(Michael Isaac Stein/The Lens) Credit: Michael Isaac Stein / The Lens

For Ada Phleger, the last straw was the fourth short-term rental that opened on her block.

“It’s uncomfortable, because you feel like the community has never really settled, because there are different neighbors every week.” she said. “They’re not people who will knock on your door when it’s Sunday morning and the floodwaters are coming and everyone has to move their car. … And it really feels like you’re on display the whole time, too.”

It’s become a recurrent narrative in New Orleans: city blocks dominated by guest houses for tourists looking for an authentic local experience. Phleger lives in the St. Claude neighborhood, which has seen a particularly dense concentration of short-term rentals over the past few years.

Phleger, an attorney for the Federal Public Defender’s office, decided to do some digging.

“I discovered that all four houses on my block were all being rented out by the same company,” she said. “And it seemed strange to me because there were violations, or at least small technical violations, on every single one of the houses.”

Phleger focused her efforts on the newest short-term rental, trying to get the permit revoked before it started hosting guests. She found evidence that the permit appears to have been issued improperly. But she said it’s taken months of work to get the city to act, in which time the house has been full of tourists weekend after weekend.

She filed complaints and called the Department of Safety and Permits, her councilwoman and the city investigator assigned to her case. She looked up the house’s blueprints and its tax assessment records. She sent the investigator photos of guests arriving and then, after being told that was insufficient, starting sending videos.

When that wasn’t enough, she rented the house herself. Only after that did the Department of Safety and Permits call the permit holder in for a violation hearing. It’s scheduled for June 26. The investigator asked Phleger to come and testify.

“I’m not that into taking a day off of work to testify,” she said. “But, you know, if that’s what has to be done, then I can do it.”

‘I am exhausted’

The Massachusetts-based company that operates the four short-term rentals on Phleger’s block is called Heirloom, also known as Stayloom. It manages more than 100 homes in New Orleans, Boston, New York, and “other destinations,” according to its website, and caters to large groups looking for luxury accommodations.

“They’re all kind of branded almost as Instagram Airbnbs, for lack of a better word,” Phleger said.

The company manages houses owned by other people. But The Lens also identified several Heirloom-managed properties owned by the company’s co-founders, Frank Glaser and Dan Glaser.

As of last week, the company had 67 listings in New Orleans on its website, including a “Cosmopolitan Designer Home with Pool” for $2,250 on average per night, the “Trendy Creole Luxury Home” for $1,710 on average per night and the “Opulent Esplanade Estate near the French Quarter” for $3,140 on average per night.

The Lens was able to confirm the addresses of 34 of those listings. Nineteen of those had expired short-term rental permits. Of the 15 with valid permits, several have records of alleged violations from the Department of Safety and Permits.

Screenshot from Heirloom’s website.

The Glasers are being sued in Orleans Parish Civil District Court for allegedly operating a rental property in the 900 block of Bourbon Street, a part of the French Quarter where short-term rentals are banned. The lawsuit claims that the Glasers were aware of that ban even as it continued to rent out the home. The plaintiffs say that Heirloom did not publicly list the property on its website, but would send information to clients if they inquired.

The city’s short-term rental laws were first implemented in 2017 under former Mayor Mitch Landrieu. That’s when the city first legalized the industry and created a regulatory structure for it. But many critics said the city’s rules were overly permissive, allowing short-term rentals to take over entire neighborhoods.

Leading up to the city’s 2017 election, several City Council candidates promised to place more restrictions on the industry. And upon taking office last year, the current council immediately began the process of overhauling the rules.

34Heirloom short-term rental addresses confirmed19Confirmed addresses with expired permits

The council is close to passing an ordinance that would redefine who could get permits and where they could be. Perhaps the biggest change would apply to properties in residential neighborhoods. Under the proposed rules, property owners would need to submit a copy of a homestead exemption to prove that they’re full-time residents at their rental properties, in effect banning so-called “whole-home rentals” in those neighborhoods. The council is expected to take a final vote on the changes this summer.

