Short-Term Rentals: Stakeholders Anxiously Awaiting New Rules

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NEW ORLEANS — The New Orleans City Council will vote on new rules for short-term rentals at its March 23 meeting, which means stakeholders from all sides of the issue will be watching the action closely as the Council nears its deadline to put new regulations in place.

The city must pass a new short-term rental law before the end of March. That’s because, in August, the 5th U.S. Circuit Court of Appeals issued a surprise ruling that said its provision limiting STR licenses to homeowners with homestead exemptions “unconstitutionally restricts interstate commerce.” So city leaders are going back to the drawing board to come up with a new set of rules.

The Council is considering a variety of new approaches to reigning in the spread of whole-house STRs in the city’s historic neighborhoods. Ideas include:

  • Allowing only one STR license per block;
  • Using a lottery system to choose who gets a license on any given block;
  • Requiring STR operators to live on site;
  • Limiting owners and operators to one permit each;
  • Creating a cap of three bedrooms per short-term rental
  • And only giving permits to actual people vs. business entities like LLCs.

The Council is also considering a “safety valve” to allow permits for STR operators who are considered good neighbors.

These ideas and more have been discussed and refined at several meetings this year, so STR proponents and opponents have been filling the Council chambers and councilmember’s email inboxes with their thoughts about what should and shouldn’t happen. Now it’s decision time.

Many in the STR business and those who oppose it find common ground when it comes to enforcement. Virtually everyone agrees that the city needs to beef up enforcement measures regardless of what policy changes are put into place.

“Anti short-term rental people want one thing: fewer STRs,” said David Holtman of Big Easy Management, an STR management company that says it only works with permitted hosts. “So great. There are three or four times more illegal STRs than legal ones. Let the new STR enforcement team the city already has in place go absolutely commando on the illegals for a year at least. It’s only been operating really for the last four to six months. They’re making real progress.”

Holtman is also a fan of the proposed rule requiring the STR operator to live on site.

“In my mind, the one-per-operator rule replaces the homestead exemption rule,” he said. “So essentially allow one STR per owner and the operator must live on site. This alone will curtail the overall presence of STRs.”

Affordable housing advocates, though, say that short-term rentals are driving up housing costs and reducing the available stock. At the very least, they are damaging quality of life in some neighborhoods. 

That’s why some groups, like the leaders of the nonprofit Jane Place, want an outright citywide ban on whole house STRs. 

“If it were me making the decision? I would have no whole-house short-term rentals in residential neighborhoods,” said Veronica Reed, Jane Place executive director. “They are commercial entities that go unregulated. There’s no oversight. There’s no quality control in residential neighborhoods. It goes against almost everything that defines a civil society, and we’re sticking this unregulated and poorly managed business in the middle of someone’s block. In some cases, many on one block.”

Reed said her group can “live with” the City Council’s plan to limit STRs to one per block.

Others, like Housing NOLA, say the city needs to better regulate the industry, and use the tax revenue it generates to support affordable housing projects and policies.

“Our leaders continue to fail in their core responsibility to regulate the housing market to the benefit of the people of New Orleans,” said Andreanecia M. Morris, executive director for HousingNOLA. “And the short-term rental situation is a symptom of that. It’s not the cause.

“We’re calling for clear, enforceable regulations that do not leave loopholes. So if you’re going to limit the number in the block, what are you going to do about existing short-term rentals? And we’re very concerned about any lottery situation, because how do you do that equitably? How do you ensure that bad actors aren’t the ones able to jump through the hoops and get it done quickly?”

Morris said the taxes and fees coming from short term rentals should be significant.

“We should be generating real revenue for affordable housing, and short-term rentals can be a part of that solution,” she said. “Right now, too much of the money is going back into the tourism industry.”

Note: The author of this story operates a legal, one-bedroom airbnb in his house.

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