Nearly 60 short-term rental licenses have been issued to units in the commercial 800 Common building in the Central Business District, city records show. (photo by Danae Columbus)
Danae Columbus, opinion columnist
New Orleans residents who are concerned that STRS (short term rentals) are destroying the fabric of their neighborhoods will probably pack the City Council Chambers next Tuesday when the City Planning Commission receives public comment as part of a study commissioned by Mayor-elect LaToya Cantrell and the City Council to determine if any modifications are warranted to existing STR regulations. It goes without saying that numerous changes are expected to be recommended.
Full disclosure: I am one of the thousands of New Orleanians who have received an STR license – mine is for a commercially zoned building. More than 5200 STR licenses have been issued to date. There are four other licensed operators on my street – a doctor, a real estate developer, a graphic artist, and a prestigious law firm.
Though I have yet to host any guests, I look forward to generating extra income from my extra space. Like Uber and Lyft, STRs are part of the new economy that Mayor Mitch Landrieu ushered into our city. Former deputy mayor Ryan Berni and others laid the original groundwork for STRs as an extension of the already permitted network of bed and breakfasts (B&Bs). Clearly, in their zeal to create this much heralded addition to the city’s tax base, our government officials failed to implement adequate safeguards to protect both the neighborhoods and the licensed operators who are paying dearly for the privilege of renting out a spare bedroom, apartment or an entire house.
Cantrell and the next Council will now try to fix many of the problems the overly lax regulations created such as licensing too many STRs on a residential block and allowing unlimited days in many cases. It won’t be easy to institute caps for existing operators but as permits expire or properties are sold, tighter regulations can take effect.
There were always problems with B&B operators – especially those who did not meet the most basic requirement, that the B&B be their primary residence. One former B&B operator listed his housekeeper as the home’s owner to circumvent the regulations. The City has already received more than $5 million in STR revenue during the first year of operation, more than enough to pay for the level of enforcement needed to catch illegal or out-of-compliance operators. Yet the City’s enforcement priorities seem to be directed at keeping STRs out of the French Quarter rather than cracking down on the most prolific violaters – many of whom are major political donors. For example, two-bedroom units can be found online that boast the ability to sleep ten people. Current regulations only allow two people per bedroom, and do not permit additional beds (blow up or sofa) in common areas.
STRs have also become an economic stabilization tool for real estate developers who have an oversupply of condominiums on their hands. The income developers derive from the STRs allows them to move on to the next project. Priced as loss leaders, many of these new condos provide unwelcome competition to the small mom-and-pop STR operators. They also provide an uncomfortable situation for long-term renters who might lease units on the same floor as the STRs. In order to skirt the law, some unscrupulous developers whose sources of financing prohibit STRs have been known to lease out entire floors to a third party who in term applies for the appropriate STR permit. This practice should be stopped.
The City has done a good job of keeping STRs out of the French Quarter, but at what price? Property values are down. Vacancies are up. Dozens of high-end properties have been languishing on the market. It has become a good time to buy a condo in the Quarter for a reasonable price.
As for other neighborhoods, there is a general belief that STRs increase property values. Buildings are being purchased, renovated, and put back into commerce. Other properties are being improved by their owners with the new money they are earning.
STRs are not responsible for the city’s overall lack of affordable housing. New studies show that New Orleans has had an affordable housing problem for generations. Most newly built public housing is mixed income housing. There is certainly less low income and blighted housing stock since Hurricane Katrina. Rental rates have skyrocketed. By nature, property owners want their property values to increase leaving little incentive for owners who are not receiving government subsidies to build and maintain affordable housing.
STRs are attracting more visitors to New Orleans, people who want to spend their money here but don’t want to stay in a traditional hotel. STRs are also creating jobs for people managing, leasing and cleaning the properties.
New Orleans STR system is a model for the rest of the world, says lawyer Bob Ellis. Some other cities including San Francisco didn’t do a good job is setting up their STR system. New Orleans government officials must take full advantage of this chance to re-evaluate the first year’s success and failures and put a new plan in place that will serve both residents and the good licensed operators who want to work within the law.
LEGISLATURE TO CONSIDER FUNDING FOR QUALITY EARLY EDUCATION PROGRAMS
On Monday, April 23, the Louisiana Legislature’s Appropriations Committee will consider HB 513, one of three bills being touted to provide real fixes for the state’s chronic underfunding problem for quality early education programs. The other two bills are HB 676 and HB 873. If passed, this trio would positively impact the lives of children birth through age for in our state by helping working parents access affordable quality programs. More than 50 business, education and civic organizations are supporting these three measures including LABI, the Louisiana Policy Institute, the Committee of 100, various Chambers of Commerce and the Jefferson Parish Business Alliance. HB 513 is sponsored by 24 legislators including Walt Leger, Stephanie Hilferty, Joe Bouie, Chris Leopold, Gary Carter, and Polly Thomas.
Danae Columbus, who has had a 30-year career in politics and public relations, offers her opinions on Thursdays. Her career includes stints at City Hall, the Dock Board and the Orleans Parish School Board and former clients such as District Attorney Leon Cannizzaro, City Council members Stacy Head and Jared Brossett, City Councilwoman-elect Helena Moreno, Foster Campbell, Lt. Gov. Jay Dardenne, former Sheriff Charles Foti and former Councilwoman Cynthia Hedge-Morrell.
