Sep 282017
 

On the heels of reports that short-term rental advocates plan to seek looser regulations on AirBnB hosting and similar services, affordable-housing advocates convened a meeting Wednesday night to announce their own policy goals restricting the same services — setting up a major election-year fight for the next mayor and City Council.

The Alliance for Neighborhood Prosperity — one of the foremost advocacy groups for short-term rentals — sent out an email in August describing the goal of electing City Council candidates friendly to its next policy goals, according to a recent article in Gambit. Those goals include as lifting the ban on AirBnB in the French Quarter and increasing the number of permissible nights under a “temporary” license (originally described as the Mardi Gras or JazzFest-type of license, allowing homeowners to rent out their whole home while they leave on vacation) from 90 days to 180 days. Meanwhile, on Wednesday, the Alliance’s president told The Times Picayune that he plans to challenge the city’s enforcement process against short-term rental operators.

On Wednesday night, the Jane Place Neighborhood Sustainability Initiative held a discussion at the Mid-City Branch Library of the effect of short-term rentals so far. While short-term rentals are often marketed as a way for individual homeowners to supplement their incomes and possibly even help with housing costs, Jane Place program manager Breonne DeDecker said the system created by the City Council is rife with abuse that accelerates the inflation of home values in low-income neighborhoods near tourist areas.

Two types of short-term rentals are allowed in residential neighborhoods, according to the city of New Orleans: “accessory” rentals are intended as a room or apartment inside a person’s home or even half of a shotgun double, and “temporary” rentals are a whole home rented out while the owner is away (the aforementioned Mardi Gras example). Homestead exemptions are required for “accessory” rentals, which are intended to be limited to owner occupants, but not for “temporary” rentals.

Increasingly, homes near tourist areas are being bought specifically for the purpose of converting them to AirBnBs, and a single person might masquerade as the “occupant” of numerous homes that are rented out all the time — and some companies even hire people to play that role, creating a “McDonalds of short-term rentals,” Dedecker said. Property owners are also increasingly asking for zoning changes on homes from residential to business zoning to fit into the third category of short-term rentals, commercial, which allows more tenants and can be rented year-round.

“These are professionals,” DeDecker said. “A lot of them don’t live in New Orleans. They are people who are taking advantage of a system that is allowing them to maximize a huge windfall of profits.”

Part of the problem is the city’s notoriously lax enforcement, DeDecker said — AirBnB still has 2,000 more listings in New Orleans than permits have been issued for six months after legalization — but a bigger issue is the poor data that the city requires from the platforms. For example, the data from competing online platforms is not compared against each other, so a listing could easily be rented 90 days on AirBnB and then 90 days on HomeAway.com, she said.

The effect, DeDecker said, is that the number of places for New Orleanians to live is being reduced — some long-term renters are being evicted to make way for short-term rentals — and housing prices near tourist areas are rising dramatically as the former single-family homes are surreptitiously converted into lodging places. After the Central Business District, Central City now has the second-highest number of whole-home rental listings on AirBnB, and the Seventh Ward is third, she said.

“We’re seeing this shift where now it’s becoming more and more prevalent in neighborhoods that are really vulnerable to gentrification,” DeDecker said. “These are large chunks of these neighborhoods that are no longer actually open to residents living in them.”

To reduce the trend, Dedecker described a series of policy goals, including:

  • Ensuring that residential hosts have only a single listing, their own home.
  • Making platforms like AirBnB participate in enforceme,nt by removing listings that do not have licenses,
  • Improving the data required from the platforms to make enforcement easier for the city, and
  • Banning commercial short-term rentals.

Maxwell Ciardullo, policy analyst for the Greater New Orleans Fair Housing Action Center, said that placing more of the enforcement burden on the platforms will actually reduce the amount of tax money that has to be spent on it by the city.

“The platforms have to participate in that enforcement,” Ciardullo said.

Many of the candidates have noted that short-term rentals were banned outright in the French Quarter, and said other neighborhoods should be able to make a similar self-determination. While the city does not currently have a process to allow that for other neighborhoods, the policy has had a surprising effect: Residential rents are going down in the French Quarter, said Meg Lousteau of the Vieux Carre Property Owners and Associates.

“We’re seeing a return of units that have been taken out of the housing market into the tourism market back into the housing market,” Lousteau said.

DeDecker declined to name specific candidates for mayor and City Council that should be supported (unlike the Alliance for Neighborhood Prosperity, which identified District C councilwoman Nadine Ramsey and District A candidate Aylin Maklansky as allies), but did briefly touch on their answers to a survey about housing issues. She did, however, rebut the notion that the current AirBnB laws were the result of a public process — the public process was held through the City Planning Commission, but then Mayor Mitch Landrieu’s office wrote its own 11th-hour legislation with the AirBnB advocates that the City Council then adopted.

