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Short Term Rental Study CITY PLANNING COMMISSION CITY OF NEW ORLEANS MITCHELL J. LANDRIEU ROBERT D. RIVERS MAYOR EXECUTIVE DIRECTOR LESLIE T. ALLEY DEPUTY DIRECTOR SHORT TERM RENTAL STUDY PREPARED ON: PREPARED BY: JANUARY 19, 2016 NICHOLAS KINDEL KELLY BUTLER REVISED ON: PAUL CRAMER JANUARY 19, 2016 BRITTANY DESROCHER LARRY MASSEY, JR Table of Contents Section Page Table of Contents i Executive Summary iii Introduction iii Key Findings iii Recommendations iv A. Existing Conditions 1 Short Term Rentals Study Background 1 Description of Short Term Rentals 3 Short Term Rental Platforms 4 Short Term Rentals in New Orleans 6 B. Current Short Term Rental Regulations 13 Comprehensive Zoning Ordinance Regulations 13 Building & Life Safety Code Requirements 22 Permitting & Licensing Requirements 25 Enforcement 25 C. Public Input on Short Term Rental Study 26 Public Input Received 26 Summary of Public Comments 27 D. Assessment of Impacts of Short Term Rentals 29 Benefits of Short Term Rentals 29 Negative Impacts Associated with Short Term Rentals 30 Affordable Housing Issues 32 Health & Safety Issues 38 Permitting & Licensing Issues 38 Enforcement Considerations 39 Revenue Issues 40 E. Nationwide Best Practices in Short Term Rental Regulations 43 Aspects of Short Term Rental Regulations 43 Assessment of Regulations in Other Cities 51 Short Term Rental Study i F. Analysis: Regulating Impacts of Short Term Rentals 53 General Analysis 53 Land Use & Zoning Analysis 55 Master Plan Consistency Analysis 68 Affordable Housing Analysis 69 Building Code & Life Safety Code Analysis 75 Permitting & Licensing Analysis 75 City Code Standards Analysis 76 Platform Regulations Analysis 80 Revenue Analysis 82 Enforcement Analysis 85 Analysis Summary 86 G. Short Term Rental Recommendations 92 Comprehensive Zoning Ordinance 92 City Code Recommendations 103 Short Term Rental Platform Recommendations 106 Department of Safety and Permits Recommendations 106 Building Code Recommendations 108 Advocacy Recommendations 109 Other Recommendations 109 Next Steps 110 Short Term Rental Study ii Short Term Rental Study Executive Summary Introduction With the growth of the sharing economy and the increased popularity of websites like Airbnb, VRBO, and FlipKey, short term rentals have proliferated in the City of New Orleans despite being prohibited in most zoning categories. While there is no official count, there are likely between 2,400 and 4,000 listings in New Orleans. The vast majority of these short term rentals operate without the proper approvals. Even if an operator wanted to follow the rules, get a license, and pay fees and taxes, the use is allowed in very limited locations. Under the current regulations, short term rentals are allowed in few districts and there is no licensing structure to regulate short term rentals. Having a structure in place is important to regulate short term rentals, to minimize the negative impacts on surrounding properties, and to facilitate enforcement on problem operators. Recognizing the issues with the current short term rental regulations, the City Council passed Motion M-15-391 directing the City Planning Commission to produce a Short Term Rental Study. The study was guided by the following goals and objectives: Ensure the safety of visitors; Protect neighborhood character and minimize impacts to residential areas; Enable economic opportunities; Create equitable regulations for the hospitality industry; Create regulations based on best practices that respond to the unique circumstances in New Orleans; Generate revenue for the City; Facilitate public notice and information; Allow short term rentals based on their impact; Propose regulations that respond to the unique impacts of each short term rental type to minimize nuisances; Propose enforceable regulations; Prioritize enforcement; and Implement a system where problem operators would not vest property rights. Key Findings Based on the review of nationwide best practices and the analysis of the situation in New Orleans, the following key findings informed the proposed short term rental recommendations: There are likely between 2,400 and 4,000 unique listing in New Orleans. About 70% are whole unit rentals with an average nightly rental rate of $250. Demand for short term rentals is significant and mostly concentrated in the historic core neighborhoods. Short Term Rental Study iii Short term rentals, as sleeping accommodations for non-residents, are subject to more stringent building code regulations than the typical single- or two-family residence. Many cities have struggled with the regulation and enforcement of short term rentals; however, the cities that have been most successful have categorized short term rentals into different types based on their impacts, put standards in place to ensure guest safety, set appropriate fees and fines to incentivize compliance, and reevaluated and revised the short term rental regulations after their implementation. Short term rentals are residential uses with commercial type