New Orleans could see a reduction of hundreds of short-term rental permits under a new density limit passed by the City Council last month, an analysis by Verite found. If new density restrictions went into effect right away, more than 300 currently permitted rentals, or about 26% of all current residential permits, would not be allowed to operate.
But the extent of the reduction will depend on how often the council utilizes a new “release valve” rule that allows it to grant exceptions to the new limits, as well as the city’s ability to enforce the law.
“Whether those short-term rentals are actually eliminated is a whole other story,” Maxwell Ciardullo, policy analyst with the Louisiana Fair Housing Action Center, told Verite. “The jury’s definitely still out on that.”
The most significant restriction in the city’s new short-term rental rules limits every block square in the city to just one residential permit each. (Commercial permits, which are not allowed in residential zones, aren’t affected by the rules.)
Verite found that as of March 30, there were a total of 232 blocks with more than one residential permit, a total of 564 permits. Under a strict one-per-block rule, that would lead to a reduction of 332 permits. A City Planning Commission analysis showed similar numbers — 227 blocks with 555 total permits as of Feb. 13.
City blocks with multiple short-term rental permits
Highlighted blocks have more than one residential short-term rental permit, according to city records. Zoom in to see the locations of sh0rt-term rental properties. Credit: Graphic by Charles Maldonado/Verite News
If two or more properties apply for a permit on the same block, the city would use a lottery to determine who gets the one available permit.
Some city blocks have as many as five or six residential permits, such as the 7th Ward block bounded by Marais, Annette, St. Anthony and Henriette Delille streets. A native New Orleanian who goes by the name Shorty was riding his bike by the block on a recent Tuesday afternoon. He asked that his full name not be shared for privacy reasons.
“The 7th Ward, it don’t hold a home feel anymore I can tell you that much,” Shorty said.
Short-term rental critics have long argued that their proliferation is damaging the character and cohesion of high-demand neighborhoods, replacing long-term residents with tourists and bachelor parties. And they say the industry is heavily impacting the housing and rental market, adding to an already dire affordable housing crisis.
“Well that’s the thing, I’m homeless, so that’s another impact,” Shorty said. “It bothers me. It’s not as affordable as it used to be. And the rents are going to keep going up.”
That’s why many housing advocates were glad to see the council pass a one-per-block square limit, a stricter cap than the roughly four-per-block square limit originally recommended by the City Planning Commission earlier in the year.
But short-term rental critics were disappointed that the council ended up approving a controversial “release valve” amendment offered by Councilmember Freddie King in a 5-2 vote. The amendment allows the City Council to approve up to two additional permits above the one-per-block limit. King said he introduced the amendment to protect “mom and pop” operators who have come to rely on the income.
King and other council members told Verite that they expect exemptions to be rare. But there is no guarantee of that. And some critics worry the loophole could open up the opportunity for favoritism and corruption.
“We don’t know how council members are going to rule,” Ciardullo said. “It could be that in some place where you have lots of dense blocks, the councilmember is more lenient and more interested in more exceptions. … And regardless of who sits on this council, I’m concerned about who might sit on future councils.”
Many of the blocks with more than one short-term rental permit are in high-demand neighborhoods that border the French Quarter and the Garden District — the two neighborhoods in the city where vacation rentals are banned.
Treme native Alfred Jones was sitting on his porch on the 1500 block of Dumaine Street last week when a Verite reporter informed him that he was on one of the densest blocks for residential short-term rental activity in the city, with four permits. He told the reporter they were mistaken — there are far more than four short-term rentals on the block.
“Just about everything on this block is Airbnb,” he said.
Several of the houses he pointed to don’t have short-term rental permits. But the signs were there — key lock boxes, a woman waiting for an Uber with a rolling suitcase and a group of seven college-aged people filing out of a house and walking toward the French Quarter.
“Come on now, it’s fairly obvious,” Jones said.
Jones was pointing to an issue that has consumed the debate since the city legalized short-term rentals in 2016 — the lack of enforcement against unpermitted properties. For years, many illegal short-term rentals have been allowed to operate with impunity. By some estimates, the city may have more than two illegal short-term rentals for every legally permitted one.
“We could ban STRs altogether, and without enforcement, we’re wasting our time,” King told Verite.
Ciardullo was skeptical that the density caps will lead to a real reduction in short-term rental activity in the city.
“Until the dust settles, and especially until we have real enforcement, I think we have no reason to believe this will result in less short-term rentals,” Ciardullo said.
The law takes effect July 1. All current residential permits will expire on Aug. 31 or sooner, depending on their expiration dates.
The ‘mom and pop’ exception
Under King’s amendment to create exceptions to the density limit, a property owner has to submit an application and inform all properties within 100 feet of their intention to seek an exemption.
The City Planning Commission will then provide a recommendation on whether to grant the request. But the final say will be with the City Council, which can either accept or reject the commission’s recommendation.
King told Verite that almost everyone agrees on the desire to get rid of large, corporate operators buying and renting out full homes. But he said he offered the amendment to protect long-term residents who rent spare rooms and rely on the income to stay in their homes.
“These are everyday citizens, the ones we go to church with, the ones we see at the grocery store. Productive, positive citizens,” King said. “There are mom and pops just trying to make ends meet by renting out a spare room or the other side of their double. … They reached out to me and said that with this one per square block, I’m now at risk of losing my own home.”
So-called “mom and pop” operators have long been part of the short-term rental discussion. Critics have argued that the concept is largely a myth used by large operators to gain sympathy for the industry, and that the number of true “mom and pops” that King describes makes up just a small fraction of vacation rentals.
