Weak enforcement of short-term rental rules could cost NOLA millions

Published: Oct. 5, 2021 at 3:43 PM CDT|Updated: Oct. 5, 2021 at 4:42 PM CDT
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NEW ORLEANS (WVUE) - The interim inspector general for the City of New Orleans said the city could be losing millions of dollars in tax money because of homestead exemption fraud. The problem is especially severe among people who operate short-term rentals.

For four years now, New Orleans officials have grappled with some owners of short-term rentals trying illegally to claim homestead exemptions. Now a new problem in collecting those taxes rears its head.

“We looked at 100 properties and found seven properties where the homeowner was deceased,” said New Orleans Interim Inspector General Ed Michel.

That means new owners, or survivors of deceased owners, are claiming tens of thousands of dollars in illegal homestead exemptions, a situation that councilmembers say is common for those operating short-term rentals.

“They are getting fake homestead exemption saying they’re living on property and getting approved for short-term rentals,” said Councilmember Kristin Palmer.

Many say weak enforcement of short-term rental rules and illegal tax breaks are a problem.

“He initially got a homestead exemption under his mothers name and he never lived there,” said Pauger Street resident Margaret Walker.

City officials say problems with short-term rentals and rowdy guests are common in the 2100 block of N. Rampart Street.

“They are constantly impinging on the quality of life,” said Palmer.

A council committee approved a number of measures to try and beef up enforcement. They include new fees of $5 a night for resident-occupied short-term rentals and $12 a night for commercial short-term rentals, to be dedicated to a neighborhood housing improvement fund.

Councilmembers say a side benefit of a beefed-up housing enforcement fund could be more seed money for developers to build more affordable housing in the city, something they said is badly needed.

“Our residents should be able to afford their homes and the neighborhoods they have lived in their whole lives,” said Councilmember Jared Brossett.

In the past two years, the city has revoked short-term rental licenses for 38 people for illegally claiming homestead exemptions and they hope to hire more inspectors to capture violators.

“Even if it’s 2% that could be about $2 million a year,” said Palmer.

The new measures now head to the full council.

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