Motel of fools

Back in January when the City Planning Commission took the first steps toward legalizing short term rentals in New Orleans, the package of recommendations it sent to City Council contained one simple but crucial provision.  CPC recommended that so-called "whole home" rentals, where an entire property is given over to full time service as a de-facto hotel be disallowed. The rest of CPC's recommendations were relatively toothless. But this one question of whole home rentals is essential. It's where the spread of STRs most acutely impacts the availability of affordable housing. Indications are that it also happens to be where Airbnb (valued at approximately $25 billion) and the landlords it facilitates are making their largest profits.

In "destination cities" around the world, residents are finding themselves in competition with tourists for affordable housing. It's a competition they are losing. In New Orleans, the battle is expected to become even more intense as tourism leaders plan to bring in 13 million annual visitors by 2018.

But a few cites, at least, are starting to push back. Barcelona has taken to imposing punitive fines on Airbnb for listing properties out of compliance with local regulations.  This week, Berlin's new law banning whole home rentals went into effect. For a while there it looked like New Orleans might be about to take a step in the right direction.  But then Mitch Landrieu stepped in.

Mayor Mitch Landrieu is pushing a plan to allow New Orleans homeowners to convert their entire homes into short-term accommodations for visitors — a move that would direct the City Planning Commission to reverse its previous stance on the subject.

That could prove a controversial position on one of the most contentious issues facing city officials and could set up resistance on the City Council.

The Planning Commission already has weighed in on the issue, rejecting a recommendation by its staff that the city authorize the rental of whole homes as year-round miniature hotels through sites such as Airbnb.

Thousands of homes already are being used that way despite a city law that prohibits such short-term rentals. A proposed law would legalize the rentals and allow the city to regulate and tax them.

The Landrieu administration has asked the council to instruct the Planning Commission to hold public hearings on its staff’s original proposal, including the provision allowing full houses or apartments to be rented in residential neighborhoods.

This afternoon City Council approved the mayor's request which means now the whole thing is punted back to the Planning Commission. Whether or not CPC decides to strike the whole home ban is still an open question.  It will be one well worth one worth watching for those of us still trying to scrape by in the second most rent stressed housing market in the country. Obviously that isn't all due to Airbnb specifically. But it is certainly an irritant.  Here's a little context.

We've practically eliminated public housing as it was prior to Katrina, in many cases turning the very land on which it stood over to "market-rate" (read: high priced condo type) developments. HANO reports a 17,000 applicant waiting list for Section 8 assistance.

Real estate in New Orleans, like it is in many other cities right now, is superheated.

The average price of a house in New Orleans has climbed a stunning 46 percent since Hurricane Katrina with peak demand in the city's historic neighborhoods -- and the escalation shows no sign of slowing, according to a report issued Tuesday (Aug. 11) by the New Orleans Metropolitan Association of Realtors.

There are a lot of factors driving that. Some of it is speculative investment. A lot of the more egregious sums you see come from out of town one percenters putting cash into vacation homes.

Eric Bouler, a Gardner Realtors agent who has focused on condos since 2004, said second-home buyers, typically ages 50 to 70, are prevalent on the market, and they have expanded their interest beyond the French Quarter and St. Charles Avenue.

"Now, the second-homers are all over the city," Bouler said. "They've been exposed to the Lower Garden District, the Marigny, Uptown, University, Lakefront."

Their willingness to look everywhere has begun to price out some condo buyers looking for a primary residence, he said.

It's not hard to figure Airbnb's role in opening up neighborhoods to part-time "second home" investment.

Another thing we're finding here as well as in cities around the world is that a local housing market is not really dependent on the state of the local labor market. Housing prices can continue to soar even as the earning power of the local workforce remains flat.  So the housing crisis is an egregious illustration of growing class disparity and the problem of concentrated wealth. It is an especially destructive effect of global inequality manifested right here in your backyard.  Incomes are stagnant. Housing prices are skyrocketing. The rent is too damn high.

Is Airbnb the single cause of all of this?  No, of course not.  Is it a conduit through which some of these destructive forces are brought to bear?  Damn right it is. It is one tool used by capital to convert once affordable housing into profit-generating assets.  The most blatant way it can do this is by taking whole houses off of the local market and converting them into hotels.

Recently the Advocate reported that, according to the website InsideAirbnb.com something like 72%  of available listings in New Orleans that are given over to whole home rentals. The same report tells us that a sizable portion, 42%, of those listings are from holders of multiple properties. This suggests that much of what happens via Airbnb is something very different from what STR proponents sometimes describe as a noble "side-hustle."

Those numbers can be and have been criticized. It's true they may be based on incomplete data (thanks to Airbnb's refusal to share data) but as ballpark figures they are probably not bad.  Besides, we can always take Bob Ellis's word for it.  The former City Attorney and current head of the group of landlords lobbying City Hall for Airbnb legalization himself admits that owners offering whole home rentals make up the "Lion's share" of his group's membership.

But ensuring that such rentals become legal is a major goal of the Alliance for Neighborhood Prosperity, a group representing short-term rental owners. Whole residential properties “make up the lion’s share of our membership,” said attorney Bob Ellis, who represents the group.

Regulatory efforts in other cities have failed because they excluded some types of properties, Ellis said, apparently suggesting rentals of entire homes in residential neighborhoods would continue even if they are banned.

You have to love that last little bit. "Welp, we're gonna just do it anyway," he says.  And they probably will unless the city's eventual policy is serious about enforcement. That is to say unless the city takes the kind of hard line that Berlin and Barcelona have. If the council and planning commission do not take this approach, if they focus on Airbnb as a matter of hospitality regulation instead of a threat to affordable housing, then Ellis is probably right. Council should take its responsibility to its struggling constituents seriously.  The mayor has already indicated he does not.  And this is where it becomes our responsibility to hold them accountable. 

It's possible this entire discussion is disproportionately focused on Airbnb depending on the actual size of its impact on the housing crisis. But, because its impact is so highly visible (you may have heard about evictions from housing converted to STRs, you may have seen that map published by the Advocate, you may have just looked around your neighborhood lately to see who, if anyone actually lives there) Airbnb is a potent symbol of how gentrification displaces a community and transfers its wealth to an already wealthy elite.  And so as people look for ways to "act locally"  it shouldn't surprise us that Airbnb would be among the first knobs they reach for in grasping for leverage.

We've actually been talking about this for a long time in New Orleans where the inherent inequities of the tourism economy are a constant source of friction.  Here are a few videos for you... you know when you have time. Below is a panel discussion we held at Rising Tide 7 titled Community of Commodity. This was before Airbnb was really a thing but the discussion did delve in to the core problems of our tourism-based economy that have only intensified lately. The panelists are Brian Boyles, Alex Rawls, Mari Kornhauser, Deb Cotton, John McCusker, and Meg Lousteau. Kalen Wright is asking the questions.


Community or Commodity? from Jason Berry on Vimeo.

The very next year Rising Tide 8 featured a "Beyond Tourism" panel going into some of the same issues. This time the panelists are Kevin Fox Gotham, Brice Miller, Robin Keegan, Meg Lousteau (again) and Mark Romig (who I'm not sure was very happy with the way it went) Charles Maldonado moderated this one.


Rising Tide 8 - Beyond Tourism Beyond Recovery from Jason Berry on Vimeo.


Finally here (again.. Meg everywhere) is Lousteau at last month's Breakfast With the Newsmakers event sponsored by The Lens. It's pretty easy to follow the thread through all of these.


The Lens - Breakfast with the Newsmakers - Meg Lousteau from Jason Berry on Vimeo.