A city of New Orleans contractor that recently discouraged strict limits on one category of short-term rentals has repeatedly worked for online vacation rental platform Airbnb.
The Times-Picayune/New Orleans Advocate reported this week on a draft study recently sent to the City Council on how the city could leverage short-term rentals in nonresidential districts — called commercial short-term rentals — to generate affordable housing. To the lament of some housing advocates, the recommendations were much more modest than past proposals from council members.
The real estate consulting company that wrote the report, HR&A Associates, has worked for Airbnb at least four times since 2012, producing glowing reports about its local economic benefits and job creation bonafides. Most recently in 2017, the company produced “Sharing for a Stronger New York” on behalf of Airbnb.
In an email, Airbnb spokeswoman Laura Rillos said the company is not currently working with HR&A.
“Airbnb is not a client of HR&A. Airbnb was not involved in the preparation of HR&A’s New Orleans study,” she said.
For some local New Orleans housing advocates, HR&A’s past work calls the study’s impartiality into question.
“Obviously this is a clear conflict of interest,” said Breonne DeDecker of the Jane Place Neighborhood Sustainability Initiative, a vocal opponent of short-term rentals. “HR&A are not neutral actors and their paid ‘studies’ demonstrate as much.”
The New Orleans City Council has been working for more than a year to overhaul the city’s short term rental regulations, which were first set in 2017 under former Mayor Mitch Landrieu. Many aspects of the reform appear resolved, and are expected to be formally adopted at the City Council’s Aug. 8 meeting.
But one aspect of the reform that has lagged behind is how commercial short term rentals can be used to fund affordable housing.
Councilwoman Kristin Palmer has been a leading voice in the reform effort, and has suggested that large commercial buildings should have to provide one affordable housing unit for every short-term rental, and that short-term rentals shouldn’t take up more than 25 percent of a building.
While current city law, enacted under former Mayor Mitch Landrieu, places a number of limits on residentially zoned short-term rentals — such as a 90-day per year limit for “whole-home” rentals and a homestead exemption requirement for people who want to rent out spare rooms or half-doubles — short-term rentals in commercial and mixed-use districts are allowed to operate year-round by owners or third-party managers.
The study from HR&A, however, says that Palmer’s proposal wouldn’t be feasible for short-term rental operators and owners trying to make a profit. If the city wanted to pursue a “unit requirement” policy, the study says the only feasible option is to require one affordable housing unit for every six short-term rentals. The study didn’t recommend that route though, saying it would be difficult to enforce and only result in 57 new affordable housing units.
In the end, the company recommended two options, neither of which had a building cap or a “unit requirement” component. The first option would subject commercial short-term rentals to a $10 nightly fee that could raise $2.5 million a year for affordable housing. The second option would be a $8 nightly fee plus a $2,500 “conversion fee” for any residential unit that’s turned into a short-term rental.
“We cannot possibly view their lack of support for affordable housing matches — which would absolutely damage the bottom line of their client, Airbnb — as credible,” DeDecker said in an email.
Philip Kash, a partner at HR&A who worked on the New Orleans study, agreed to an interview on Tuesday, but postponed it.
A top official in Mayor LaToya Cantrell’s administration, Chief Administrative Officer Gilbert Montaño, said that while he couldn’t speak to HR&A’s relationship with Airbnb directly, “any contractor or vendor that doesn’t have an objective perspective is going to be an issue.”
Cantrell has been largely silent on the council’s efforts to place tighter restrictions on short-term rentals. Her communications staff did not respond to a request for comment.
HR&A was hired by the city last year to study the potential for a mandatory inclusionary zoning policy in New Orleans. Mandatory inclusionary zoning policies throughout the country force new housing developments to reserve some units for affordable housing, sometimes in exchange for incentives such as tax relief.
The results were presented to the City Council in February. During the presentation, Councilwoman Palmer asked the HR&A representatives why they hadn’t looked at short-term rentals as a potential incentive to nudge developers to build more affordable housing.
“Are we really looking at short-term rental licenses as incentives?” she asked. “Because what we’re seeing happening downtown, that’s something that’s really taking a lot of properties off the market.”
“We did not examine that as a tool,” Kash said in response.
The study discouraged the city from implementing aggressive inclusionary zoning requirements, warning they could hurt development. Some advocates charged that the study gave too much weight to developers’ bottom lines.
The council passed an ordinance that established inclusionary zoning in March. In a press release at the time, Cantrell said HR&A’s work “informed the final ordinance.”
“It’s concerning to know that HR&A’s client list includes real estate developers, landlord groups, and short-term rental platforms and we believe it certainly warrants a review of their Smart Housing Mix recommendations,” Cashauna Hill, executive director of the Greater New Orleans Fair Housing Action Center, told The Lens in an email.
In the spring, the company started working on a second study for the city. An amendment to the original contract directed HR&A to study the one-to-one match and the 25 percent cap as potential options. Their total contract value was changed from $83,000 to $219,000.
It’s unclear what the City Council will do with the study, and whether they will act on it when other short-term rental rules — including stricter limits on residentially zoned short-term rentals and proposed enforcement policies — are put to a vote at their next regular meeting on Aug. 8. It’s possible that the council could revisit the issue at a later date, but Palmer has expressed concerns about waiting.
“My concern is that once we pass this short-term rental legislation… we could technically take a lot of units off the market if we’re not addressing the affordability issue here,” Palmer said during the February presentation. “When we start drilling down with this STR ordinance there is going to be a substantial need for affordability and affordable housing in that, and it will be a requirement. Full stop.”
This story was updated after publication with a statement from Airbnb. The company had initially declined to comment.