The City Council has scheduled a vote on short-term rental zoning changes for Oct. 6, in what's likely to be a marathon debate over the future of properties rented on websites such as Airbnb.The Planning Commission's decision to maintain its original limits on "whole home" rentals was looked on as something of a victory for STR skeptics at the time. But the catch to that is in the zoning. Pat explains this a bit in a recent column.
After hearing hours of testimony about proposed zoning changes for short-term rentals, the Planning Commission decided to retain a short-term rental ban for whole-home rentals, but allow people who live in a residence to rent out rooms on a short-term basis. The proposal would also allow whole-home short-term rentals in commercially zoned areas such as downtown.
But the Planning Commission vote was just a recommendation -- the Council has final say on whether it wants to change the zoning code. And if it does, there are questions about whether the city has the resources to enforce violators, or allow illegal short-term rentals to continue operating, as they are now.
Not only will short-term rentals be unlimited in Commercial zones, they will also be unlimited in something called “mixed-use” zoning. That’s a type of zoning that can include both commercial and residential uses. Unless you’re familiar with the CZO and zoning maps, you may not realize that in historic, core neighborhoods of New Orleans – the neighborhoods currently dealing with the highest number of short-term rentals – wide swaths of neighborhoods are considered “mixed-use.” That’s especially true if a property is located near a main street like Canal, Carrollton, Tulane, or Broad.The Advocate was on this in July when they produced this very scary map of just how widespread the "whole home" problem could potentially be under the proposed regulations.
So yeah, that problem “whole-house” short-term rental you’re thinking might finally be shut down because it is in a remodeled home? Depends on what the property is zoned. If you’re in Mid-City, it is a coin flip whether or not CPC is going to be just fine with making that illegal hotel by your house a permitted use that will never go away. Better check those maps and the fine print in the law. At least you’ll know how much leverage your neighbors will be negotiating with when the short-term rental company offers the city some cash to get their own waiver.
At a recent even hosted by the Louisiana Landmarks Society, economist Jay Brinkmann talked about inflationary pressure of short term rentals on housing costs.
Because investors are buying properties knowing they can rent them out for a profitable income — in some cases gleaning a return of up to 10 percent annually — it means prices have been going up faster than the local economy can support, based on local incomes needed to support the prices.STRs drive up property values by shifting housing stock over to the tourism market. Housing prices become decoupled from the local wage economy such that nobody can afford to actually live here. The only way, then, to maintain the inflated property values is to keep selling houses to people who plan to operate them as hotels. Brinkmann suggests that sort of bubble will collapse on its own at some point. I rather doubt it. Not as long as we keep choosing to inflate it.
This, in turn, means property taxes are going up, all the while creating a false sense of security about the housing market, Brinkmann said.
In his lecture, he compared the real estate market in New Orleans to that in 2008, when markets were dominated by investors in Florida and other states who fled after the cash flow dried up, thereby causing a sharp decline in property value.
Now, the same thing could happen in the Crescent City, he said, as areas change with the influx of short-term rental clientele, which alters the fabric of the neighborhood. Ultimately, he said, the resale value of homes could eventually be driven down, unless homeowners could find a short-term rental operator to buy it.
“We’ve seen that happen,” he added. “That’s the kind of risk I think we’re needlessly injecting into the neighborhoods here.”
Will the council and the mayor give a shit? Probably not. Well, probably they won't give a shit about you, anyway.
In the meantime, Brinkmann said, because rising property taxes is good for the city and the mayor’s office, particularly as the year’s new budget is being formulated, City Council is under “tremendous pressure” to vote in favor of short-term rentals as a whole.Should make for a fun meeting.
That pressure, Brinkmann said, could explain the “disconnect” he sees between lack of enforcement of short-term rentals seen already, and zealous enforcement of other housing-related laws, including those enacted to protect actual buildings within historic districts.
“Is city enforcement focused more on structures than people?” Brinkmann asked. “The attention paid to structures as opposed to attention paid to integrity of neighborhoods strikes me as a little incongruous.”