Under existing rules, some companies and individuals have been able to buy up dozens of houses to operate as full-time short-term rentals. For example, property records show that the Glasers have an ownership stake in 14 of the 34 confirmed New Orleans properties advertised on the Heirloom website. Six of those are in residentially zoned districts.

Advocates and City Council members have repeatedly pointed out that the proposed regulations won’t create much change if they aren’t enforced. And the current state of enforcement doesn’t inspire much confidence in many short-term rental critics.

“I am exhausted,” Councilwoman Kristin Palmer said. “The amount of complaints that we get, it’s so frustrating. The constituents are so frustrated, and I’m frustrated for them.”

Palmer has led the charge on creating more restrictive short-term rental regulations. And earlier this month, she submitted an ordinance to change how the city enforces the rules. It includes beefing up the city’s short-term rental office. It also places more accountability on platforms like Airbnb and Homeaway.

Right now, only the person offering a home for rent —  a property owner, long-term tenant, or in some cases, the operator —  needs to have a permit. Under the new system, online rental platforms like Airbnb and management companies like Heirloom or Sonder would need permits as well. The change, according to Palmer, aims to create a shared responsibility between the homeowner, management company and platform.

“We’re open to sharing responsibility,” Heirloom spokeswoman Emily Mininberg said. “Part of our partnerships are that when our owners are winning, we’re winning. And when they’re not winning, we’re not winning either.”

She said that the company has always tried to comply with the city’s rules.

“When the licensing rules came out in the spring of 2017, the first thing we did is get a license for every single property we operate and own personally,” she said.

But in May 2018, when the City Council started the process of overhauling those rules, it instituted a freeze on “temporary” permits in many of the city’s short-term rental hot spots. Once the most common of the three types of short-term rental permits, temporary permits allow people to rent out full houses or apartments in residential neighborhoods for up to 90 days per year.  Mininberg said those changes are why the company is operating so many unpermitted listings.

”When the licensing rules came out in the spring of 2017, the first thing we did is get a license for every single property we operate and own personally.”—Emily Mininberg, Heirloom

“The reason they are not licensed is that we are legally unable to renew our license,” she said. “Our main qualm is having licensed everything and having gone through the diligence of wanting to follow the rules, and having the rug pulled out from under our feet.”

However, at least nine of the company’s active properties had another type of permit — commercial — before they expired. Commercial permits were largely unaffected by the freeze. For six of those properties, the city denied permit renewal applications.

Mininberg said the company plans to continue operating their properties, including some of the unlicensed ones, until the new rules are finalized. It also appears that ahead of the new regulations, the company is attempting to get into the traditional hotel business.

In March, Uptown Messenger reported that the company was trying to build a “two-suite boutique hotel” on an empty lot at 1213 Magazine Street. Last year, the city denied Daniel Glaser’s application for a short-term rental permit at that location.

 ‘An eminently provable case’

Phleger has been a resident of the neighborhood for eight years, but she only moved to her current house last year.

She said when she first moved there, “There were two whole home rentals on the block, and then there were three, and then there was a fourth,” she said.

In March of this year, in an attempt to forestall the fourth Heirloom listing before it opened, Phleger started researching the property. City records said that the owner of the house applied for and received a short-term rental permit on the same day — Feb. 1.

The owner, Julie Groth, got an accessory permit. Accessory permits, like temporary permits, are available in residential neighborhoods, but they’re good year-round. They’re intended to allow homeowners to rent out part of their houses — from a spare room to an unoccupied half-double — and they require applicants to have a homestead exemption proving that the rental property is their full-time residence. Accessory permit holders must also be on-site while guests are staying in their homes.

But Phleger said the property didn’t appear to meet any of the requirements.

The application for the short-term rental on Phleger’s street says it’s for one half of a double shotgun.

“I ended up talking to some of the Stayloom employees who were working there and they told me that someone was moving into the other half of the house,” said Phleger. “But there is no other half of the house. It’s just one house.”

