Today, new disruptions such as the pandemic, growing gentrification, and the rise of tech- enabled short-term rentals for tourists are ratcheting up displacement pressures. Available housing inventory is down to its lowest level in a decade, public housing is now rented out at market rates, and affordable rentals are disappearing.
“As New Orleans grows and prospers, rents go up, and the folks who need to live in the city, or the folks who work in the city can’t to afford to live here,” said Veronica Reed, executive director of Jane Place Neighborhood Sustainability Initiative. Jane Place is a small community land trust and housing justice organization in New Orleans’ Black-majority Mid-City neighborhood, where 55% of the residents are Black, and 33% live below the poverty line.
Displacement risks for renters in have been exacerbated by the recent proliferation of short- term rentals (STRs) catering to tourists via online platforms like Airbnb and HomeAway. Over 6,000 homes and counting in New Orleans are STRs. As neighborhoods becomes more transient, their community character and social capital erode. And as more homes are reserved for tourists instead of residents, turnover rates rise, driving up rents and home prices. That forces more Black residents out, with STR owners profiting from their displacement. “Our neighborhoods surrounding downtown were basically becoming ghost towns, with blocks and blocks of housing only occupied Thursday through Monday morning,” Reed says.
“Those who can’t pay the higher rents in the city end up living in surrounding parishes. But they have the added expense of transportation. There is limited regional public transit, so that means they have the cost of a car and insurance. And then they have the cost of parking downtown. So, they’re going to pay one way or the other.”
Jane Place issued a report documenting widespread abuses and illegalities in the STR sector, exposing the pernicious effects of STR proliferation on Black renters and neighborhoods.[iv] Together with Loyola University’s New Orleans College of Law, it published research drawing a direct connection between STRs and eviction rates.[v] That laid the groundwork for changing the laws governing STRs.
Under a 2016 City ordinance, in theory some of the licensing and other fees STR owners paid were supposed to go toward affordable housing. But in practice, those revenues only added up to the cost of establishing a single unit of affordable housing. That effectively ignored STRs’ negative impact on renters and neighborhoods like Mid-City. But in 2019, the City passed two new ordinances advocates hope will discourage STR proliferation. The first requires STRs in residential neighborhoods to have a homestead exemption, making whole home rentals owned by investors and speculators illegal. The second new ordinance established a new structure for permits and fees, operating ordinances, and enforcement penalties. Jane Place is monitoring the impacts of the new laws on STR licenses now and plans to issue a report on it in early 2022.
“The new regulations went into effect right before the pandemic hit, in December 2019,” Reed explained, “then the bottom fell out of the short-term rental market. A lot of STR owners quickly moved back into the long-term market. Now we have observed instances where landlords are trying to force these tenants out to return the units to the short-term rental market. That is a factor in a number of eviction filings we’re seeing right now through our Early Eviction Warning System and Eviction Court Monitoring.”
New Orleans is one of the most difficult markets for secure housing. It’s a Black-majority city so rich in social and cultural capital that it attracts visitors from around the world, yet its Black- majority neighborhoods are devalued. In the wake of Katrina, $13 billion in “Road Home” federal aid was allocated according to appraised value of housing before the storm, and since Black- majority neighborhoods are chronically under- appraised, most of that money bypassed Black homeowners. As a result, Black neighborhoods were slow to rebuild, and Black residents either didn’t return or were forced out as gentrification and tourism resurged.
Those who remained were largely renters, including 79% of Mid-City residents today. After Katrina, federal rental assistance was offered, but it was temporary, lasting on average 15 months. Such aid is intended to “facilitate disaster-affected households’ transition back to permanent, market-rate housing.”[vi]
But for many Black residents, transitioning to permanent market-rate housing is precisely what’s forcing them out of New Orleans. What kind of intervention could enable them to stay, offer them secure rental housing, and create and preserve sustainable, economically just neighborhoods and communities?
Answering that question is Jane Place’s mission. It started as a community collective which purchased three-story, 11,000 square foot warehouse in the mixed New Orleans neighborhood of Mid-City in 2005. The intention was to convert it to a limited-equity housing cooperative, with some collective space for community-based projects. Then Katrina hit two months later, and the group shifted its focus to recovery and rebuilding. It officially incorporated as the Jane Place Neighborhood Sustainability Initiative in 2008.
