Business
2:48 pm
Fri July 18, 2014

Short-Term Rental Stakeholders All Agree On One Thing: Current Law Inadequate

A screenshot of the Airbnb website shows over a thousand available short-term rentals in New Orleans, which are illegal under current city law.
A screenshot of the Airbnb website shows over a thousand available short-term rentals in New Orleans, which are illegal under current city law.
Credit Airbnb

Unlicensed, short-term rentals are illegal in New Orleans, but there aren’t a lot of people getting busted for renting out their house on websites like Airbnb or VRBO. That’s because the law that bans vacation rentals is almost impossible for the city to enforce.

Recently, the New Orleans City Council tweaked the Comprehensive Zoning Ordinance on short-term rentals. And more changes are likely to come.

Over the past few years, longtime Marigny resident Ken Caron has watched the unlicensed bed and breakfast industry explode across his neighborhood. Caron is on the board of the Faubourg Marigny Improvement Association. He says he’s seen short-term rentals, especially ones that aren’t occupied by the owners, change the character of his neighborhood.

“You know if you’re renting out a house and there’s no owner on the property, people can do whatever they want,” Caron says. “There’s some houses that are B&Bs on this block that have balconies and I can’t tell you, it’s probably every weekend, that people are just yelling off those balconies. At all hours of the night, throwing beer cans.”

Caron says he moved to the Marigny because he wanted to live someplace away from all the partying — someplace where he knew his neighbors.

"You look at the upper end of the French Quarter -- that's basically lost. You'll never get the historic part of that back. And that's something I don't want to see happen to our neighborhood." -- Marigny resident Ken Caron

“On Mandeville Street here there’s one block that, on the entire street, there’s only one person that actually lives there. The rest of them are short-term rentals. So you know, what happens to that block? You look at the upper end of the French Quarter — that’s basically lost. You’ll never get the historic part of that back. And that’s something I don’t want to see happen to our neighborhood.”

Homeowners aren’t the only ones upset about short-term rentals. Innkeepers say that unlicensed, untaxed short-term rentals pose an unfair advantage over bed and breakfasts. Bonnie Rabe is the president of the Professional Innkeepers Association of New Orleans, or PIANO.

“For instance, if I were charging $100 a night and they were charging $100 a night, my room would be really $113.50 a night,” Rabe says. “Whereas their room would still be $100 but it would be flat $100, and they’re just not paying any of the taxes.”

Since short-term rental operators don’t have to pay city taxes, they can afford to keep nightly rates lower. So, for a visitor, the choice between Rabe's place and an Airbnb listing is clear.

“Why shouldn’t I just say I’m closing down next week and stop paying my taxes and continue to operate?” she wonders.

Proponents of short-term rentals agree with Rabe's position. The Alliance for Neighborhood Prosperity is a new group of vacation rental owners who advocate for the legalization, regulation and taxation of short-term rentals. Bob Ellis is an attorney for the group.

“They want to have a standard by which they can charge, collect and remit taxes — they want to be regulated by the city,” Ellis says. “Right now, under the current code, since short-term rentals are illegal, they can’t even charge a tax or remit a tax or pay a tax because the city doesn’t recognize that as a viable or legal business.”

Ellis says if short-term rentals were legal, the city could actually make money off of them. Right now, the city doesn’t have the manpower to enforce the ban against vacation rentals. This means that all short-term rentals can fly under the radar, even the ones that allow for wild parties. However, if vacation rentals were legal and had to pay licensing fees and city taxes, that revenue could pay for someone to monitor and penalize the irresponsible operators.

“The best part about recognizing an industry that’s virtually untapped is it’s a new revenue stream for the city that can be used one for enforcement; and two, as some extra money to patch those holes in the budget,” he says.

Last week, the Alliance for Neighborhood Prosperity hosted a community meeting for short-term rental operators. Most people at the meeting were on board with the idea of regulation and licensing; they said that fees wouldn’t affect how they do business.

But some Airbnb operators were worried about new restrictions. One such resident, who preferred to remain anonymous, rents out a room in her Bywater home for festivals, holidays and the occasional weekend.

“I am someone that’s slightly more worried about the legalization process and the regulation of Airbnb, just because I feel like it’s gonna exclude people like me who don’t necessarily do it full time, can’t necessarily pay a lot of fees in order to host.”

This host says she counts on the extra income from Airbnb to supplement her rent, and she makes friends with her guests. She says it’s almost like having a third roommate. In some ways, it seems like regulations that exclude hosts like her wouldn’t make sense.

Nothing’s been decided yet. At the last City Council meeting, Community Development Committee Chair Latoya Cantrell said she was committed to seeing short-term rentals regulated and taxed. But there’s still a lot to consider when drafting a new law.

Some say that an owner or property manager should be required to live on the same block as their short-term rental, and their phone numbers should be publicly available. One resident suggested that formerly blighted properties should get priority for a short-term rental permit. That could be an incentive for investors to bring unused property back into the market.

The Alliance for Neighborhood Prosperity says it wants a solution that works for everyone. They’ve commissioned a study with the University of New Orleans to look at the economic impact of short-term rentals. They plan to submit a proposed ordinance to the City Council later this year.

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