New Orleans Councilwoman's Plan for Short-Term Rentals Includes Stricter Rules, Higher Fees

2018-12-14 | The Advocate

Dec. 14--City Councilwoman Kristin Gisleson Palmer on Thursday confirmed details of her proposal to tighten the rules governing short-term rentals in the city, laying out a plan that would limit the rentals to owner-occupied homes in residential areas and requiring that those in large commercial buildings be matched with affordable housing units.

If ultimately approved by the council, the proposal would be the first major overhaul of short-term rental rules in New Orleans since they were first passed in late 2016.

It would also include dramatic hikes in the nightly fees the city charges that Palmer estimated would lead to a tenfold increase in the amount those charges bring in for affordable housing programs.

The plan will come up for an initial City Council vote next week that will kick off a four-month review process and a series of additional votes by the City Planning Commission and the council before it can go into effect.

While changes are possible or even likely along the way, the basic elements of the plan, especially requiring a homestead exemption for most properties in residential areas, largely track policies that most council members have indicated they support.

Palmer said she would not compromise on what she described as a measure needed to protect the fabric of New Orleans communities.

"I'm not flexible on selling our neighborhoods," Palmer said. "I'm not flexible with telling people who have lived in a community for 25 years that they have to leave because they can't afford the property taxes anymore or they don't know their neighbors anymore."

The proposal was hailed as a good first step by some critics of short-term rentals, while platforms like Airbnb and Homeaway panned it, saying it would hurt residents who have been legally renting out their property under the rules put in place by the previous City Council.

The most dramatic change the plan would introduce is the requirement that residential properties rented out to tourists be covered by a homestead exemption, indicating that they are their owner's primary residence. Owners would be allowed to get up to three short-term rental licenses for properties with multiple units.

That would do away with the most popular type of license under the current law, "temporary" licenses that allow entire properties, whether or not occupied by their owners, to be rented out for up to 90 days per year.

That limit has proved difficult to enforce, and critics have argued it has allowed speculators to buy up large number of properties in residential neighborhoods and turn them into full-time accommodations for tourists.

Such properties accounted for more than half of the 4,850 rental licenses in the city earlier this year, though their numbers have fallen by more than 1,000 after the City Council barred the city from renewing the licenses or issuing new ones. It's unclear how many such properties are now being rented without licenses.

The Palmer plan would continue to allow large commercial properties, such as condo or apartment buildings, to be used for short-term rentals. However, it would limit short-term rentals to 30 percent of the total number of units in the building and would require one unit of affordable housing for every short-term rental unit on the property.

Commercial properties that are licensed before the new law goes into effect would be grandfathered in.

Smaller commercial properties in neighborhoods, such as former corner stores, would be limited to four short-term rental licenses. Owners of individual condos would be able to apply for a license if they have a homestead exemption.

Palmer said the homestead exemption requirement is aimed at addressing neighborhood concerns that short-term rental units where the owner is not on hand create more problems, from noise and late-night parties to trash.

Such a policy "is going to protect those (owners) who are using short-term rentals to make ends meet while tamping down on rampant speculation," said Breonne DeDecker, a vocal short-term rental critic with the Jane Place Neighborhood Sustainability Initiative.

DeDecker said other elements of the policy, such as the number of rental units that would be allowed in multiple-unit buildings with a homestead exemption, continue to be too loose.

The plan also calls for a substantial increase in the per-night fees the city charges on short-term rentals. Guests are currently charged $1 for each night of their stay, with that money going to affordable housing through the city's Neighborhood Housing Improvement Fund.

Under Palmer's proposal, fees would be $10 per night in residential areas, $20 a night for smaller commercial properties and $25 a night for large commercial properties.

In the first year the short-term rental rules were in effect, the city collected about $652,720 in fees. Even with fewer rentals allowed under the proposed new rules, Palmer estimated the higher fees would bring in at least $7 million a year.

The plan also keeps the ban on short-term rentals in most of the French Quarter and adds a similar ban in the Garden District.

Ordinances laying out how the new rules would be enforced will not be rolled out until early next year. However, Palmer said they would include requirements that the platforms which advertise the rentals, such as Airbnb, be licensed with the city, at a fee of $10,000, and that they inform the city what properties they have listed, when they are rented and whether they are licensed.

Palmer said she also supports asking the Legislature to increase the $500 cap on fines the city can issue in order to give enforcement actions more bite.

Airbnb and Homeaway, which both referred to the policy as the "Palmer ban" in separate statements, said the proposal would hurt property owners who have abided by the rules and relied on income from their short-term rentals.

"This framework would jeopardize those responsible homeowners without cause, decrease tax collections, and prevent tourism dollars from being spread across the city," Homeaway spokesman Philip Minardi said.

But Palmer said that if the platforms want to benefit from the city's lucrative tourism economy, they will have to play by the rules.

"We have 17 million tourists a year that come to this city. We determine the parameters of our hospitality," Palmer said. "It's a market for them; they're making money off the city of New Orleans. It's in their best interest to continue to do business with us."


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