that would eliminate hosts from renting out entire properties in residential neighborhoods.
The council voted to advance many recommendations from the City Planning Commission after passing 15 amendments, bringing the city one step closer to creating a more restrictive set of rules. Among those amendments, the council voted to maintain a ban on short-term rentals in most of the French Quarter and the Garden District.
The new rules would only allow residential short-term rentals for homeowners who have a valid homestead exemption and use that property as their primary residence. People would no longer be able to rent out entire residentially zoned properties, as they can under the city’s current system.
But the debate isn’t over yet. The new policies approved by the council still need to be written into ordinances, which will then go back to the council for a final vote within the next 90 days. Between now and then, the council can make changes.
And there are still a number of vital details that the council has yet to decide on. Thursday’s meeting did not deal with many of the remaining contentious aspects of the City Planning Commission’s recommendations, including permit caps in commercially zoned buildings, ways to leverage short term rentals to fund affordable housing, and new enforcement measures to make operators follow the new rules.
But the policies that did win council support on Thursday establish the broad structure that will replace the city’s existing laws. Those took effect in 2017 under former Mayor Mitch Landrieu.
The Landrieu administration laws, which were written in coordination with Airbnb employees and lobbyists, were seen by many residents as far too loose. Critics pointed to corporate developers scooping up dozens of homes in neighborhoods like Faubourg Marigny and Treme and operating them like scattered hotels.
“We have lost thousands of housing of units to the short term rental racket, with the majority of them owned by absentee owners, corporations, and people fortunate enough to own multiple homes,” said Breonne DeDecker, the Program Manager at Jane Place Neighborhood Sustainability Initiative, at the meeting.
When the current council was sworn in in May 2018, one of its first moves was to place a moratorium on the most popular type of short term rental license — temporary licenses, which allow whole-home rentals in residential areas for up to 90 days per year — to pause their proliferation. A year later, there are about 600 active temporary licenses in the city, down from more than 2,300 in 2018. The council also ordered the City Planning Commission to study the issue and recommend changes.
Left: Temporary licenses as of April 24, 2018 (pre-moratorium). Right: Temporary Licenses as of May 16, 2019.
Those recommendations came out in September and were the basis for the policies approved on Thursday.
Under the plan, hosts could only rent out homes where they could prove residency with a valid homestead exemption.
This means that for properties with a single “unit” or “dwelling,” the owner could only rent out individual rooms, not the entire home.
The City Planning Commission initially recommended only allowing one rental unit per property. But under the proposed rules advanced Thursday, if the property has multiple units, owners could still rent out up to three of those units. The owner of a four-plex, for example, could live in one unit and rent out the other three.
The City Planning Commission had also previously recommended that the homeowner should have to be on site for the duration of their guests’ stays. But on Thursday, the council passed an amendment to loosen that requirement to account for times that an operator wouldn’t be available to cater to their guests, like during work or if a member of the military is called up to active duty.
The debates to come
Thursday’s meeting didn’t touch many of the most contentious pieces of the short term rental debate.
Perhaps the biggest remaining question marks relate to commercial permits. Commercial short term rentals are growing quickly, up 33% from April 2018, one month before the moratorium was put in place. The City Planning Commission recommended capping commercial permits to 25 percent of any one commercially zoned building, a proposal that was not part of Thursday’s vote.
Council members have also talked about using commercial permits as leverage to add more affordable housing units. Councilwoman Kristin Palmer previously advocated for a “one-for-one match” that would force developers to add one affordable housing unit for every short term rental license. The council is currently waiting on a feasibility study before moving forward on that policy.
Palmer has also talked about increasing nightly fees to generate revenue from the Neighborhood Housing Improvement Fund, which helps fund affordable housing projects. Currently, that fee is $1 a night. But council members have previously discussed raising that fee in order to raise an estimated $20 million a year.
But Mayor LaToya Cantrell’s administration may have thrown a wrench in that plan with its high profile infrastructure deal. Cantrell hopes to raise tens of millions in upfront and recurring revenue to fund infrastructure projects in New Orleans. The deal is comprised of a number of pieces of legislation, including one that would raise taxes on New Orleans short term rentals by as much as 6.75 percent.
Cantrell’s administration estimated that the tax would generate $10.5 million per year. The rules advanced on Thursday could lower that figure. It’s unclear where Cantrell stands on the proposal, or if the mayor’s office will weigh in before the final vote.
The last aspect of the new short term rental regulations that the council still needs to deal with is enforcement. Lax enforcement has been a constant concern for critics and argue that it is a key part of any reform effort.
“Unless enforcement is made a significant part of this law, we are all wasting our time,” said resident Cynthia Scott at Thursday’s meeting.