Renovation plans approved by the Historic District Landmark Commission in 2017 show that the house was converted from a double into a four bedroom single-family home. And online records from the Orleans Parish Assessor’s Office don’t show a homestead exemption on the house.

Phleger said she was surprised that the property was able to obtain an accessory permit, since all of the information she found was from publicly available city documents.

“If the Department of Safety and Permits didn’t complete their diligence, we can’t be held liable for that and won’t take responsibility for that,” Mininberg told The Lens. “Regarding the condition inside, whether it’s consistent or not consistent with the application you should absolutely reach out to the permit holder.”

Groth, the permit holder, did not respond to a request for comment. Officials with the Department of Safety and Permits said they needed permission from Mayor LaToya Cantrell’s communication team before they could speak to The Lens. Cantrell’s office did not respond to repeated requests for comment.

After finding those documents, Phleger filed a formal complaint on the city’s website in March.

“I didn’t hear anything back from the city,” Phleger said. “People started staying [at the house]. And I start kind of awkwardly leaving my house to take pictures of people when they would come in. And so I sent a picture to the city.”

One of the photos that Ada Phleger took of the short-term rental across the street to send to the city investigator. Credit: Provided by Ada Phleger

She called the short-term rental office, which in turn pointed her to an investigator who was assigned to her complaint. She called her and sent a follow up email with some of the evidence she’d dug up. She sent the listings and pictures of guests entering the house. She also sent records showing that it was a one unit property and that the rental was for the entire home — indicating that the owner couldn’t be staying on-site during the guests’ stays.

“I emailed the investigator giving her the floor plan, the actual stamped floor plan these people had submitted when they renovated the house,” Phleger said. As for the photos of tourists staying there, “The city told me there were no suitcases in the photograph and that it wasn’t a video so they wouldn’t be able to prove anyone was staying there.”

So she went out and shot a video of two men loading their bags into a white minivan and sent that to the investigator. She also reached out to Palmer’s director of constituent services.

“I continued to tell the city every time somebody else stayed there and started, as requested, submitting videos of people arriving with their suitcases,” said Phleger. “But they still won’t revoke the permit. … It just didn’t make sense to me because that felt like an eminently provable case.”

Fed up with the process, she decided the best way to prove that the house only had one unit and that the owner did not live there was to rent it out herself. However, she said she had trouble renting it with a New Orleans address. Mininberg told The Lens that the company sometimes won’t allow people from New Orleans to rent a house for a single night to prevent locals from using it to throw a party.

”We had dinner there with my next door neighbors and a friend of mine and my grandma for her birthday.”—Ada Phleger

Phleger’s mom and grandma were planning to visit New Orleans in mid-April, giving her an opportunity. She used her mom’s Airbnb account to rent the house.

“We had dinner there with my next door neighbors and a friend of mine and my grandma for her birthday,” Phleger said.

After dinner, they took pictures of the inside of the house, confirming that it was a one-unit home and that they were indeed the only people staying there. She sent the evidence to the investigator on April 22.

In June, Phleger finally got the email she’d been waiting for: The Department of Safety and Permits had scheduled an adjudication hearing for the property’s owner on June 19. That date has since been pushed back to June 26. Phleger said was glad that city was finally taking action, but the process was eye opening.

“Nobody gave me any explanation of the process, that it takes a long time and that we have to be patient,” Phleger said. “I’ve talked to other people who were only successful in getting adjudication after a year, which is problematic if you have one-year permits. … You’ve essentially been able to do to do the thing you were not permitted to do for the entire permitting period.”

Meanwhile, the three other Stay Heirloom properties on her block continue to operate, though one of them has an expired permit.

‘A total failure of cooperation’

Palmer listed several reasons why it took months for the city to act on Phleger’s complaint. First, she said the short-term rental office needs more resources.

“A complaint-based system doesn’t work,” she said. “We’re going to make sure that we have a fully functioning STR office.”

Phleger agrees, telling The Lens that although she had time to do the research, it’s unreasonable to expect everyone in New Orleans to do the same every time they notice an illegal short-term rental.

