I think short-term rentals don’t belong in residential neighborhoods. That’s why all our buildings are located in the CBD with hotel permitting.
Andreas King-Geovanis, CEO and founder of Sextant Stays
If you’re looking for a surefire way to start an argument in New Orleans, try bringing up short-term rentals (STRs). If you’ve never heard of them, an STR is a furnished room or living space that’s available to rent for short periods of time (like for a Jazz Fest weekend or over Carnival).
For many residents, STRs can be a great source of extra income. By and large, most folks don’t have a problem with homeowners renting out the other side of their double shotgun or a spare room to tourists or visitors coming to town for a weekend. But when outside investors and companies scoop up properties in historic places like the French Quarter or historically Black neighborhoods like Treme, it can push out working families and residents, raise rents and property taxes, and alter the fabric of a neighborhood for the people who live there.
Until recently, Peter Bowen was the head of the city’s Office of Business and External Services and in charge of regulating short-term rentals. Before he was appointed to the role by Mayor LaToya Cantrell, Bowen was the general manager of the STR company Sonder New Orleans, raising concerns about potential conflicts of interest.
In order to mitigate the concerns of residents, the New Orleans City Council and the mayor’s office enacted ordinances that aim to rein in bad actors and stop harmful practices in the local STR industry. For example, city law requires operators of STRs in residential districts to live onsite, places a cap on rentals in nonresidential districts, and requires short-term rental platforms like Airbnb and HomeAway to secure permits from the city in order to operate.
The ordinances and permitting process have led to STR companies shifting their focus away from residential neighborhoods to commercial zones like the CBD. A case in point is Heirloom, which owns more than 300 properties across the country. The company recently announced it would be relocating its headquarters to New Orleans. Heirloom also plans to invest $30 million in local development products and pledged to hire 30% more New Orleans-based employees.
Interestingly, Heirloom is part of the reason why STR regulations have become much more actively enforced. Back in 2019, the company allowed the short-term-rental permits of many of its properties in the city to expire while still operating them as STRs, violating the city’s rules. Heirloom says they’ve since addressed the problems, and the company has shifted to focusing on developing properties in commercial zones rather than neighborhoods. But some housing rights advocates are hesitant to trust companies with a history of flouting the rules and say that even their branding as a “luxury accommodations provider” is suspicious.
“If the current short-term rental permitting structure is working as designed, luxury short-term rental companies should not have a great impact in New Orleans’ residential neighborhoods since commercial short-term rental owner permits are only allowed in areas zoned commercial or mixed-use,” said Russell Moran, advocacy manager at Jane Place Neighborhood Sustainability Initiative, a community land trust that opposes STRs in residential neighborhoods
Some STR companies agree that STRs can negatively impact local communities and have exclusively focused on developing properties outside the residential zones.
“I think short-term rentals don’t belong in residential neighborhoods,” said Andreas King-Geovanis, CEO and founder of Sextant Stays, a company with more than 500 spaces across South Florida and New Orleans. “That’s why all our buildings are located in the CBD with hotel permitting.”
Rather than buying homes and operating them as STRs, Sextant purchases vacant, historic buildings and refurbishes them as STR units about four times the size of a typical hotel room, complete with amenities like a washer, dryer and fully stocked kitchen.
“Since we control the entire property, we eliminate the friction between long-term tenants who have work the next day and the revelers coming back from Bourbon Street,” King-Geovanis said.
King-Geovanis also points to Sextant’s history of stepping up during times of crises as evidence of the company’s commitment to the city. In the aftermath of Hurricane Ida, Sextant housed displaced families, as well as more than 1,000 volunteers and workers from Salvation Army, Cox and Amazon. The company also paid its employees four times their normal wage as hazard pay and provided free housing to their families while the company worked to get back online.
The truth is that New Orleans needs hospitality: The taxes that hotels, bars, and restaurants pay are what help pave our roads and improve our schools. But the city has a checkered past when it comes to STRs, which have created legitimate cause for concern, especially as new developers and companies are investing millions of dollars to expand the industry here. But as long as the current permitting process is followed and enforced, there’s plenty of room for everyone, tourists and residents alike.
DID YOU KNOW? Following New Orleans’ lead, on July 8, 2021 St. Tammany Parish essentially banned short-term rentals from single-family residential areas of the parish.
Photo Courtesy Sextant Stays; AP Photo/Gerald Herbert
