Revenue uncollected

Citing quality of life issues and millions of lost revenue dollars each year, the New Orleans City Council’s Housing and Human Needs Committee on Monday said there needs to be stricter enforcement of the laws that prohibit illegal short-term rentals.

City law forbids renting a property in the French Quarter for fewer than 60 days, while making it illegal to rent a property for fewer than 30 days elsewhere in Orleans Parish.

Speaking before the council committee, Brian Furness, a French Quarter bed-and-breakfast operator and member of the Short-Term Rental Committee, said legitimate hotels and bed and breakfast operators lose about $13 million a year to the bandit short-term rentals. The city, Furness added, loses about $1.4 million a year in taxes and about $185,000 each year in permit fees it would otherwise collect.

Beyond the lost revenues, Furness said illegal short-term rentals carry other safety and health concerns since they are not inspected like licensed operators.

Jerry Zachary, a member of Vieux Carre Property Owners, Residents and Associates who works with Furness on the Short-Term Rental Committee, said the proliferation of illegal short-term rentals is thanks in part to the Internet and the ease with which people can post and find ads.

But without proper enforcement from City Hall, he said, the rentals are “hollowing out the essence of what makes a neighborhood a neighborhood.”

“In the French Quarter, it is increasingly difficult to know your neighbors since they change each weekend,” Zachary said.

City Council President Stacy Head, who serves as co-chairwoman of the committee, said the administration has been too lax in its enforcement of illegal short-term rentals.

Jared Munster, director of the city’s department of safety and permits, said the city only responds to complaints it receives about illegal rentals.

Asked by Head why his office doesn’t seek out the rogue properties, Munster had one answer: “It simply comes down to resources.”

When the city does find a property in violation of the law, Munster said, it sends a note to the owner informing him of the law and asking him to stop.

Others countered that the city has not sent out any letters in the past year.

Bonnie Rabe, who owns the Grand Victorian Bed & Breakfast in the 2700 block of St. Charles Avenue, said the lack of enforcement from the city makes people fearless of any possible sanctions.

“People are doing it because they know they can get away with it,” Rabe said. “They just proceed with business as usual.”

The fact that any fine is capped at $500 is another would-be deterrent that has little effect, said Meg Lousteau, executive director of VCPORA. She said her organization is working with state Sen. J.P. Morrell to rewrite the legislation to increase state-mandated fines.

While the majority of those who spoke on Monday advocated tougher enforcement of existing laws, attorney Jim Uschalt said the city should embrace short-term rentals as a way to be able to collect tax dollars it otherwise misses out on. Uschalt also questioned if the efforts to rein in illegal rentals might be a way to “protect a monopoly.”

While the council and some residents said there is a need for more education among property owners and renters about the laws that prevent illegal short-term rentals, the city must make sure it is aggressively enforcing those laws, Councilwoman LaToya Cantrell said.

She also suggested actions like jail time for scofflaws might be a way to ensure the city code is followed.

“We have to send a strong message here,” she said.