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Planning Commission endorses block caps for New Orleans short-term rentals

A short-term rental in New Orleans.
Carly Berlin
A short-term rental in New Orleans.

After hearing hours of public comment from housing advocates, Airbnb owners, and neighborhood association leaders earlier this week, the City Planning Commission endorsed a one per blockface cap on short-term rentals in residential areas at a rescheduled meeting on Friday afternoon.

The idea of a one-per-side of the block cap was widely shot down by residents from all sides of the STR debate on Tuesday. But the Planning Commission has turned to it as a weigh to limit the proliferation of short-term rentals in neighborhoods after a key provision in the city’s previous regulations was shot down by a federal court in August.

The commissioners gave the green light to the preliminary recommendations made by its staff last week, with a few key changes. They voted to limit STR owners in residential areas to just one permit, and to reduce the number of guest bedrooms allowed in non-commercial short-term rentals to six, with a three guest cap.

Their vote is far from final, though. The City Council still needs to consider the changes in the coming weeks, before adopting a new law by March 31.

The Planning Commission’s vote followed a marathon meeting on Tuesday afternoon, which was cut short by impending severe weather. At that hearing, dozens of residents – from Airbnb owners to affordable housing advocates – came out en force to decry the commission staff’s preliminary recommendations for new STR rules.

STR proponents argued that block caps would pit neighbors against neighbors in a struggle to secure city permits through a lottery system. While many said they supported some degree of regulation, they said the additional income from their short-term rentals help cover rising housing costs, especially as property and flood insurance premiums shoot up.

“It’s a very expensive time to pull this income away,” said Dana Dolder, an STR owner in the Marigny. One of her neighbors, a retired woman in her mid-70s, relies on the income from an STR to pay her mortgage. “Am I supposed to go head to head with her? That just feels unfair,” she said.

But critics of STRs argued that a one per blockface (or two per block) cap was far too permissive. They called for measures to preserve housing options for long-term tenants, rather than allow the continued conversion of homes over to tourist use, particularly in the city’s historic core: the areas closest to downtown hospitality jobs.

“I have been a hard-working hospitality professional and citizen of our great city for over two decades, and I cannot afford to live in New Orleans,” said Wanonieca Arnold, a cook at the Ernest N. Morial Convention Center.

Her apartment was destroyed during Hurricane Ida; it wasn’t adequately repaired, and her rent shot up by $300 within a month after the 2021 storm. “I have not been able to find stable housing since,” she said.

Many critics said they supported an outright ban on STRs in residentially-zoned areas. They also called for STRs in commercial and mixed-used zones to be addressed, especially in light of recent reporting that a planned affordable housing development in Central City will be converted into luxury vacation rentals.

But the Planning Commission’s considerations only pertain to residential short-term rentals. That’s because the driving force behind the city’s rule rewrite process is a federal court decision that gutted a key provision for residential STRs.

Back in 2019, when the city passed a suite of regulations aimed at reigning in short-term rentals, one of the central rules was a residency requirement. STR owners in residentially-zoned areas needed to prove they lived at the residence they rented out on platforms like Airbnb and Vrbo, by showing they had a homestead exemption for the property – essentially proving the building was their primary residence.

But in August 2022, the U.S. Fifth Circuit Court of Appeals decided that the city’s homestead exemption requirement was unconstitutional, deeming it “discriminated against interstate commerce,” and later gave city officials a deadline of March 31 to pass a new STR law.

Because of the ruling, Planning Commission staff said it is likely that current residential STR permit holders that were approved under the old rules won’t get grandfathered into the new regime.

But the commissioners appeared sympathetic to STR owners who might lose their permits when new rules take effect. On Friday, they also reccomended a new mechanism that would allow STR owners to apply for an exception to a block cap.

Planning Commission staff also reccomended consolidating the existing residential short-term rental permit types – partial, small and large – into one umbrella “non-commercial” category. And, to comply with the court ruling, they also recommended that STR operators – rather than property owners – be required to live onsite at the buildings they list on STR platforms.

Currently, STR owners can outsource the management of their STR to another person – an operator – who can manage an unlimited number of STRs.

A shift from owner to operator occupancy would effectively restrict operators to just one license. Both owners and operators would also need to be a “natural person,” rather than a business entity like an LLC.

Many STR critics at Tuesday’s meeting called these changes too loose. They said there should be a limit on the number of permits any STR owner can hold, to prevent out-of-town investors from snatching up multiple properties.

In response, commissioners voted on Friday to limit owners to one permit.

Both STR proponents and critics bemoaned the city’s lack of enforcement of its current STR rules. Airbnb owners called on the city to crack down on “bad actors” instead of those who’ve abided by the city’s rules. Housing advocates noted that illegal STRs far outnumber legal ones, and that most comprise whole units rather than a bedroom in an owner’s home.

According to the independent watchdog site Inside Airbnb, there are 6,776 Airbnb listings in New Orleans. That number doesn’t account for listings on other STR sites. There are only about 2,300 currently issued city permits for STRs.

In December, the New Orleans Office of Inspector General sent a letter to Mayor LaToya Cantrell’s administration noting that if the city cracked down on just 12 illegally operating STRs, it could have accumulated more than $500,000 in potential fines over the course of 2022.

The city’s Short-Term Rental Administration has recently scaled up its core of inspectors, and has begun using a new web-scraping service to track down illegal listings.

Carly Berlin is the New Orleans Reporter for WWNO and WRKF. She focuses on housing, transportation, and city government. Previously, she was the Gulf Coast Correspondent for Southerly, where her work focused on disaster recovery across south Louisiana during two record-breaking hurricane seasons. Much of that reporting centered on the aftermath of Hurricanes Laura and Delta in Lake Charles, and was supported by a grant from the Pulitzer Center.

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