Saturday, November 14, 2015

AirBnb STR Regulation? Questions and Issues to Consider

I wrote a piece last month that ended with a declaration that I was working on a list of questions that needed to be answered and would have the list in the next couple days. I was overly optimistic. Each question seemed to add two more ancillary questions. After watching the CPC meeting, I started reading through the comments submitted to (they can be found at planning—the deadline to submit your own comments is November 30, 2015.). There I found a great deal more information and many questions posed that I hadn't thought of. After reading and reading, I have decided that I have a few thoughts on all this that don't really lend themselves to a list per se, just categories of concern. I'm sure everyone knows my stand as an opponent of short term rentals, but if they are to be permitted and regulated there are some things that must be considered.

First and foremost, AirBnb's tactic has been to force municipalities to subpoena their listing data. New Orleans has to require that the data from all the various listing sites be turned over before any permits are issued. There is no other way to know the actual number of short term rentals, number of rooms, addresses, names of the people listing the rentals. Without that information, many of the other issues surrounding STR become difficult if not impossible to sort out. Along with the acquisition of that data, the City must insist that a license/permit number be required by the listing entity before a listing is accepted by their site. No permit/license, no listing. If a non-permitted listing is found, both the site and the person listing the property should be fined substantially. (That data will also help in the tax collection issues that everyone is concerned about and that most of the pro-short term rental folks say they're willing to pay.)

The ANP short term rental advocacy group wants blanket permission for all of the above categories of short term rentals. If permits are to be issued, the City should only allow Owner Occupied/Homestead Exemption properties to be permitted/licensed. That will eliminate absentee landlord problems and remove corporate listers completely. There are other issues that are troubling even with this scenario.

-Can an entire unit (like half a double) be listed or only an extra room in the owner occupied dwelling? There are currently too many “whole unit” short term rentals being listed (illegally).

-Some have suggested that the Homestead Exemption be pulled if an owner is short term renting, turning the property into a de facto commercial enterprise. I have to disagree with this approach as that will open the door for absentee and corporate entry into the market.

-Allowing only owner occupied/homestead exemption properties to be listed also removes the incentive for absentee/non-resident/corporate purchase of a property solely for its conversion to a short term rental property. (Absentee ownership should also apply to a person who lives in one house and STR's the house they bought next door. Owner occupied should be defined as living on the premises that is listed for STR.)

-A Homestead owner at least lives here and votes here. Yes. That matters to me.

-The Louisiana State Fire Marshall has come out against STR's as most are non-compliant with fire safety regulations. Installation of sprinklers and emergency exit markers should be required, as well as any other safety requirements that currently legal Bed and Breakfasts must comply with.

-Compliance with all Anti-Discrimination and Americans with Disabilities Act laws pertaining to commercial lodging businesses should also be part of the permit/license requirements. Any law pertaining to the above issues that a legal Bed and Breakfast already has to comply with should be applied to STR's.

-Will the STR be billed by Entergy or their insurance carrier at commercial or residential rates? If it's permitted/licensed as an STR, it is then a commercial entity and should be billed as such. (Currently LEGAL Bed and Breakfasts already pay these rates.)

-Standard Homeowners Insurance does not cover damage or injury that is a result of a commercial enterprise, I'm told. In order to get permit/license, proof of appropriate insurance should be provided and required, just as it is for car registration.

The lawyer for the ANP suggests that 20 rooms per block sounds reasonable to him. That is an enormous number of rooms. There are other problems connected with that suggestion.

-Permits/Licenses should be considered under the Conditional Use rules requiring notification of adjoining property owners. Doing it this way can potentially weed out bad actors up front as their neighbors will let you know if they have already had problems.

-Is an entire unit (like half of a double) or just an extra room in the owner occupied house being short term rented?

-Is the property listed as “suitable for special events?” (On AirBnb there is a box that can be clicked when listing the property for this. This allows the property to be rented for bachelor/bachelorette parties, etc.) If so that means other fire/safety/insurance issues have to be dealt with just as they would be for any venue rented for a special event. This could be a problem. For example, the Trash Palace can no longer be the venue for the KdV ball as the attendee numbers exceed their permitted limits. The same criteria should be used for any STR listed as "suitable for special events."

-How many rooms are being STR'd on the property?

-What is the maximum number of occupants allowed per room? (That has to be a consideration. There must be a limit not only on the number of rooms, but the number of occupants per room.)

-How many permit/licenses will be allowed per block? (BLOCK and BLOCK FACE must be discussed and the language clearly stated before a maximum number is determined.) Right now I know of one block face in the Marigny that has five STR's. That is too many per block face or even per block. As the neighborhood fabric is frayed and parking issues become rampant, which is already happening in some areas, this will be a very important limit.

-Stacy Head said she sees no problem with someone renting out their “back house.” On the Marigny block face mentioned above, one person erected a pre-fab large tool shed-like building that is being STR'd, and the person next door refurbished an ancient extant shed to STR. Will it suddenly be permissible for everyone to erect a structure in their backyard to STR? Will building permits be required? Can everyone on the block do it?

-Perhaps we should consider tying the number of permissible STR's to the number of long term affordable rentals in the same neighborhood, like a two to one ratio: two affordable long term rentals to one STR Homestead.

