For years, short-term rental properties proliferated and threatened New Orleans’ historic neighborhoods, leading to loss of the social fabric and to the eviction of longtime residents. In August 2019, the City Council passed rules to rein in short-term rentals, and residents breathed a sigh of relief.
Now, the University/Carrollton Area is facing a similar threat: the mass conversion of historic residential houses to mini-student dormitories, dubbed Doubles-to-Dorms (D2D) by residents. Because of its proximity to two universities, the area has attracted out-of-state developers, some backed by Wall Street money, who are buying up historic homes and converting them to mini student dorms.
With a single bedroom renting to students for $1,250 a month, a four-bedroom apartment garnering $5,000 per month and a triplex bringing in $15,000 monthly, the profit margins are astounding. Unsurprisingly, developers have found “creative” ways to obtain building permits allowing them to expand existing building footprints to maximum lot coverage and squeeze in additional bedrooms, exponentially worsening density and parking problems.
Short-term rentals and D2D dorms share many similarities. Both involve transient renters who have little connection to the neighborhoods. Both rely on increased density to maximize profit, and both lead to soaring property values and displacement of long-term residents.
This summer, I had first-hand experience with such a development. An out-of-town developer tried to turn a four-bedroom craftsman house right behind my back fence into a 12-bedroom dorm based on a claim that the house had been a “legal” triplex. All of the units were rented over a year in advance at $5,000 a month, potentially generating $15,000 a month in rental income from what had been a single-family home. Thankfully, together with our neighbors, we successfully appealed the building permit, stopping the project.
That developer’s business model focuses on student housing in historic university neighborhoods. The business purchased 10 houses in close proximity to the universities within the last 18 months and has converted or has plans to convert all of the properties to multi-family dwellings. In one case, the developer created two duplexes with 16 bedrooms on a lot where a single-family home used to sit.
The passage of Councilmember Joe Giarrusso’s University Area Interim Off-Street Parking Zoning District (M-20-80) this March has slowed down the D2D frenzy a bit. But the City is now considering amending the zoning laws to make it easier to build triplexes and fourplexes throughout the city with the expectation that the amendment will increase affordable housing. Motion NO. M-20-279 regarding the issue went before the City Planning Commission this week. Commissioners deferred a vote on it until next month.
Lack of affordable housing is a serious problem and requires urgent attention. While promotion of affordable housing is necessary, making it easier to build multifamily structures without proper legislative safeguards would not serve that goal. It would actually undermine the affordable housing goal because it would lead to increased property values, making housing unaffordable for local homeowners. In Uptown/Carrollton, it would only encourage real estate developers and add fuel to the D2D boom. In addition, it would incentivize other problematic developments such as short-term rentals, whether they’re operated legally or not
Uptown/Carrollton has been a stable neighborhood for a century and a half. It offers a variety of housing options, including a substantial – though rapidly diminishing – supply of inexpensive homes for low income renters and first-time home buyers.
The City Council should carefully consider zoning law changes to avoid irreversibly damaging historic neighborhoods. What makes New Orleans unique is its historic neighborhoods. Let’s not allow wealthy developers profit at the expense of local homeowners, all without creating a single unit of affordable housing.
About the author: Chunlin Leonhard is the Léon Sarpy Distinguished Professor of Law at Loyola University New Orleans College of Law and an Uptown resident.
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