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N.O. City Council approves short-term rental regulations

24th October 2016   ·   0 Comments

By Fritz Esker
Contributing Writer

On October 20, the New Orleans City Council approved short-term rental regulations aimed at limiting whole-home rentals and banning them in most of the French Quarter.

This was only a preliminary consideration and must still be ratified at a later date. Last Thursday’s vote was 6-1 in favor with Jared Brossett the sole dissenting vote.

At the meeting, District A Councilmember Susan Guidry added an amendment to the proposal requiring the homestead exemption (meaning the permit holders live in the home) for temporary permits. She said that if homeowners are traveling to Europe for three months, then they should have the ability to rent out their home. However, since they live in the home, they will be more considerate of their neighbors because they’ll be returning home eventually.

“They’re going to be careful who they rent it out to because they live there,” said Guidry.

The homestead exemption was an important consideration for many residents since one of the most common criticisms and fears about Airbnb is that it allows moneyed out-of-towners to buy property and freeze out locals.

Timothy Eskew, owner of Bicycle Michael’s on Frenchmen Street, said he has spoken to east coast residents buying homes in the Marigny/Bywater area solely for the purpose of using them as an Airbnb. While Eskew does not object to homeowners living in their homes renting out space from time to time to make extra money, he is opposed to people running unlicensed hotels year-round.

“If everyone in the neighborhood is an Airbnb, there’s no one interesting to hang out with,” Eskew said.

But there are many residents in New Orleans who live in their home and rent out a spare room or an apartment while remaining on-site. Meg Doosey and her husband Mike are Airbnb hosts in their Broadmoor home a few weekends a year. It helps them pay for improvements to the house.

“We make it known through Airbnb that the rental is owner-occupied in a family-friendly neighborhood, hopefully deterring people that want a ‘party atmosphere’ from renting our place. It is so we do not disturb the landscape of our neighborhood,” said Doosey. “And we’ve never had a problem with any of our renters who have come from various places in the U.S. and across the world.”

At last week’s City Council meeting, several New Orleanians took the podium to offer their opinions on the issue. Holly Willis spoke about how short-term rentals provide needed income for New Orleanians struggling to find work.

“A lot of people here truly love New Orleans, but they’re underemployed,” Willis said.

Byron Stuart echoed Willis’ sentiments. After being laid off from a job in the tech sector, he rented out part of his home to make ends meet. This allowed him to stay in a city he loves instead of leaving in search of a new job.

Andrew Grafe emphasized the importance of the homestead exemption provision and requested that the city place a limit on the number of short-term rentals per block, as they do with hotels and bed-and-breakfasts.

“I have said all along that our short-term rental regulation had to be realistic, practical, and enforceable,” said District B Councilmember Latoya Cantrell. “We also needed to get cooperation from the major short-term rental websites. Without access to their data and without facilitating tax collection, any ordinance would be practically unenforceable and unfunded.”

A study on rents and Airbnb

Some opponents of Airbnb argued that the service causes rents to rise, displacing locals. Airbnb funded a study by Research by the Numbers, an economic consultancy headed by Loyola University of New Orleans professors John Levendis and Mehmet Dicle. It indicated that there is not a correlation between Airbnb activity and rising rental costs.

The study used Zillow and Airbnb as its primary data sources. Levendis and Dicle analyzed local rental markets by zip codes, instead of the city’s more informal neighborhood distinctions. In these zip codes, the two professors looked to see if changes in rental rates were correlated with changes in Airbnb activity.

In the city’s most populous zip code, 70119 (mostly Mid-City), rental prices sharply increased in 2014 but have held steady in the past two years. However, Airbnb listings have continued to rise in 70119. The city’s second most-populous zip code, 70115 (Freret, Touro, parts of the Irish Channel and Garden District), has seen a slight decline in rental rates over the past year and a half while Airbnb listings have increased.

The correlation between rental rates and Airbnb activity was highest in the 70117 zip code (Bywater, part of the Marigny and St. Roch, St. Claude). But the study, using Metairie as a control group, argued that the higher rates were due to overall increases in rent and not due to Airbnb.

According to Levendis and Dicle’s study, Airbnb hosts rented their properties an average of 63.8 nights a year. About 47 percent of Airbnb hosts rented their properties for fewer than 30 nights a year.

When asked what other factors could have driven an increase in rental costs, Levendis said there are many possibilities. An increase in development of a certain area (such as the new streetcar on Rampart and other new businesses in the Bywater/Marigny neighborhoods) could cause rental prices to rise. If a city or neighborhood gets a reputation as “cool,” it would spur demand and raise rents.

Levendis expressed interest in researching how much of a correlation there was between a rise in rental prices and the heyday of Hollywood South. He said rental prices, on average, have gone down in the city over the past six months, but Airbnb listings have gone up. He has not researched this, but he speculated that the decrease in film and TV productions in New Orleans over the past year could have contributed to a decrease in rental prices.

“Although passing the motion yesterday was difficult and painful, we needed to agree on a feasible approach and we did that,” Cantrell said. “Doing nothing would have had a disastrous impact on our neighborhoods.”

This article originally published in the October 24, 2016 print edition of The Louisiana Weekly newspaper.

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