Wednesday, March 20, 2013

Short-Term Thinking

Adding to New Orleans’ problems involving blighted property, sky-high rents because without enough properties in commerce, and multiple levels of gentrification concerns comes one more real estate issue to add onto the pile. Short-term rental properties.

This really came to a head during the run up to the Super Bowl, when the issue erupted all over NOLA’s internets and talk radios. When I found out that city ordinances prevented people from renting properties for less than 30 days citywide, and 60 days in the French Quarter, I reacted with something like jaw dropping incredulity.

I’m mentally filing this away with the equally lunatic city ordinances that prevent brass bands from playing music on French Quarter streets, shut down music venues because byzantine city zoning doesn’t appear to allow music in New Orleans, and heavily restrict the operation of food trucks in a town known for culinary culture.

And, yes, I know there are probably a whole lot of folks out there on the NOLA interwebs who have weighed in unfavorably on short term rentals. (I've actually seen some of them come out against short term rentals, and then turn around and lament the closing of a popular Uptown restaurant that's found itself on the wrong end of the neighborhood and city ordinances...)

To them, short term rentals are just another insult to the injury of people “not from here” showing up in town and changing “everything good about this place.” As if there are dozens of skinny jeaned hipsters from Williamsburg flocking to NOLA to flip properties so they can be used as short term rentals. While there are some very real critiques to be made about ordinances governing use of property consistent with neighborhood cohesion, this is starting to sound like complaining for complaining’s sake.

Like those folks braying about Koch-brothers food truck conspiracies on New Orleans’ streets, it is troubling to see a local-culture grassroots defense of corporate rent seeking. But that’s the way the political game is played in this town, and the major players wouldn’t be where they are if they didn’t know how to divide and conquer. Here we have a city looking to solicit major developments from some very big hotel and condo developers (they’re even putting in new streetcar lines to do so), and at the same time, the local-first types are complaining about how the short-term rental ordinance should be strongly enforced so all these pesky visitors will have to spend their money with those big hotel and condo developers. Isn’t it nice the pro-development local media corporation set up an entire thread for folks to complain about this one thing?

Oh, that’s just the surface – that’s just when you only look at it in terms of “short-term rentals vs. staying in a hotel.” Heaven forfend anyone scratch the surface a little and find out how short-term rentals, blight, real estate speculation and corruption, and the whole issue of neighborhood gentrification intersect. Unlike the ebil armies of food truck hipsters unleashed on the town by Obama’s birth certificate or the Koch brothers’ plot for world domination or whatever, there IS a single tree from which grows much of this city’s poisoned real estate fruit: property tax assessments.

But that’s a more complex issue. A lot of commentators and counterculture magazine authors would rather spend their time complaining about things that don’t require actual thought or have actual political solutions. What better way to justify endless and useless complaining than by having an intractable, irredeemable problem to complain about? And if you get to use hot-button words like “hipster,” “carpetbagger,” and “gentrification” in your op-ed piece, that’s just some bonus-level street credit in your authenticity account.

Say it again: "property tax assessments." Even the phrase sounds unsexy to all but the most droll political wonks. And who wants to read about unsexy?

Instead, let's focus on this week's local political distraction "illegal short-term rentals." This is a ridiculous and nearly unenforceable ordinance in the first case, especially for a town that comes close to celebrating its own inability to enforce ladder ordinances at Mardi Gras parades because allowing people to act like horse's asses is apparently part of the "culture." I guess we could get code enforcement on the job, but a quick walk from my home to the Banks Street Bar is a pretty good indication that code enforcement isn't capable of identifying derelict automobiles, fallin' ass down fences, and houses with so much trash on the porch it looks like a varmint zoo. And heaven help us if we make the decision to have city enforcement folks troll Craigslist, Airbnb, and Vacation Rental By Owner with the intent to start sending out cease and desist letters to violators. You're more likely to find those folks getting their cases thrown out by commenting on What does all that mean? There's simply no disincentive here that discourages short-term rentals from operating.

Second of all, why would this city WANT to discourage short-term rentals from operating? This is what I don't get behind all the whining. This is a festival destination and event city. Property owners in New Orleans can make some good money through short-term rentals. And before someone complains that these are out-of-town folks making the money, I dare ask who owns the big local hotels? I have to think that there's a higher percentage of local individuals arranging short-term rentals than local individuals who own big hotels on Poydras.

Other whining might focus on the type of short-term renter. Because "folks who aren't from around here" apparently make a lot of noise when they're in town for Mardi Gras and Jazzfest, and they might leave some litter around their short-term rental. Well, fetch the smelling salts, Scarlet, I know cats that ain't never lived outsize the 504 area code that get loud around the holidays. And, correct me if I'm wrong, but some place on St. Roch just got shut down because a neighbor complained about noise and litter. That place seemed to be a big favorite of the locals, if the opinions on my Facebook feed are any indication.

Let me keep on this track for one more thing, this city markets itself to rowdy out of towners. That's the bullshit mythology of New Orleans the city went all-in on some time ago. So, yeah, there may be some rowdy tourists that show up in the neighborhood once in a while. Here's the thing about short-term rentals - especially those in the neighborhoods - they're more convenient for FAMILIES on vacation. When you've got kids in tow, you're more likely to prefer a quiet neighborhood cottage to a big downtown hotel or a bed and breakfast. A short-term rental probably has a working kitchen while at the big hotel, you've got to drag the kids from one restaurant to another. The concentration of big hotels also has the added affect of keeping people downtown. While that might be the preferred model for the bachelorette party crowd, FAMILIES on vacation are more likely to patronize neighborhood establishments elsewhere and appreciate the neighborhood culture that is this city's greatest selling point. Going outside the family-on-vacation perspective, what about business people? Maybe giving travelers an option beyond "French Quarter Hotel + Bourbon Street" might change a few paradigms worth changing. Staying flexible on the type of accommodations offered in a town diversifies the type of people you have coming through town. Might it be time for New Orleans to begin developing as a destination for something other than poker weekends and bachelorette parties?

Third, some of the complaints about short term rentals I've been hearing have to do with upkeep of the property. You know what's good about a property owner looking to provide short-term rentals? They tend to keep the property up to encourage additional short-term renters. Unlike landlords who seem to be able to get away with whatever they want, short-term operators have two factors requiring constant maintenance and upkeep: they have to have a certain number of short-term renters to make it worthwhile from a financial standpoint, and they have robust competition in the form of hotels and bed & breakfasts. They have significant incentive to keep the place nice. And if the renters themselves are behaving badly, neighbors can do the same thing they do when regular renters behave badly: call the authorities and hope they do something about it.

Finally, there's the idea that given the chance, the whole city will become short-term rentals for out of town conventioneers. While this is something of a valid concern, the money angle doesn't support it. As previously mentioned, short-term operators have to have a certain number of short-term renters to make it worthwhile from a financial standpoint. With the Sugar Bowl, Mardi Gras, Jazzfest, etc., they have the opportunity to do so, but those are also limited opportunities. It is also a lot of work to keep up a short-term property, and many costs (cleaning, furnishing, maintenance) that eat into the margins. There is also significant competition for the event attendee's dollar, especially during the "off season" when hotels are quite inexpensive. For this reason, this city can only support a finite number of short-term rentals.

And if they ever become too numerous and start posing a real problem for the city, there's always that unsexy property tax assessment issue that can be visited (that we should probably get to anyway).

Until then, I wonder what jaw droppingly incredulous local political issue we'll deal with next week, when everyone forgets about this one and logs their outrage on a different thread.