New Orleans should legalize the proliferating business of short-term rentals in this tourist-friendly city, charge operators fees and regulate the practice, city planners say.

On Tuesday, the City Planning Commission staff released a study and recommendations on how New Orleans could regulate short-term rentals of homes and rooms, which have become very popular among travelers through websites like Airbnb and HomeAway.

Presently, the vast majority of short-term rentals are not allowed under the city’s laws. Nonetheless, the study said there are between 2,400 and 4,000 such rentals, with about 70 percent of those listings renting out an entire home for an average rate of $250 a night.

Short-term rentals have become a contentious issue in New Orleans, giving rise to dilemmas faced in many other cities. Some cities — like San Francisco and Portland, Oregon — have established regulations.

Those opposed to short-term rentals complain that they are driving permanent residents out of desirable neighborhoods as homeowners turn their properties into short-term rentals for tourists. Others charge that they are causing rent to spike and turning formerly quiet neighborhoods into tourist hot spots.

Meanwhile, those in favor say short-term rentals give homeowners a chance to make some extra income, provide tourists with new experiences and expand the city’s tourism economy.

The commission said the city should create a system to license the rentals. It recommends charging operators fees and making sure they pay taxes, have liability insurance and maintain a log of their activity. Fees could be as low as $50 a year for part-time operators and as high as $500 a year for those who run short-term rentals as a business.

The report suggested it would take three or four workers to enforce the regulations and conduct inspections at a cost of between $175,000 and $300,000 to the city.

Short-term rentals have mushroomed in the past few years with the proliferation of websites that list short-term rentals, and the study said regulations are needed.

“The current short term rental regulations are not working for short term renters and neighborhoods alike,” the study said.

Carol Gniady, executive director of French Quarter Citizens, a neighborhood group, said the recommendations did not go far enough. She worried that the enforcement would continue to be too lax if these recommendations were adopted, in part because they do not call for enough inspectors and would not force websites like Airbnb to provide the data the city would need about short-term operators.

“Without enforcement, this is just a waste of time,” Gniady said. “There is still no enforcement component that is realistic.”

The City Planning Commission called the study a first step in creating regulations. The City Council is expected to take the recommendations and look at drafting regulations.

Tags: airbnb
Photo Credit: A trolley rolls down Canal Street in New Orleans in July 2011. Marcin Wichary / Flickr