A 2018 report by the affordable housing group Jane Place Neighborhood Sustainability Initiative found that nearly half of the short-term rentals in the city were managed by a small group of operators and companies, and about 80% properties listed on websites like Airbnb were for full homes, rather than spare rooms.
Verite’s analysis found that among the 564 permitted short-term rentals on high-density blocks,36 percent had listed operators that managed at least two properties. Some of them appeared to work for large management firms including Stay Vello or Vacasa.
But King said that he has heard from many constituents who he says align with a kind of non-corporate, resident owned rental that he thinks is appropriate. He said it was startling to see that the new block limit could remove as many as 332 permits.
“It is a bit alarming to know that potentially hundreds of residents may be negatively affected by the one-per-square block limit,” King said.
He said he couldn’t say how many of those were the types of “mom and pop” operators he wants to protect, but that “there’s definitely some people in that number who are good, honest, hard-working people who check all the boxes.” He gave the example of an Air Force veteran and his wife in Algiers who rent out a spare bedroom upstairs who called him in tears over the potential loss of his permit.
“This man is a pillar of his community, he cleans up the playground across the street,” King said. “I just don’t know if allowing my neighbor to rent out a back room, if that’s going to destroy a neighborhood.”
Two out of seven council members voted against King’s exemption amendment — Councilmembers Oliver Thomas and Eugene Green.
Green told Verite that while he was sympathetic to short-term rental operators who bought homes with the expectation of earning short-term rental income. But he said he had greater sympathy for the tens of thousands of New Orleans residents who are negatively impacted by the proliferation of short-term rentals, rising rents and the hollowing out of neighborhoods.
“You lose the culture,” Green said. “I remain focused on building our neighborhoods with people who live there, people who are going to use the businesses in the community, people who are going to raise their children there, who are going to be attending the schools and churches of our community.”
He also pointed out that even if properties lose their short-term rental permits, they can still make money with their extra unit or room.
“At the end of the day there are other options,” Green said. “Remember, we didn’t eliminate long-term rentals.”
He said he still opposed the exception rule, but that ultimately, he thinks the council overall struck a good balance.
Like King, Councilmember JP Morrell said that he expects exceptions to the one-per-block rule to be rare, and that support of neighbors will be vital to getting one.
“I think it’s going to be extremely difficult for anyone to get an exception without robust support from their neighbors,” Morrell said. “The people arguing against short-term rental regulations, all of them said my neighbors love me. Well, with Councilman King’s amendment, you get to see if your neighbors love you. Because if your neighbors don’t love you, then you’ve got a problem.”
Still, Ciardullo is nonetheless worried about the loophole, saying the subjective criteria for whether to grant an exemption leaves opportunity for favoritism and bias.
“It’s not unheard of that council members or their staff or their staff’s family members own and operate short- term rentals,” Ciardullo said. “There’s just a lot of opportunity for corruption in that system when it’s not an objective set of criteria.”
Enforcement and commercial short-term rentals
From its inception, the Cantrell administration has struggled to enforce the city’s short-term rental laws to the frustration of city councilmembers. But the recent law adds new enforcement tools, and councilmembers told Verite they were encouraged by recent improvements at the Department of Safety and Permits.
The new law increases reporting requirements from platforms like Airbnb and VRBO, who are now required to share much more information with the city, including every listing in New Orleans and their associated permit numbers.
The law also gives more specific details on how violators have to be punished. Morrell and Ciardullo said that the city and hearing officers — who review alleged violations and assign fines — will have much less discretion over whether to punish violators. For example, certain violations will trigger an automatic permit revocation. Three or more instances of some violations will require the city to ban the property from getting a short-term rental permit for five years — what Morrell calls the “three-strike rule.”
Ciardullo said that mandatory penalties are important, as is a rule that bans violating properties from holding a permit for five years, rather than just the owner.
“You can’t even sell it to your mom or your sister or your wife and have them get the permit,” Ciardullo said. “The property is prohibited from being a short-term rental. So that’s a big deal.”
Morrell said he was happy with progress made by the Cantrell administration to hire more people for enforcement and obtain software to scrape data from sites like Airbnb. But he said more needs to be done.
“We’re having robust conversations with Sewerage and Water Board and Entergy about pulling meters on properties that are repeat offenders,” Morrell said. “You can’t rent an STR without water and power.”
Perhaps the biggest obstacle to enforcement is the number of available administrative hearing officers. When the city finds short-term rental violations, they have to bring the property owner to an adjudication in front of an independent hearing officer. Currently, the city only has two hearing officers for short-term rental violations, which has severely limited enforcement. Last year, the city held only 43 short-term rental adjudications — a fraction of the number of complaints and violations in the city.
“It takes six months to bring in one of these people, even when they’re a flagrant violator, to a hearing,” Ciardullo said. “And they make three times as much as the fines in those six months in short-term rental income.”
“In order for the three-strike rule to work, you kind of need to have strikes,” Morrell said.
But ultimately, he said he was encouraged by the progress in enforcement.
Morrell and Ciardullo added that the future of short-term rentals in New Orleans will also hinge on what the council does with commercial permits, which aren’t covered by the new law but make up about half of the city’s roughly 2,440 current permits.
Commercial permits are only allowed in non-residentially zoned areas, like the Central Business District. But that also includes properties tucked in residential neighborhoods and zoned as mixed-use.
The council recently launched the process to rewrite some of the rules for commercial rentals. Councilmember JP Morrell said that process will take longer than the six months it took to write the rules for residential rentals, but that the end result will likely be additional restrictions.
“Commercial STRs are having a very devastating effect on the rental market,” Morrell said. “There’s going to be a very robust effort by the council to slow that down dramatically and layer more restrictions.”
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