Short-term rentals of whole homes should stay out of New Orleans, Planning Commission votes

Posted on: August 10 2016

By Katherine Sayre, NOLA.com | The Times-Picayune 

Renting out entire homes for short-term stays year-round in New Orleans neighborhoods should remain banned, while residents should be allowed to rent out spare rooms in their own homes, the City Planning Commission recommended on Tuesday (Aug. 9).

The commission voted 8-1 to legalize owner-occupied short-term rentals and allow homeowners to rent out their whole homes for 30 days out of the year, such as during special events like Jazz Fest or Mardi Gras.

But the commission rejected a controversial proposal to allow entire houses to essentially be converted to vacation rentals year-round. Whole-house rentals make make up the majority of listings on websites like Airbnb, VRBO and HomeAway.

The commission's vote is a recommendation to the City Council, which must give final approval. The vote came down after a 4 1/2 hour contentious public hearing.

An estimated 5,000 short-term rentals are listed by property owners on various websites, despite the fact that it's illegal to rent residences for less than 30 days or less than 60 days in the French Quarter. But enforcement of the ban has been scarce. 

Commissioner Nolan Marshall said short-term rental owners talk about how tourists love getting an authentic experience in New Orleans' neighborhoods. He said as a resident, he doesn't want to be a tourist attraction. 

"They're doing it using an illegal business model," Marshall said. "They're bragging about taking investments from an illegal business model."

Marshall cast the lone "no" vote in opposition to short-term rentals overall. 

The Planning Commission considered creating four categories of short-term rentals, but the most controversial whole-home category was removed from the proposal before the vote. 

In the city's months-long attempt to legalize and regulate the industry, the idea of allowing whole-house rentals managed by absent owners and managers has sparked the most controversy. Whole-house rentals also make up the majority of short-term listings.

Commissioner Kyle Wedberg, who lives in Bywater, said three out of the last five houses that were sold in his block are now listed on Airbnb. "Something is happening to neighborhoods that is undeniable," Wedberg said.

The commission approved three other categories:

  • Accessory -- Renting out space in an owner-occupied home or half of an owner-occupied shotgun double.
  • Temporary -- Renting out an entire house for up to 30 days a year.
  • Commercial -- Short-term rentals of houses and condos in commercial areas.

All three categories would require owners to get a license from the city Department of Safety and Permits.

In January, the Planning Commission voted 5-2 against including whole-house rentals when deciding to move forward with legalization. But a whole-house policy was put back into consideration at the request of Mayor Mitch Landrieu, which allows the City Council to consider the option as well.

Most of the crowded hearing focused on whole-home rentals. Rental property owners said the extra income allowed them to keep up with rising property taxes and support their families. Workers with house cleaning services talked about depending on short-term rental business. Owners described how much tourists enjoyed being part of the city's interesting neighborhoods and supporting local restaurants. Many supporters said they welcomed being taxed and regulated and taken out of the black market.

Attorneys for the Alliance for Neighborhood Prosperity, a group of short-term rental owners, said whole-home rentals -- which under the proposal would have to go through a condition-use permitting process -- would generate enough revenues to pay for enforcement of the short-term rental law. 

"Tax us as hotels -- do it," said attorney Bob Ellis.

But opponents worried about the future of the city's neighborhoods, what it means to allow essentially commercial ventures into residential areas. The hospitality industry's lobbyists also turned out in opposition of a whole-home legalization. Opponents decried the trend of taking homes out of the long-term rental market in the midst of the city's affordable housing crisis. 

Two property owners said they converted their properties to short-term rentals after renting to long-term, lower-income tenants under the federal Section 8 voucher program, lending credence to those concerns.

Sam Price, a musician who lives on Louisa Street, said he was fortunate enough to realize his dream of home ownership two years ago, and during that time, he has seen his surrounding community erode from families and artists to short-term rentals. The houses remain dark except when the tourists arrive. "They're just a bunch of kids looking for a cheaper place other than a hotel," Price said.