Short Term Rentals Can Help with Affordable Housing Crisis — If We Can Find the Right Mix 

Throughout March, the New Orleans City Council will deliberate on the City Planning Commission’s (CPC) newly proposed Short-Term Rental (STR) regulations. The City of New Orleans is currently in the process of revising STR regulations for residential permits due to a U.S. 5th Circuit Court of Appeals ruling that deemed the city’s current regulations as unconstitutional. The final vote from the City Council must be made by March 31st. 

There will be multiple opportunities to submit public comments on this matter: 

·    Thursday, March 2: Special City Council Meeting 

·    Tuesday, March 14: Governmental Affairs Committee Meeting 

·    Thursday, March 23: Regular Council Meeting (Final Vote) 

How We Got Here 

In 2019, the New Orleans City Council unanimously voted to direct the CPC to draft changes that would revise the city’s STR policies to generate millions of dollars towards creating affordable housing.  Responding to evidence that the STR explosion has played a role in the affordable housing crisis that has been festering since Hurricane Katrina, the council continued to revamp the policies created in 2016.   

Long before Airbnb and other web-based platforms were available, New Orleanians were renting out their homes during major events. Given that history, the City Council proposed a series of changes that would meet the needs of the majority of New Orleanians — most of whom are cost burdened and paying more than they can afford on their housing – including 1) allowing property owners with homestead exemptions to continue to be able rent out their home or units on their property; 2) establishing an assortment of new fees intended to generate at least $20 million in new revenue for affordable housing annually; and 3) accessing untapped millions for the city to create an enforcement system to implement their new STR plan. 

New Orleans’ Current Housing Landscape 

In order to alleviate the negative impacts of STRs moving forward, it is important to understand the city’s current housing landscape and how STRs influence that landscape: 

  • New Orleans is a tourist-centric city. Many decisions made by city leaders and elected officials keep the opinions of tourists top-of-mind before the needs of residents. The discourse around tackling issues such as homelessness often defaults to how those experiencing homelessness “hurt businesses’ bottom line” and “negatively impact curb appeal” simply through their public presence. Solutions offered or deployed normally seek to cover up the appearance of a struggling city to make the city look nice for tourists while not addressing the root causes of homelessness and housing insecurity. If the city refuses to deviate from the tourism industry as a major revenue source, STRs must be used as an incentive tool to promote the creation of affordable housing through small multi-family development. Currently, nightly fees from STRs are intended to be directed towards the Neighborhood Housing Improvement Fund, but there are not enough accountability mechanisms to ensure that those fees are being collected and utilized properly. All fees collected from STRs need to go back to the community, not circulated back into the tourism industry. 
  • STRs displace residents. Stories of landlords evicting long-term tenants to convert their units to STRs are all too commonplace in New Orleans. Our current zoning policies create loopholes that allow for the proliferation of STRs in mixed-use neighborhoods, as we saw in the recent case of the Brown’s Dairy site. Inconsistent spot-zoning – which would increase with a residential STR ban – enables STRs to destabilize neighborhoods while upzoning to allow for more affordable housing opportunities gets denied. If long-term rentals are ultimately more profitable for homeowners, why are STR owners ignoring this option? 
  • Renters are stigmatized and not welcome here. The city is beginning the community input process to amend our Future Land-Use Map, and if you were to attend these public meetings, you would hear both coded and blatantly disparaging comments against renters. Opportunities to allow for more multi-family and in-fill development are met with opposition from homeowners who explicitly state that they do not want renters living in their neighborhoods. Lack of rental opportunities goes beyond the existence of STRs, and broader action from city leaders is necessary to combat the disproportional influence homeowners have in zoning decisions. 
  • Enforcement is key. No matter what policies are put in place to mitigate the impacts of STRs, there will always be the underlying issue of illegally operated STRs. CPC’s regulation recommendations focus more on land-use policy, leaving room for the City Council to add specific mechanisms that can improve enforcement, but it will take pressure from residents to guarantee that the Council prioritizes enforcement. The administrative capacity necessary to carry out effective enforcement should be carefully considered before any new regulations are passed to ensure that enforcement is feasible, cost-efficient, and does not rely on the scarce dollars that currently support housing programs in the city. 

GNOHA and HousingNOLA’s Stance and Policy Recommendations 

The Greater New Orleans Housing Alliance (GNOHA) and HousingNOLA recommend the following additions/changes to the newly proposed STR regulations: 

  • 1:1 ratio of affordable long-term rental unit to STR unit for small multi-family projects to incentivize development 
  • No conversions of whole homes, apartments, or blighted properties into STRs 
  • Citywide STR density cap rather than density restrictions by block or block-face 
  • Increased penalty fines as a consequence of operating STRs without proper licensure 

Even if STRs were eliminated from New Orleans’ housing market, residents would still face a housing affordability crisis. If the City Council stands firm and makes the proposed and necessary changes to properly regulate STRs, it will be a needed first step.  Alone, however, it will not fix these problems for New Orleanians – instead, it will ensure that a bad situation doesn’t get worse. It still falls on our leaders to not only finalize the changes to STR regulations but also implement policy solutions designed to create the right housing mix. These solutions include: 1) full implementation of the Smart Housing Mix; 2) creating policies to ensure rentals meet basic health and safety standards; and 3) facilitating transit-oriented development in areas with strong public transit access.   

We encourage all residents to make their voice heard throughout this process as the City Council works towards their final vote at their Regular Meeting on Thursday, March 23rd.  Now is the opportunity for Mayor Cantrell and the City Council to #PutHousingFirst by devoting the resources and attention necessary to implement solutions for long-term residents who have seen their housing become less affordable and have been pushed out of their neighborhoods. We must be vigilant to ensure that this opportunity is seized fully and effectively. 

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