“That’s part of the frustrating thing,” she said. “I have the privilege of working from home and having some time and being empowered to do this. But this is one house and I’ve been working on this for months.”

”We’re going to make sure that we have a fully functioning STR office.”—City Councilwoman Kristin Palmer

The other reason it might have taken so long, Palmer said, is that administrative rulings by the Department of Safety and Permits can be overruled if the homeowner takes the case to court. Palmer said investigators want to make sure the case is airtight to avoid that.

The final explanation was that short-term rental platforms aren’t cooperating with the city, making enforcement a grueling task.

“The platforms have gone to great lengths to avoid meeting their end of the bargain,” said a February memo from the Department of Safety of Permits. “Their actions may be legitimately characterized as deliberate data obfuscation, refusal to provide required data, and a total failure of cooperation with any enforcement mechanisms pursued by the City against platform users who violate the law.”

The issues with platform cooperation were present from the start, according to the memo. The regulations passed under the Landrieu administration required the platforms to send monthly information to the city and respond to administrative subpoenas requesting specific information, although it doesn’t specify what information the platforms are required to provide, according to the memo.

“I feel for the people in the short-term rental office,” he said. “They didn’t write this. They did the best they could with the tools they were given.”

The monthly data reports from Airbnb and Homeaway were anonymized, making them unusable in enforcement proceedings, the Department of Safety and Permits memo says. The subpoenas weren’t much more helpful, according to that memo.

“Instead of providing the data requested, which generally included details such as listing address, they only responded with ‘basic subscriber information,’” the memo said. “The Department has found the administrative subpoena process to be cumbersome at best given the limited level of compliance from the platforms.”

Information sharing got even worse in May 2018, when the City Council created an Interim Zoning District that placed a moratorium on temporary residential permits.

“On June 6, 2018, following the May 25, 2018 passage of the IZD, communications between the city and both platforms eroded,” the memo said, referring to Airbnb and Homeaway.

Airbnb used to automatically display permit numbers on New Orleans listings. After the moratorium, Airbnb took that down, making it difficult to link an Airbnb post to its corresponding city address.

“Because of this breakdown in cooperation, the Department saw a year’s worth of work to build the highest compliance rate in the country disappear overnight,” the memo said.

In a March response memo, Airbnb Senior Public Policy Director Laura Spanjian wrote that the city had mischaracterized the company’s actions and demeanor.

”I feel for the people in the short-term rental office. They didn’t write this. They did the best they could with the tools they were given.”—Jeffrey Goodman

“I write today in hopes of expressing our continued commitment to working with the City to strike the right balance with short-term rental regulations and enforcement,” it said.

The memo points out that after the first short-term rental rules were put in place in 2017, Airbnb deactivated nearly 3,000 listings that didn’t provide a permit number or apply for a permit through a pass-through registration system on Airbnb’s website. It also points out that the company continues to collect and remit taxes on behalf of the city.

Goodman argued that those positive aspects of the relationship aren’t enough.

“They have never apologized for operating illegally in this city for years,” Goodman said. “You have to license the platforms and get them to take some sort of responsibility for what happens on their sites.”

Palmer hopes her new ordinance will do just that. The platform permit, which would cost $50,000 a year to obtain, would require each listing to display both the owner and operator permits. It would prohibit the platforms from completing any transaction for a property that isn’t properly permitted by the city. And the companies would have to remove any listings of improper short-term rentals within seven days of receiving notice from the city.

The city would retain the right to revoke or suspend any of the three permit categories. For owner permits, the Department of Safety and Permits would be able to immediately suspend a permit without waiting for a hearing.

For all of the permits, the city would be able to levy a $500 daily fine for each violation.

Whether those fines will be large enough to incentivize compliance from a company as large as Airbnb is unclear. But Palmer noted that there will always be the opportunity to amend and expand the regulations after they are implemented and the city has time to observe the effects.

“We have to start somewhere,” she said. “I think that this is a really good first step.”

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...