May 15, 2019
By Jacob Huebert
In New
Orleans, home-sharing is popular. Many visitors enjoy staying in the city’s
historic residential neighborhoods, in homes rented through online services
such as Airbnb, instead of paying for an expensive French Quarter hotel room.
And many New Orleans residents benefit from the opportunity to make money
through short-term rentals of homes they own.
Unfortunately,
that could all soon change. Tomorrow, the New Orleans City Council will vote on
a proposal that would restrict home-sharing—severely—in a variety of ways. Let’s
consider some of the worst.
Perhaps
most extreme and troubling is a rule that would ban short-term rentals in
residential districts unless the owner lives on the premises. After officials
proposed this ban, the city’s Planning Commission received many letters (online here) from
ordinary people who have purchased and improved homes in New Orleans and depend
on the income short-term rentals provide. Here are a few examples of what they
said:
- “I rely on the income I earn renting my home to help make
ends meet, offset living expenses, because social security is my only form of
income.”
- “[I]t is difficult to make [living in New Orleans] work from
a cost of living perspective. Airbnb has allowed my wife and I to raise our
family in New Orleans. Please don’t take that away from us.”
- “We have a 3 bedroom whole home rental which was legal when
we purchased it. We rely on the income we earn renting to support our family.
We recently had a baby and having the [short-term rental] income has made
maternity leave a lot less stressful.”
While
the harm the ban would inflict on those people and countless others like them
is real and significant, the ban’s alleged benefits are speculative at best.
Some
argue a ban will help reduce housing costs in New Orleans, but in fact there’s
little evidence on whether and how much short-term rentals affect long-term
rents. A few studies on this issue have focused on a single city with unique
characteristics, such as New York or Boston, have found only modest effects,
and aren’t a good basis for making predictions about New Orleans. And the only nationwide
study on this issue found that a one percent increase in Airbnb
listings in a given zip code leads to an increase in long-term rents of just
0.018 to 0.024 percent—18 to 24 cents per
$1,000—and in an increase in house prices of just 0.026 to 0.037 percent.
Besides,
if New Orleans wants to make housing more affordable, there are other things it
could do that would have a much larger effect and would respect, rather than
violate, people’s property rights. For example, it could liberalize
land-use restrictions to make it easier to build more housing.
Also,
a ban isn’t necessary to prevent nuisances or parking problems because the city
already has laws that address those issues. And if the city believes that
short-term tenants might create problems that existing laws didn’t anticipate,
it can make and enforce new rules to specifically address those issues without
arbitrarily restricting anyone’s property rights.
The
New Orleans proposal would allow short-term rentals in units that aren’t owner-occupied
in commercial districts, but even there the number of units that could be used
for short-term rentals would be limited to the greater of one unit or 25
percent of all units in a building or on a lot. This too would needlessly
restrict property rights. Again, if the city is concerned about potential
nuisances, it can enforce rules targeting those nuisances against tenants or
owners who create or allow them. A preemptive ban or cap is overkill.
Another
onerous provision of the proposed rules would require property owners to
provide one off-street parking space for every two bedrooms rented. This is
unneeded and wasteful: If the city is concerned about too many cars parking on
a street, it can restrict parking on that street, and guests can park elsewhere
if necessary. There’s no need for the city to mandate that owners devote
significant portions of valuable land to a use that in many cases may be
inefficient and undesirable.
Finally,
we’ve noticed that supporters of the restrictions on short-term rentals in New
Orleans, as in many other cities, include the operators of hotels,
bed-and-breakfasts, and hostels, who say that short-term rentals through online
platforms have or will hurt their businesses. The City Council should disregard
their calls for economic protectionism; it should not “balance” their financial
interests against property owners’ fundamental rights. The law is supposed to
protect the equal rights of every citizen, not protect select businesses from
competition. Protection of a particular industry is not a legitimate
governmental purpose, and laws that do not serve any legitimate public purpose
are unconstitutional under the Due Process Clause of the Fourteenth Amendment.
New
Orleans’s city government has been deliberating for a long time about how to
regulate short-term rentals. It hasn’t arrived at an acceptable answer. So now
it should take some more time to determine how to address any legitimate
concerns those rentals may present—without arbitrarily and needlessly depriving
people of income and their rights.
Jacob Huebert is
a Senior Attorney at the Goldwater Institute.
