The New Orleans City Council is set to vote tomorrow on an ordinance that would allow short-term rentals in the city. The vote comes in the wake of recommendation delivered in August by the New Orleans City Planning Commission that the city only allow residents to rent out spare rooms in a personal residence for less than 30 days, but that whole house and apartment rentals would be banned throughout the city.
While the city faces an Oct. 22 deadline to act, the council may yet delay the vote.
The big issue in the proposed ordinance is whether to allow residents to lease entire houses on a short-term basis. Some neighborhood groups have opposed the practice, arguing that it destroys the sense of community in those neighborhoods. Claims also have been made that short-term rentals cut into the availability of affordable housing, which is hot button political issue in New Orleans, as it is elsewhere.
Joining the opposition are labor unions and groups representing artists and musicians who see the lack of affordable housing negatively impacting their members. The hotel industry also, naturally, are opposed to legalizing short-term rentals because they see them as a threat to the hotel business.
For its part, Airbnb has begun a television ad blitz in the New Orleans metro market featuring its property owners explaining how the service has affected them. They have rallied property owners to lobby the council, which many have done, explaining how short-term rental income has helped homeowners pay their mortgages and helped bring tourists to the city who otherwise couldn’t afford to come.
It’s unlikely the council will choose to lift the short-term rental ban without new regulations in its place. If the council decides the city’s status quo on short-term rentals is unacceptable, here are three options they will consider.
Keep the current short-term-rental ban and enforce it
Right now, New Orleans bans any rentals that are shorter than 30 days. However, the ban is not generally enforced. The council could decide to preserve and enforce the ban, which is what the neighborhood groups and hotel industry would love to see happen.
To enforce the ban would require pulling the New Orleans Police Department and other city agencies away from fighting violent and property crime to track short-term rentals instead. In Nashville, which has a similar ban, police have publicly opposed being deployed to enforce the ban. A police spokesman told Reason magazine that “our police officers have plenty on their plates answering calls for service and proactively working to deter criminal activity.” Such a move likely would draw similar opposition from police in New Orleans.
Adopt the Planning Commission’s recommendations
The New Orleans City Council could simply choose to adopt the recommendations of the City Planning Commission. These would permit short-term room rentals, but outlaw leasing entire homes and apartments.
This would be the preferred stance of many affordable-housing advocates, who generally acknowledge that some homeowners do short-term rentals in order make ends meet. However, this option might chase away real-estate investors who are needed to help combat the city’s problems with blight.
Some apartment complex owners make some units available on a short-term basis in order to lower costs for long-term tenants. To that extent, the change could result in higher rents over the long run, as those costs have to be made up somehow.
Allow short-term room rentals but regulate whole unit rentals
This proposal is the one most likely to be adopted by the council. It would allow homeowners to rent out individual rooms, but place restrictions on those who look to rent out entire houses and apartments.
The devil would be in the details. Some proposals call for a ban on whole-house rentals except for special periods that amount to 30 to 60 days a year. Other proposals call for a ban on whole house rentals except for those whose properties claim a homestead exemption on property taxes. Only owner-occupied properties can claim that exemption. Still other proposals could cap the number of whole-house rentals in a block or neighborhood.
If the council decides to go this route, they should opt for a reasonable time limit on whole house rentals. Many people only live in New Orleans part-time, so the law should allow them to rent out their homes while they’re not there. Perhaps the best solution is not to have time limits on short-term rentals but to opt for a cap on the number of short-term whole home rentals in certain neighborhoods or on certain blocks. This would still offer incentives to real-estate developers to put homes back into the stream of commerce as long-term rentals, while also providing a way to generate income until long-term tenants can be found.
The council should work to find a way to legalize short-term rentals, including whole home rentals, across the city. It should also find a solution that both protects the quality of life and protects property rights. The city also should recognize that short-term rentals can be an important part of bringing additional tourism-related revenue to New Orleans.
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