“This was not a compromise,” DeDecker said. “This legislation was written between the administration and the companies.”

Other cities are taking much stricter stances against short-term rentals, she said, requiring more data from the platforms and limiting abuses of the system.

“Whenever you hear this phrase that New Orleans is the leading edge, no, we’re not,” DeDecker said. “What we did was we created a permitting system by which it is very easy to get permits and very easy to make some level of taxation happen, which is very different from making a good public-policy outcome for residents.”

Breonne DeDecker of the Jane Place Neighborhood Sustainability Initiative describes the effect of short-term rentals on New Orleans. (still image from video by Robert Morris, UptownMessenger.com)

  • Joanne Hilton

    Yes, Yes,Yes. Airbnb, etc is a scourge, on so many levels. Do I have a problem with someone renting an extra bedroom in their home? No, not at all. It is the whole house/apartment rentals that are creating so many problems.

  • publicschoolteacher1

    Why isn’t anyone talking about the fact that the rental market is crashing while taxes and insurance continue to skyrocket? Has anyone looked into the number of unrented apartments over the summer? It seems like a combination of cheap high rises and the loss of a significant chunk of population has caused a glut on the market. There is not an apartment shortage. Apartments rented as Airbnb’s would not be inexpensive if added to the market anyway.

    • Joanne Hilton

      Where are the cheap high rises? The downtown apartments rent for about 1500/mo for small 1 bedrooms.

      • publicschoolteacher1

        Ask real estate agents- there are new apartment complexes that are not low income housing but are taking renters away from traditional shotgun style apartments. At the same time, more people are leaving the city than coming. There’s an article in nola.com about it today. There are not enough renters to rent the available apartments, so many apartments are currently empty. Drastically lowering the rents so that they are affordable to low income people might not be an option since if the cost of owning the property is higher than the rent obtained from the property, the owner may not be able to afford to keep the home. The short term rental market is helping people keep their homes. Rents are not arbitrarily made up- they rise as costs rise. Cheap apartments are usually in bad shape and not well maintained and not the kind that are posted on AIrbnb, so taking those off the short term market does nothing to help. I do think that Airbnb’s should be limited, but shutting them down completely only helps the hotel industry, not locals.

    • IrishChan

      The rental market is not crashing, it’s coming down from a bubble that was caused by a few factors 1. New Orleans’ desirable areas lacked the high density apartment developments you see in most other cities, so there was already a low supply. 2. Then Short term rentals came along and started taking more supply off the market, while demand for apartments in the city was increasing… People were actually moving back to New Orleans from the burbs and other areas of the country I had two rentals in the Irish Channel and watched the rents climb and climb because it was a desirable area and a good amount of my competition keep turning into short term rentals. I’m still able to get well above what I charged before the bubble started.
      But yes, rents are coming down… we now have high density apartment complexes downtown, and the supply on the market has drastically increased.

      • publicschoolteacher1

        I guess maybe what happened was that those high density apartment buildings were built around the same time as the number of people leaving NO increased (see the nola.com article) and the film industry here folded. At the same time, property taxes increased substantially last summer, and of course insurance rates just continue to rise. So if rents continue to decline and costs of ownership continue to increase, what will happen in the long term? Plus, if you look around or ask any real estate agent, they will tell you that a plummet started this summer in the number of people looking for apartments, resulting in a glut. I really wish the media would cover this. Additionally, 27 restaurants closed this summer and Magazine Street retail is suffering. Something is going on. And frankly, worrying about STR enforcement is the least of NO’s problems. i grew up here and easily remember when every other house was run down and falling apart. Do we want to return to that just so that hotels can make their money? Clearly STR needs some regulation, (limit them to residents only, or limit the number of units a person can have to 3 or so), but STR’s are by far not the biggest issue in NO.

      • publicschoolteacher1

        Also, have you tried to rent out anything this summer? The oversupply issue has really only been a serious issue for the past three months or so, and seems to be worsening.

  • Pistolette

    There is a much bigger problem brewing right now. Robert, please write something about the huge amount of “For Rent” signs all over uptown (not STRs, but regular rentals of all prices). We have a critical housing adjustment going on and yet there’s no media coverage of it yet. I’ve watched the long-term rental prices fall all summer and yet no one’s even calling to view the apartments. Do we have an oversupply of housing? Property owners who never considered STR before are now turning to it as a last resort because they haven’t been able to rent their properties since the Spring. Obviously if this trend continues we’re looking at some serious economic misery in the next year. A very hot potato for the next mayor.