impacts which should be permitted in commercial and mixed-use districts and only allowed residential districts in limited circumstances. Short term rentals with lesser impacts, like those that are temporary or have a permanent resident present at the time of the rental, should be categorized separately and regulated with fewer restrictions. To preserve the existing residential housing stock for permanent residents and prevent proliferation of short term rentals in high demand residential neighborhoods, whole unit short term rentals should not be permitted by right, except in owner-occupied two-family dwelling and should be limited in density in residential districts. The Department of Safety and Permits should create a new license type and would administer and enforce the short term rental regulations. The City and the platforms should explore opportunities to cooperate on legitimizing and regulating the short term rental industry. Under the current tax structure, there is minimal revenue generation potential as short term rentals with two (2) bedrooms or less pay no taxes and between three (3) and five (5) bedrooms only pay $0.50 per room per night. Those with six (6) or more bedrooms are subject to the 13% hotel sales tax, only 1.5% of which goes to the City. Revisions to State laws are required to change the current tax structure. This should be put in place prior to allowing short term rentals to fund their licensing and enforcement. Recommendations Land Use and Zoning The City Planning Commission recommends revising the Short Term Rental definition to clarify that it takes place in a residential dwelling, rented to one party for less than thirty (30) days, and common bathrooms are allowed. There should be no neighborhood prohibitions for short term rentals. The following four (4) types of short term rentals are proposed: Accessory Short Term Rental: A short term that is accessory to a residential use. The partial unit accessory short term rental is limited to two (2) bedrooms (up to 25% of the unit) and three (3) guests. The whole unit rental is limited to where the property owner lives in one half or a two-family residence and the other half is used as a short term rental with up to three (3) bedrooms and six (6) guests. The operator or owner shall be present at the time of the rental. This type shall be allowed as an accessory use in all districts where a residence is permitted. One (1) parking space is required for the partial unit rental, and one (1) parking space per two (2) guest rooms is required for the whole unit rental. A Type A Short Term Rental License is required. Short Term Rental Study iv Temporary Short Term Rental: A permanent resident can rent the entire dwelling unit, with a maximum of five (5) bedrooms and ten (10) guests, using up to four (4) temporary use permits for a total of thirty (30) days per year. This type shall be allowed as a temporary use in all districts where a residence is permitted. No additional parking beyond that required for a residential use is required. A Type T Short Term Rental License is required. Principal Residential Short Term Rental: A property owner can rent an entire dwelling unit for the entire year, with a maximum of five (5) bedrooms and ten (10) guests, subject to conditional use approval in all residential districts. The conditional use must be renewed after three (3) years and there shall be a cap of between two (2) and four (4) Principal Residential Short Term Rentals and bed and breakfasts per square (based on the location). If parking is required, then one (1) parking space per two (2) guest rooms shall be provided. A Type P Short Term Rental License is required. Commercial Short Term Rental: A property owner can rent an entire dwelling unit, with a maximum of eight (8) bedrooms and sixteen (16) guests, as a permitted use in most commercial and mixed-use districts with limited restrictions. If parking is required, then one (1) parking space per two (2) guest rooms shall be provided. To ensure consistency between these proposed short term rental regulations and the bed and breakfast regulations, the bed and breakfast regulations should be modified to allow for rentals of up to thirty (30) nights, reduce Principal Bed and Breakfasts to eight (8) maximum bedrooms, eliminate prohibitions in certain neighborhoods, allow Accessory Bed and Breakfasts as a Short Term Rental Study v permitted or conditional use in more residential districts, and change density limits to be consistent with the Principal Residential Short Term Rentals. Operator Requirements To ensure that short term rentals are properly licensed and operate in a responsible manner, the following regulations should be put into place: A Short Term Rental License, which is a privilege and not a right, should be required for all short term rentals. The operator shall provide liability insurance, have an in town manager for any period the operator is out of town, maintain a log of all short term rental activity, and pay all applicable taxes and fees.
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