Long-term Fixes for Short-term Rentals

Is balance possible for neighborhoods and STRs?
Illustration by Paddy Mills

Jennifer Gibson Schecter was once a tourist in New Orleans herself and is now proud to call NOLA home. 

The advent of companies such as Airbnb, Vrbo and Sonder have commercialized spare rooms, duplexes and single-family homes and apartments as travel accommodations that provide more space, more privacy and tout a more authentic cultural experience than hotels can provide. The demand for options like these clearly exists, and to remain competitive, New Orleans needs to offer them, but in a way that works for everyone.

The short-term market is booming. In an August press release, Airbnb co-founder and CEO Brian Chesky touted the company’s continued success, stating, “Over the last year, we generated $2.9 billion in free cash flow and our Q2 revenue is up more than 70% since Q2-2019.” He reported Airbnb achieved “103 million nights and experiences booked, our largest quarterly number ever.”

What do those numbers translate to in New Orleans? For many, they look like entire blocks of houses that remain empty Tuesday through Thursday, yet are filled with rambunctious tourists on the weekends. A 2019 study by HR&A Advisors and Urban Focus reported that from 2016 to 2019, the number of short-term rentals (STR) in New Orleans had more than doubled, reducing the availability of housing for New Orleans residents. The report found that in neighborhoods like Treme, Marigny and Bywater, between 10 to 16% of occupied housing units were listed as short-term rentals.

The city has tried various provisions and rules to prevent the complete dismantling of residential neighborhoods, and we are once again in a state of flux. In August, judges in the Federal 5th Circuit Court of Appeals found a key 2019 law unconstitutional — ruling that out-of-state, short-term rental owners were being discriminated against and that the law violated the commerce clause of the U.S. Constitution. The law was meant to prevent whole-home rentals in residential neighborhoods and required owners to prove they lived on part of the property they listed. The ruling means that now, that couple in Colorado who wants to “invest in real estate” may do so in New Orleans, and corporations like Sonder can once again buy residential properties for the sole purpose of commercial endeavors.

In response, the New Orleans City Council held a special meeting on Aug. 29 and unanimously passed an Interim Zoning District (IZD), which created a six-month pause on accepting short-term rental applications in residential areas. Existing permits and previously submitted applications will be in effect and honored until March 1, 2023.

Councilmember JP Morrell, a longtime critic of short-term rentals, said in a statement, “We are not going to rush through a legislative process that will affect our residents’ quality of life and livelihood for generations to come. Reevaluating the Comprehensive Zoning Ordinance (CZO) is going to take time, and this IZD will ensure that the City Council has the ability to get the job done right … The goal is to bring all STRs into the more restrictive regime at the same time.”

As part of the proceedings, a new ordinance was introduced that would require every short-term rental property to have signage visible from the street identifying it as such. The purpose is to increase the accountability during the revision process.

Many people question how any new rules will be enforced. Prior to the court ruling, the mayor’s office announced in June that it was increasing its staffing in the short-term rental office from 6 to 23, including more inspectors and administrators who process applications and levy warnings and fines on short-term rental operators. The office also reported investment in a new software data program, Granicus, that makes it easier to identify illegal short-term rentals.

Much remains to be seen about the City Council’s new regulations and how they will be implemented. We can only hope they strike a balance between affordable quality of life for residents and competitive short-term rental inventory for visitors.