Council puts a hold on Airbnb around French Quarter/Uptown
29th May 2018 · 0 Comments
By Christopher Tidmore
Contributing Writer
Just over a year and a half ago, former New Orleans Mayor Mitch Landrieu drew national attention, not for the removal of the Confederate Monuments, but for the full embrace of Airbnb. Landrieu and his City Council engaged in a legislative experiment: the wide-scale legalization of online Short Term Rentals of private residential properties. New Orleans became one of the first cities to both make online homeshare platforms widely legal – as well as to provide permits for property owners to engage in “whole house rentals” in historic residential neighborhoods.
Last Thursday, the New Orleans City Council sought to pare back those regulations. District “C” Councilwoman Kristen G. Palmer, who represents the French Quarter and its surrounding Historic neighborhoods, has moved a councilmanic motion ending “Whole House for Short Term Rentals in most of New Orleans” historic residential neighborhoods – in homes which are not owner-occupied.
The motion was scaled back from the Councilwoman’s original proposal, in which she expected to cut Airbnb rentals – and other online STRs like VRBO and HomeAway – “by half” within a year from nearly 5,200 today. Her colleagues on the council decided to scale back her proposal, dropping her original ban on new commercial licenses, except in limited circumstances, and also shortening the ban on new permits from one year to nine months. Still, Palmer’s motion directs the New Orleans City Planning Commission to not provide any new STR permits in non-owner occupied residences. Effectively, whole house rentals will be ended in the historic neighborhoods around the French Quart, Faubourg Marigny, Bywater and Treme, as well as Mid-City and much of Uptown when the current permits expire.
Four years ago, as online Short Term Rentals began to expand into New Orleans, Palmer admitted in an interview with The Louisiana Weekly, “Airbnb didn’t seem like a big deal. We are all about the shared economy.”
However, in the intervening time, and particularly after the Landrieu’s widespread legalization of STRs, “I started to get really frustrated because we started feeling it within these core neighborhoods.
“You started hearing ancillary stories about what was going on, and I have family members who live in other parts of the city in historic cores. You started seeing property values going up, and then you started seeing property values and house sales in and around these areas going for prices that we’ve never seen before. And we are like, ‘Who the hell are buying these houses’, right? We don’t have that kind of income around here.
With 300 percent jumps in property taxes, in many cases thanks to STRs, Palmer explained, people in the affected neighborhoods felt powerless.
“Since this started, there were over 10,000 applications submitted. Issued has been close to 6,000. And then the ‘Temporaries’ that have been issued – which means its a [entire] house that has been operating as a total Short Term Rental – is 2,856. Accessory Permits, which is if you live in the house and you also rent out – which everyone is totally cool with – that’s 1,611. And then ‘Commercially Issued,’ ones that are in commercially zoned properties, are 1,141.”
In other words, just over 20 percent of the STRs actually live up to the concept which Airbnb and the other online homeshare services originally promised, that short term rentals were designed mostly to provide additional income for individual homeowners. The truth is very different, Palmer argued. “I want to be very clear on that. What this actually shows is that people are coming in and using residential properties for commercial uses. In fact, going through the data, we have found that 18 percent of all holders control 44 percent of all the permits.”
A small group of high dollar investors from outside of New Orleans have created a commercial hotel market out of residential properties. For example, she observed, “The Sander company, which is based in San Francisco, has 124 listings,” and thanks to shell companies also getting permits, Palmer added, “We think that they have that many, if not more, actual permits, but they [take advantage] of multiple listing data.”
Palmer contended that the “hotelization” of historic neighborhoods is not just a New Orleans problem, but one facing coastal and heritage cities across the nation – and potentially the world. It is just that since New Orleans broadly legalized STRs, the Crescent City was able to collect the data to see the impact on rents, taxes, and other quality of life issues, that are not as obvious in other cities.
“Everything is linked. There’s is a reason. When you do a cost-benefit analysis on a shot-gun double (which is the vernacular, anywhere else in the country would call it a duplex), you see it. When you [buy] it, you own it, and you are close to the Urban Core (so you are close to jobs and how people get to work), you do a cost-benefit analysis. ‘Do I rent out for $1,200 per side, or I can bring in $3,000 per month on each side?’ So people make decisions, ‘I’m just going to bring in $3,000 per month.’ So then what happens now is that you take the apartments off the market. And, then all of a sudden we start feeling this pressure…because we don’t have enough apartment places in the market.”
