Draft rules would legalize short-term rentals in New Orleans

Posted on: January 20 2016

By Robert McClendon, NOLA.com | The Times-Picayune

Airbnb-style operations, currently banned in most New Orleans neighborhoods, would be legalized city-wide, if the council adopts newly released draft regulations for short-term rentals.

The draft rules suggest the city adopt a light-touch posture regarding the vacation-rental market and would place almost no restrictions on shotgun doubles where the owner lives in one half and rents out the other.

The proposed regulations were released late Tuesday (Jan. 19) by the City Planning Commission, which had been asked by the City Council to study the issue.

The commission's draft proposals are likely to ignite what has been political powder keg for years, with housing advocates, neighborhood groups and the traditional lodging industry squaring off against property owners and the raw power of New Orleans' seemingly insatiable tourism market.

Jeffrey Goodman, an urban planner who has closely tracked the short-term rental debate in New Orleans, called the commission's proposal "a good starting point," as it recognizes that there are different kinds of operations, each with differing impacts. Nevertheless, he said the city should do more to ensure the regulations are enforceable.

The commission's draft proposal does not recommend placing requirements or restrictions on listing sites such as Airbnb, VRBO.com or HomeAway, which have facilitated the explosive growth in short-term rentals despite the city's near-blanket prohibition on them. The proposal says only that the city, "if possible," should "work cooperatively" with platforms on the collection of taxes and the enforcement of license requirements.

"I think New Orleans should ask more of the listing companies in helping put this system into place," Goodman said. "Why, after this ordinance gets passed, should any listing company allow a non-permitted host to create a listing?

"Unless Airbnb, HomeAway and others become real partners in enforcement, it will be very difficult to make these recommendations work," he said.

Airbnb and HomeAway have long been criticized for their refusals to actively participate in the enforcement of short-term rental regulation. Airbnb last year, though, vowed to help cities collect taxes and crackdown on users who list properties they don't live in.

"Today represents a positive step towards ensuring that everyone in New Orleans is able to share their home," a spokeswoman for Airbnb said in a statement. "We appreciate the Planning Commission's considerable work on this issue and look forward to connecting our community with policymakers in the weeks and months ahead."

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A diagram shows the different types of short-term rentals that would be allowed under new rules under consideration by the City Planning Commission. 

The rules would require all short-term rental operators to have a license, but people who live on the property would face far fewer restrictions than those would run vacation homes remotely. The owner of a shotgun double, for example, would be allowed to rent out the other half of his property 365 days a year. Such operations would be allowed in any residential neighborhood with no caps on density. In a block of all shotgun doubles, every person would be allowed to run a short-term rental on their property if they wanted.

People who only want to rent their place occasionally for Jazz Fest or other big events would face similarly light restrictions.

People who own residential property but don't live on the premises would face the toughest restrictions, subject to limits on the number allowed in a given area and required to obtain special permission from the Planning Commission.

Despite the existing ban, independent reports have shown there are thousands of properties available for short-term rental. The commission's study estimated there are between 2,400 and 4,000 at a given time, with the average nightly rate running $250.

The potential to make in a week what a long-term tenant might pay in a month is spurring landlords and investors to expand from tourist hotbeds such as the Garden District and French Quarter to neighborhoods like Bywater and Mid-City, once home to the city's working class.

The Planning Commission staff conducted an deep analysis of rents in high demand neighborhoods and found that short-term rentals were highly correlated with rent inflation. However, because the same neighborhoods are also sought after by residents, the report said it was impossible to measure the impact vacation rentals are having on the market.

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Some types of short-term rental operations would not face density restrictions, allowing them to proliferate unchecked by anything but the market.  

To limit the potential effects, the city should impose density limits in its historic core, which is facing the most pressure from the vacation rentals, according to the Planning Commission study.

It's unclear how effective the density restrictions suggested in the draft recommendations would be, though, as shotgun doubles predominate in the very same neighborhoods most popular with tourists. Because homeowners would be allowed to rent out half the property, large swaths of housing could be converted to short-term use.

Neighborhood organizations and business lobby groups were still digesting the 118-page report this morning and declined to immediately comment on its implications.

The Planning Commission will consider the recommendations at its Jan. 29 meeting, after which it will pass them on to the City Council, which has ultimate authority over land-use policy.