Property owners blast city for lack of illegal short term rental enforcement



At a meeting of the New Orleans City Council's Housing and Human Needs Committee today, bed-and-breakfast operators, property owners and representatives of the city's tourism industry demanded more stringent enforcement of short-term property rental laws, saying the city's apparently lax attitude toward the problem takes business from legitimate bed and breakfasts and hotels and costs tax dollars.

"Every year legitimate operators lose $13 million in potential bookings to illegal short-term rentals," said bed and breakfast operator Brian Furness, giving the estimates of the French Quarter Citizens Illegal Short-Term Rental Committee. Based on taxes paid by licensed and permitted facilities, he added, "Those illegal operators would owe $1.4M annually in taxes. Against this backdrop, the city's lack of enforcement is perplexing."

Under city code, property owners without hotel or bed and breakfast permits cannot rent out their homes for less than 60 days in the French Quarter or 30 days elsewhere in the city. The city enforces the law by sending out notices to property owners or agents advertising illegal short-terms. But in January, Gambit found that the city had not sent out any such notice during the entire second half of 2012, despite flagrant online advertising in the run-up to the Super Bowl. Nor had city government ever provided a semi-annual report on enforcement efforts, as required by the law.

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As speakers pointed out today, illegal short-term proprietors are not subject to the same safety inspection or insurance requirements. Several said local government should be concerned about its potential liability, or at the very least damage to its reputation as a tourism-friendly city, if vacationers were to be injured or killed in a fire at an illegal short-term rental property.

A more immediate and tangible concern, however, is lost revenues, since illegal short-term proprietors don't pay taxes or permit fees on their businesses.

"I just don't understand how the city can leave all this revenue on the table ... Just going by what we pay in taxes," said Bonnie Rabe said Bonnie Rabe, president of the Professional Innkeepers Association of New Orleans (PIANO) and owner of the Grand Victorian Bed and Breakfast on St. Charles Avenue. "The bottom line is people are doing it because they know they can get away with it. They know the city isn't doing anything."

Jared Munster, acting director of the New Orleans Department of Safety and Permits, which is tasked with illegal short-term enforcement, said that online ads, which can be taken down (and subsequently reposted) very quickly and often posted anonymously without a listed address, are difficult to match to homeowners and offering agents. Furthermore, he said, the department doesn't have the resources or staff to enforce the law as aggressively as speakers at the meeting were requesting. Furness said French Quarter Citizens and the Vieux Carre Property Owners, Residents, and Associates (VCPORA) organization have offered volunteers to the city a number of times.

Jared Uschold, an attorney who identified himself as representing "medium-term" rental properties (who are in compliance with the law) said that rather than shutting down short-term rental properties, the city should incorporate them into the law and tax them as it does bed and breakfasts and hotels. Uschold said that bed and breakfast permits are too difficult to obtain. In some neighborhoods, like the French Quarter, he noted, long-time zoning restrictions ban the establishment of new bed and breakfasts.

"I sometimes wonder if this is actually about protecting a monopoly," he said.

But neighborhood residents argued that the problem extends beyond unfair business practices to quality of life in the affected neighborhoods. VCPORA executive director Meg Lousteau said the rentals shrink the available pool of apartments available for long-term lease. That, she said, works as one factor pushing up rent to a point where people who work in the French Quarter can't afford to live there.

"When you drive the prices up with these artificial markets, you damage the viability of the Quarter as a neighborhood," she said.

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