“And, then we see old warehouse buildings…early 1900s buildings that were converted, six, seven or eight floors. Some people got HUD grants for affordable housing components in there, [or have a percentage of affordable housing], and they were flipped to STRs,” the Councilwoman pointed out. “Now people are doing a cost-benefit analysis, “We don’t need all of that. We can just do whole buildings as Short Term Rentals.’”
STRs are not just pricing out the Working Class, Palmer claimed. “We are totally pricing out the Middle Class.”
Nor did Landrieu’s restriction that STRs in residential neighborhoods to just 90 days of rental nights have any practical effect in stopping the commercialization of historic areas. “You can put [the house] on one [online] platform for 90 days. Then another platform for 90 days. Then a third platform for 90 days.” Owners cheated by jumping from Airbnb to HomeAway to VRBO utilize multiple platforms to create full-time rentals in neighborhoods where they were supposed to be time restricted.
Palmer’s motion directs the City Planning Commission to hold a public hearing on the proposal, which bans the issuance of new and renewed temporary licenses in the Central Business District and in historic neighborhoods that have seen the highest concentration of short-term rentals.
Mayor LaToya Cantrell cannot veto Thursday’s action by the Council because it was passed as a motion, not a law. After it goes through the planning commission, the council will have to vote to add it to the city code, at which point Cantrell will be required. The planning commission will have to vote on the proposal before sending it back to the council.
While it’s pending, city employees will not accept applications or issue temporary short-term rental licenses in the affected areas. That starts immediately. People can ask the City Planning Commission for an exemption, which would have to be approved by the council.
Under the legislation, an interim zoning district would be created for whole-home rentals in the adjoining neighborhoods to the French Quarter, the Faubourgs Treme, Marigny and Bywater, along with historic residential zones from the Lower Garden District to Uptown to Central City to Mid-City to elsewhere in the 7th Ward. Only Accessory Permit renewals for owner-occupying residences, those possessing a Louisiana Homestead Exemption, would be allowed in those areas.
Airbnb Policy Director Laura Spanjian called the proposal “drastic” and said it would take effect “with no input or transparency.” Noting that New Orleans welcomed over 11 million visitors to the city last year (according to University of New Orleans research), Spanjian argued in a letter to the New Orleans City Council, “Allowing hosts to obtain permits for whole home rentals in commercial areas, and for up to 90 days in residential areas, allows New Orleans to welcome this growing number of visitors in a sustainable way while balancing the needs of neighborhoods, instead of forcing the city to build more chain hotels.”
A study, released at the end of March, disagreed, bolstering Palmer’s case for her legislation. The Jane Place Neighborhood Sustainability Initiative’s report “Short-Term Rentals, Long-Term Impacts: The Corrosion of Housing Access and Affordability in New Orleans” maintained that historically Black neighborhoods around the downtown area – ones that previously did not have a tourist focus – have essentially seen entire blocks become virtual hotels. And, perhaps as consequence, they have felt the greatest levels of racial out-migration. As the study notes, “From 79 percent to 46 percent in Treme, 90 percent to 65 percent in Mid-City, and 75 percent to 45 percent in Leonidas/Pigeon Town [Uptown-Riverbend], the historically Black neighborhoods with the highest concentration of STRs have all experienced tremendous declines in number of Black households. [Comparing the maps] [a]longside one another, the displacement and license maps lead us to infer that STRs are capitalizing on and contributing to the displacement of Black Communities.”
In the historically African-American Faubourg Treme two years ago, a two-bedroom apartment rented for $1,000 per month, or $32 per night. As of February 15, according to Inside Airbnb, the average STR apartment rents for $187 per night, meaning that it just takes six days for an owner to pocket the same amount.
The Jane Place Report contends that this has led to a swath of evictions in favor of converting properties to Airbnb and other homeshare rentals.
“Airbnb pretends they are home-sharing service, that their users are homeowners who are making ends meet by renting out their homes,” Jane Place Initiative program manager Breonne DeDecker said. “But our report exposes that lie. What is happening in New Orleans is not home-sharing, but the hotelization of residential housing.” The incentive is there. As of March 2018, according to the report, the average rent for a two-bedroom apartment in the city increased to $2,107, or $65 per night, far below the typical Airbnb rate.
This article originally published in the May 28, 2018 print edition of The Louisiana Weekly newspaper.