-Given the number of STR's already in existence, if we whittle it down to only owner occupied/homestead exempt dwellings, who gets the permit? The person who files the Conditional Use papers/insurance/fire inspection first? The person who has been doing it longest? A lottery (much like we do for artists at Jackson Square)? If there are already five on one block face, and it is limited to one per block face, who has to shut down their current operation? They've all been illegal up to this point. Whatever is decided on this has to be ironclad and tough.

-Permit/License should be granted for one year only with the ability to renew if they are in compliance with regulations and there have been no complaints filed.

-Just as there are only a certain number of CPNC's (what a taxi needs to be legal) or artist vendor licenses, there should be a limited number of STR licenses available city wide. There can be a waiting list for the following year. If someone loses their permit due to continued violations or complaints, the next person on the list can take his/her shot and go through the permitting/licensing process.

-Fees for the permit/license must be substantial. They must be large enough to be taken seriously.

-If an illegal STR is found, there should be substantial fines. Again, large enough to be taken seriously, limiting the number of violations that can be handled with a fine before more serious action is taken. We are able to stop construction on a a site (I've seen Stop Work orders on buildings in town). If we can do that we can do something similar to unpermitted/unlicensed STR's.

-Fees should be graduated scale: a whole unit would be highest fee, and two STR rooms in one house would be a higher fee than one.

-Fees and fines should be used solely for the enforcement of the regulations on STR's.

-I saw one comment suggesting seizure of the property of a violator. I'm not in favor of property seizures in general, but enforcement of regulations, enforcement with teeth, is critical. Something like the “blight” fines that accrued daily might be one way to go.

-Taxes must be exactly the same as they are for hotel/motel/B&B's.

-There must be safety and compliance inspections on a regular basis.

-There must be a system for neighbor complaints to be acknowledged, addressed and acted upon.

-There must be a posted sign with a contact number in case of complaints or other STR issue.

-It has to be made illegal to evict a long term tenant to convert a unit to STR. It happens. That can't be allowed to continue.

-Tenants who pose as actual renters, who then immediately list their new apartment as a STR should be subject to immediate lease termination. It happens a lot.

This problem comes from both ends of the rental question. People have been evicted by their landlords, with leases broken, as the landlord thinks he can make more turning the unit into an STR. I know at least half a dozen people in the last couple years that that has happened to. City wide the number must be pretty large if I know that many from just among my friends. I've also seen landlords who found out that that nice guy who rented Apartment B, listed it and turned it into an STR the afternoon he got the keys. There are several people in town who posed as long term tenants in multiple units, then listed those same units as Short Term Rentals turning themselves into professional STR providers. If a landlord knows that's what a tenant plans to do then they're both at fault, but often the landlord doesn't know. We need some discussions in this city about a more balanced approach regarding the rights of tenants and landlords as we are a city with a large number of renters whose rights and issues have been overlooked for a very long time.

Having spent the last month reading comments, I will not attempt to cover all the ground that so many others have gone over much better than I can. In comment section 1, p.95, a man named Jay Seastrunk has a lot of interesting comments regarding Master Plan specifics and safety/bldg issues. He mentions the possibility of a homeowner with a raised home, building multiple bedrooms under his raised home, each with its own exit door and wonders if something like that, which would be essentially a motel under the pilings, would be legal. That could happen even with the Owner occupy/Homestead regulation scenario.

I wish I'd written down all the page numbers of great comments. I didn't. I know Mr. and Mrs. James Morrison, Jr. are in that first comment section and their well reasoned and very detailed 5 pg comment has lots to say about zoning with regard to single family, two family, multi-family homes. I would urge you to find that one and read it.

Either comment section 1 or comment section 4, look for Dr. Emile Brinkmann, PhD. Dr. Brinkmann was the Chief Economist of the Mortgage Bankers Association, and is considered an expert on residential real estate issues. He feels that a unit removed from the rental market circumvents the Fair Housing Laws. He also talks about zoning issues, distortion of home prices and rental rates, and says that if the homeowner HAS a mortgage and decides to STR, he may be committing Mortgage Fraud unless he explicitly stated that he was going to operate a short term rental on the mortgaged property. It's a lengthy and very informative document, in depth with some recommendations. Again, I urge you to track it down and read it. It's worth it.

Also important are the comments from the Hotel folks and PIANO, the LEGAL Bed and Breakfast group. As PIANO points out, they had to dot all the i's and cross all the t's in order to open their business. If we're going to allow and regulate STR, we are in fact allowing the property owner to run a business in a residential area. They should at least have to play by the same rules, not just pay the same taxes and think it's a fair game.

After a month of reading all of this, I am more convinced than ever that IF we allow this into the city, the data from the listing corporations is crucial as is the limitation of permit/licensing to owner occupied dwellings. Otherwise we'll be overrun with STR's owned by people who don't vote here, use our city as a piggy bank, and who don't care about neighborhoods or displaced locals. I'd like to ban STR outright, but if we have to compromise on this, then at least let's make it tougher to do and of greater benefit to us.

For anyone who thinks this is only a downtown problem, one woman who commented at lives on Dominican Street. She says as of LAST summer, she had counted 18 AirB's, excluding VRBO/Homeaway/Craigslist, etc. She and her husband have lived in that house for a very long time. She feels surrounded, without neighbors, and says that two elementary schools in her area are also virtually surrounded. This isn't what we want for our neighborhoods, so let's really think about this. My questions are the tip of the iceberg.

Again, go read what much smarter people than me have written about this and watch out for the smoke and mirrors of the slick PR types putting out info for folks like ANP.