Striking the right "balance"

Last week Latoya Cantrell and Jason Williams called a fair amount of attention themselves for suggesting that it might be time to take some (limited and dubious) action on the short term rental front. Cantrell's bold idea is what they're calling a "soft cap."

Under the current law, people who own property in most non-residential zoning districts are guaranteed the ability to get commercial short-term rental licenses, which allow them to rent entire homes or apartments every day of the year.

There’s no limit on the number of such licenses in each building, so an apartment building can become, in effect, an Airbnb hotel.

Some large apartment buildings in the city have dozens of commercial, short-term rental licenses. The Lens recently reported on a small Bywater apartment building that’s in the process of being converted to full-time Airbnbs.

Cantrell’s proposal would allow just two commercial, short-term rental licenses in each building. Anything beyond that would have to be vetted by the City Planning Commission and approved by the city council — hence the council’s description of the limit as a “soft cap.”

The proposed change would apply to two types of zoning districts: one type of mixed-use district and one type of low-density, commercial district.

Notably, it will not affect some downriver neighborhoods, including Faubourg Marigny and Bywater, which have some of the highest concentrations of Airbnbs in the city.

The vetting process here is the same as one that applies already where there are limits in place. Most of the city is already under a "soft cap."  This process has already come under criticism for being a glorified system of spot-zoning where the determining factor in each decision tends to be the amount of money and influence on the city council an individual property owner can wield. For example, in a few weeks, we'll see how much political sway the developers of the Sun Yard hold. Their poshtel/pool bar proposal was rejected by the Planning Commission. But Counicl can override that for any reason if they want to.

LaToya and Jason also agreed it is time to do a "study on the effects of short-term rentals." That is encouraging. A good time to start learning about a problem is a year or so after your supposed remedy has been enacted into law.  Also the information they're looking for is already available. JPNSI has been compiling and distributing it for a few years now. They're releasing a study this month, in fact. One thing they've found, unsurprisingly, is concentrated wealth.

A few corporations and individuals are gobbling up chunks of New Orleans real estate to profit from the expanding short-term rental market.

"We're talking about 10 individuals (or corporations) that have taken 568 homes off the market and have redirected them toward tourists," said Breonne Dedecker with the Jane Place Neighborhood Sustainability Initiative. "Every unit of housing that is removed from the long-term-residential market has an affect on the market around it."

The city's law is, still, in this very story, described by Mitch Landrieu's spokespeople as "a model for other cities trying to limit, regulate and tax short term rental platforms." But their model is just turning neighborhoods into resort villages to the profit. It needs substantial revision.

LaToya Cantrell would tell you it needs "balance" and that she will do some listening or whatever to determine how that works. But there are obvious actions that should be taken immediately. Here are the two most popular ideas. Short term rentals of "whole home" units should be be banned from residential neighborhoods.  Licenses should be limited to one per individual.  Those are the two most direct means of stopping the conversion of structures into virtual hotels via the STR process.  LaToya's spokesperson claims she is against that.

"The mayor-elect does not support converting structures into virtual hotels via the STR process, especially when those structures can house our residents. She is currently working to strike the right balance on this issue so that the right regulations are in place that protect the cultural fabric of neighborhoods," Mayor-Elect Cantrell's Communications Director Mason Harrison stated in an emailed response.

Recall that Susan Guidry proposed limiting licenses to one per homestead exemption in the original ordinance. LaToya made a big to-do during the mayoral campaign of her having voted for that amendment (although it was clear it wasn't going to pass at the time.)  So why isn't she offering a similar proposal now? 

Jane Place points out that much of the luxury condo development in the CBD has sustained itself through the STR market. 

Dedecker recently took to Twitter to point out two corporations, Stay Alfred and Sonder, have more than 100 STR permits in New Orleans each. 

Stay Alfred, which is based in Spokane, Washington has more than 30 permitted STR in The Maritime apartment building in the Central Business District.

Neither Stay Alfred or The Maritime returned FOX 8's request for comment. 

"[The Maritime] has 106 apartments in it. As of last week, there were 61 permitted short-term rentals in the apartment building with another 21 permits pending, which means 82 out of 106 units are currently or about to be used as short-term rentals. That is 80 percent of a residential building basically being utilized as a hotel," Dedecker said.

Last week, we mentioned Sonder, in relation to its presence in another faux-tel development in Mid-City.  That development's owner, Joshua Bruno, has a history of getting LaToya to listen to him and "balance" things in his favor from time to time. Until she makes a solid commitment to clamping down on STR expansion, we have to assume she's still listening to people like Bruno.

And that is a problem because next they will want to "balance" the French Quarter too. This morning's T-P allows Quarter landlords to whine that the total ban on STRs there is cutting into their racket now.

Michael Wilkinson, also of French Quarter Realty, said that some of his clients have been converting short-term rentals into "what they should've been in the first place: Long-term rentals."

"We're seeing that, which we kind of expected, and some people are keeping them for themselves," he said. "It's put a lot of things on the rental market because of that."
But the large inventory of long-term rentals has made things challenging for landlords. John Ferrara, a longtime French Quarter landlord and a former resident, said it's as challenging to find long-term renters as ever.

"People who had condos and second homes in the Quarter, they used them periodically and then they rented them out the rest of the time. Now they can't do that," Ferrara said. "You can't rent -- I have vacancies for over a year now."

Wither the pied-a-terres? It sounds a lot like the ban is actually doing what it's supposed to do. Notice nobody in this story ever takes a minute to wonder if the problem might have to do with the rent being too damn high. The pro-Airbnb and YIMBYist crowd loves to talk about the sacred value of "supply and demand." At least they do as long as those dynamics are favorable to the investor class. When it doesn't, though, somehow that's a bad thing.

For years, he said French Quarter Realty used to have handouts with listings of apartments and corresponding photos running one to two pages. But now, "we have four pages of apartments."

"I have one client that just rented a $1,200 apartment, a guest quarters behind the main house, that he had on the market and after a year he finally got someone," Ripley said. "It's just been very difficult because it impacts the investment buyer, and now is competing with a whole new market in the CBD."

The "whole new market in the CBD" is where all the STRs are, of course. Real estate just isn't very successful in New Orleans if it is wasted on housing people who actually live  here.