Major affordable housing project becomes short-term rentals as council mulls new STR regulations

The Brown’s Dairy project promised more than 50 affordable housing units but will instead deliver dozens of short-term rentals. The news comes at a time when council is discussing new ways to regulate the proliferation of short-term rentals in New Orleans.
Published: Jan. 19, 2023 at 11:05 PM CST
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NEW ORLEANS (WVUE) - A Central City development site once promised more than 50 affordable housing units but will instead become dozens of short-term rental units, just as the New Orleans City Council pushes up against a March 31 deadline to meet a federal ruling that forces councilmembers to approve the first draft of an ordinance laying out new ground rules for STR regulations.

The Brown’s Dairy site, nestled between Oretha Castle Haley Blvd. and St. Charles Ave. in Central City was once the home of jobs and industry. After the facility closed, pieces of it were sold off.

A large portion of the site was sold to 1400 Baronne LLC, which promised a groundbreaking concept for affordable housing that would see potential homeowners rent out the other half of the home they purchased. More than 50 homes were to be built, with much fanfare from the city.

But the plans fell through, after the developer said the city failed to deliver on subsidies for potential homeowners.

“We had the land, plans and financing in place. The developer did not request or need incentives. But without subsidy for the homebuyers, the project could not move forward,” the development group said in a prepared statement. “Our vision was for affordable homeownership; we had no interest in developing a luxury product, so we chose to place the vacant land for sale.”

It turns out the group(s) who bought the land had plans other than affordable, or even market rate housing: they would build short-term, vacation rental units.

“We have, once again as a community, allowed the needs of tourists to trump the needs of the people of this city,” said Andreanecia Morris, Executive Director of HousingNOLA. “It’s another missed opportunity.”

Morris said the proliferation of STRs in New Orleans, now at more than 2,300, is only exacerbating an already-existing affordable housing crisis.

“It continues to give people the idea that there’s an easier way to make money, as opposed to providing housing for the average New Orleanians, for your friends and your neighbors,” Morris said.

On Thursday, New Orleans City Council passed two ordinances aimed at curbing the increase in short-term rentals and expanding the city’s affordable housing stock, with both ordinances directing the City Planning Commission (CPC) to make changes to the city’s zoning codes.

The first ordinance dealt with applying the same standards for affordable homeownership to all housing projects going forward. Morris said those affordable housing standards were being applied to affordable housing projects building rental communities but not projects resulting in subdivisions, which allowed Brown’s Dairy to slip through the cracks.

“What CPC will do in the next meeting, they’ll put together a study and they’ll make recommendations to city council about how we can enhance affordable housing here in New Orleans,” said Councilwoman Lesli Harris, whose district encompasses the Brown’s Dairy site. “I think this council is in lock step in understanding that New Orleans needs additional affordable housing.”

The second ordinance directed the CPC to change the zoning in and around the former Brown’s Dairy site specifically, from high-intensity mixed-use to multi-family residential, prohibiting any new STRs going forward. Any existing commercial STRs in place at the time of the change will become non-conforming uses, and they stand to lose their permit after six months out of operation.

“The conditions of New Orleanians are such that folks can’t afford to live here anymore, or they’re pushed to the outskirts of New Orleans,” Harris said. “People need to be close to home, close to jobs, close to family.”

CPC will meet next Tuesday, January 24 to vote on the recommendations, and send them back to council for approval.

A draft of the proposed changes includes limiting residential STRs to one per block, and requiring either a homeowner, operator or tenant live on-site at all residential STRs.

Currently, a moratorium is on place for new residential STR permits following a ruling by the 5th Circuit Court of Appeals that struck down rules on STRs put in place by the council.

“It’s really not hard, but unfortunately our leaders are missing this. They continue to miss the need to prioritize housing,” Morris said.

The conversation comes at a pivotal time when the council is considering ways to address New Orleans’ ongoing crime epidemic.

Morris said the conversation cannot just be about jails and police.

“We have got to interrupt the cycle of poverty that is setting the stage for these tragedies,” she said. “We’ve got to acknowledge that our young people are not realizing or not seeing opportunities, and that’s not because of them, that’s because the opportunities don’t exist.”

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