The City Council on Friday heard the 2022 budget presentation from a city department it’s butted heads with repeatedly over the last several years — the Department of Safety and Permits — on short-term rental enforcement, slow permit processing and corruption allegations.
The city is on its fifth day of department by department hearings on Mayor LaToya Cantrell’s proposed 2022 city budget. The hearings will help the council decide whether it wants to make any changes to Cantrell’s draft before passing a final 2022 budget by the end of the month.
Cantrell has proposed an $8.2 million budget for Safety and Permits next year, up from about $6.4 million in its adopted 2021 budget.
The department has faced several scandals in recent years. Following the 2019 collapse of the Hard Rock hotel building, it was subject to several investigations into bribery schemes and lax enforcement among inspectors. Two former department inspectors have pleaded guilty to bribery schemes since 2019.
One of the department’s 2022 goals is to “restore public trust” by revising and monitoring its internal rules and procedures.
Council members have also scolded the office for the difficulty businesses and residents face in getting permits processed. Councilwoman Kristin Palmer in particular has argued that speeding up the efficiency of the office is one of the top things the city could do to spur economic development in the city. Cantrell administration officials appearing at the hearing made several suggestions on how to speed up the process, including potentially replacing LAMA — the current city system for tracking code and permitting processes — and continuing setting up satellite offices for easier access to department officials.
But the issue that has caused the most friction between the department and the council is short-term rentals. And on Friday, council members once again implored the administration to crack down on illegal rentals, and administration officials once again conceded they needed to do more.
“We gotta figure out a way to stop this,” Councilman Jay Banks said. “Short term rentals are a benefit to some people, but they are a detriment to a whole lot of others. And we gotta make these things fit in our neighborhoods, and not have our neighborhoods conform to the needs of these very greedy developers that take our housing stock, that pushed our people out onto the street.”
STR regulation has been a major priority of the current council, which passed a slate of new STR laws in 2019 that were more restrictive than those crafted by former Mayor Mitch Landrieu’s administration. But since those rules took effect, residents and council members have consistently questioned whether the Cantrell administration is actually enforcing them.
The issue was raised again last year when the Cantrell administration created the Office of Business and External Services, an umbrella office that contains several city departments including Safety and Permits, Code Enforcement, the City Planning Commission and the Office of Economic Development.
The first and current leader of that office is Peter Bowen, a former executive at major STR operator Sonder.
Residents immediately criticized the decision to put a former STR executive in charge of the department that enforces the city’s STR rules. Those criticisms were renewed in June when The Times-Picayune/New Orleans Advocate reported that Bowen still owned tens of thousands of dollars worth of Sonder stock.
The city responded to the critiques by saying Bowen wasn’t working directly on STR enforcement, and that they would formalize that arrangement in a document. But on Friday, Bowen spoke at length about what his office is doing to ramp up STR enforcement along with Tammie Jackson, director of the Department of Safety and Permits.
“We know we need to do more and we know we need to be more firm on this,” Bowen said.
The 2022 budget includes two new positions and more than doubles the budget of the department’s short-term rental administration compared to the original 2021 budget, from $459,000 to just over $1 million.
Jackson said on Friday that the department would use the extra resources to increase the number of STR adjudication hearings, a process that can lead to fines or revoked permits for properties violating the rules. Jackson gave a similar promise in April, saying that the department would hold adjudicating hearings for at least nine properties a month starting in May.
But on Friday, Jackson said that so far this year, the department had only adjudicated eight total properties. She said the office currently had 200 outstanding STR cases. Jackson repeated the promise from April, saying that in 2022 they would adjudicate “upwards of 100” cases.
Bowen also said that they were working to compile daily fines against ongoing violators to add more teeth to enforcement efforts. Short-term rental violators can be fined for each day a violation persists.
Bowen said inspectors are going to non-compliant properties each day to check whether violations still exist. That allows the city to bring much higher fines against a violating property once they are brought in for adjudication.
“The days where it’s a $500 slap in the wrist are behind us,” he said.
The department has also released a request for proposals for a software that would automatically delist violating properties from major platforms like Airbnb and VRBO. Bowen said they hope to get that up and running early next year.
Bowen also said that the city has taken a step that no other US city has taken in STR regulation by suing a small STR platform called Stay Heirloom, also known as Stayloom, for operating without a platform permit. The Lens previously covered how the company operated several illegal short-term rentals on a single block of Louisa Street, and one neighbor’s interminable struggle to get the city to take action against them.
Bowen said the case could result in upwards of $1 million in unpaid taxes, fines and fees. City permitting records appear to show that Stayloom applied for a platform license since the suit was filed, and the application has been approved
Councilwoman Kristen Palmer and Banks encouraged the department to increase the use of an enforcement tool it rarely uses: cutting power to offending properties. Jackson said the department had only disconnected two homes this year, but agreed that it was a tool that could be used more frequently.