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New Orleans is trying again to regulate vacation rentals

Tourism-dependent New Orleans has enacted new Airbnb-style short-term rental regulations, including limiting licenses to one property per block and requiring the licensee to live on the property.

The new rules, adopted after hours of emotional debate on Thursday, were necessitated by an August federal appeals court ruling that snuffed out an ordinance aimed at stopping “whole house” rentals by absentee homeowners. It also reignited disputes that have roiled the city since short-term rentals took hold in the mid-2010s.

“The neighborhoods are divided on this. Neighbors are divided about it,” said New Orleans City Councilman Freddie King.

This debate is unlikely to end any time soon. And Dawn Wheelahan, an attorney for short-term rental interests, said Friday the court cases are continuing. Her clients include a Portland, Oregon woman who lives there and in New Orleans, and a company that manages short-term rentals in several cities.

Opponents of increased regulation say short-term rentals are expanding the tourism market and providing many homeowners with the extra income they need. Proponents say a surge in vacation rentals, spurred by outside investors and absentee homeowners, has inflated real estate costs and taxes, while once quiet and charming areas have been filled with hordes of partygoers.

The old rule limited short-term rental licenses to the licensee’s primary residence — a residence for which he is claiming a Louisiana homestead property tax exemption. That excluded homeowners out of state. And a three-judge panel of the US Fifth Circuit Court of Appeals unanimously ruled that it unconstitutionally restricted interstate commerce.

As a result, the new regulation limited licenses to one person per block. It also says that the person holding the license must live on the property, whether that’s the owner or someone – perhaps a tenant – who is allowed to live there.

The result is that some license holders are concerned about their future income. Existing license holders wishing to renew must win a lottery involving all other license applicants in their block.

“They could put me in the lottery and I could just lose my retirement income like that,” said one woman, adding that it’s more lucrative to rent part of her home to holidaymakers than to have long-term renters. Faced with rising taxes and insurance, she told the council Thursday, “If I have to go back to long-term renting, I’ll have to sell my house.”

But strong opposition to vacation rentals has also been shown by people who said the proliferation of short-term rentals — and cities’ lax enforcement of regulations — has driven homeowners away because of noise from unruly guests or inflated home ownership costs.

A New Orleans native said he witnessed the “hollowing out” of his neighborhood.

“It was taken over by wealthy investors,” he said. “It has become a playground for tourists and for these wealthy investors. … We’re becoming a smaller, whiter tourist town. Less like the city I grew up in every year.”

Councilor Eugene Green saw the one-per-block limit as a compromise with people who want vacation rentals to be abolished.

“I saw the signs that said, ‘My STR is my retirement,’” Green said. “But for the people I spoke to, their homes and their neighborhoods are their retirement.”

Council members included an amendment from King that watered down the density limit somewhat by allowing a property owner to request an increase in the limit for a specific area. There would be bureaucratic scrutiny, public comment from concerned neighbors and a vote by the council on such a motion.

Wheelahan said the new rules still have several legal and constitutional issues. Among them is the requirement that only a “natural person” and no corporation may hold a license.

“Prohibiting corporations from owning permits violates the Supreme Court’s 2010 Citizens United ruling, which found corporations have the same First Amendment rights as individuals,” she said in an E- Mail.