Today it functions as a traditional neighborhood CLT, developing secure, affordable housing in Mid-City, with the community trust owning and leasing the land. But instead of leasing it to homebuyers, it uses the CLT structure to create affordable rentals. For example, its three-bedroom, one-bathroom units rent for just over 60% of market prices ($925 as opposed to $1500+ a month).
Jane Place’s units are subsidized through the HUD HOME Program, and are exempt from property taxes. But If such subsidies were the only mechanism they used to keep rents low, neither affordability not housing security would last long. Appreciation of the land and the buildings would eventually mount so high that market pressure would become irresistible, and either force rents up, or force owners to sell the building at a market price. But since their CLT structure shields the rental units from those pressures. The trust retains ownership of the land, preventing the sale of the property due to outside market pressures. So the units appreciate only slowly, rents stay permanently affordable and secure.
Jane Place has been innovative in finding a way to extend to renters many of the same advantages traditional CLTs offer homebuyers: security, affordability, and a chance to build modest equity.
Jane Place’s board of directors, which includes two of its tenant members, offers residents rental assistance funded out of the trust, and a savings incentive program where J.P. Morgan Chase provides matching funds to double tenant savings, up to $50 a month. It also gives tenants the opportunity to do in-kind work in exchange for payment or a break on the rent. “It’s like sweat equity attached to rent,” says Reed. “You could clean the laundry room, sweep the halls, cut the grass or attend a board of directors or committee meeting and at the end of the year, that will translate into a dollar amount. It can either be taken off December rent, or we can write you a check.”
As a result, Jane Place has very low tenant turnover, even during the pandemic — proof that even under extremely adverse conditions, it’s possible to create affordable, secure rental housing that works for tenants.
Jane Place has created 12 affordable rental units so far, with another 14-16 planned for 2022-2023. That is a small number compared to the estimated 33,000 affordable rental units New Orleans needs in the next ten years. But Jane Place’s impact is broader than its own small scale. It is demonstrating structural innovations that could potentially change rental markets and offer secure housing by creating permanently affordable units, protecting renters from displacement, and giving them a measure of financial security.
“For most CLTs, homeownership is a much easier way to go — you build it, you turn it over, you maintain the relationship but it’s on to the next house,” Reed says. “Stewardship and property management isn’t easy but I do love the relationship we have with our tenant members.”
At the same time, Jane Place is also advocating for stronger tenants’ rights policies, which could be another form of far-reaching change, including establishing the right to counsel, which could shift the pattern of rising evictions in New Orleans. Closely monitoring eviction court, Jane Place discovered two salient facts: 1). the majority of those who end up there are Black women; and 2). the controlling factor for being able to stave off eviction was having a lawyer.
“The best outcomes for tenants occur when they are represented by counsel,” Reed says. “Southeast Louisiana Legal Services can only represent a narrow group of tenants. Everyone else is on their own unless they can afford a lawyer. Most folks cannot. We estimate it would cost about $1.5-2 million a year to have everyone represented by counsel in eviction court. That’s a remarkably small price to pay.”
Jane Place and other advocates demanded this funding be allocated.[vii] The New Orleans City Council heard them and approved $2 million in the City’s 2022 budget for tenant legal representation.[viii] That effectively guarantees the right to council in eviction court.
Reed and housing advocates across the state would like a “renters’ bill of rights” enacted as state law. “There are virtually no tenants’ rights in the state of Louisiana,” she said. “The basic landlord-tenant laws were codified in the 1870s, so you can imagine there is nothing much there. Every time there’s an attempt to do something about it at the local level, maybe in a small city, it’s blocked at the State Legislature level. So in coordination with a few partners across Louisiana, we’re working on a renters’ bill of rights the state could adopt. We are also looking at a rental registry in New Orleans.”
Such policy shifts, coupled with innovations Jane Place has modeled for its own tenants, could be transformative for rental markets like New Orleans. Jane Place is a small organization and replicating and scaling its approach would require much more capital than it has access to now. But it demonstrates a powerful vision of how New Orleans could develop if we shifted investment priorities.
Jane Place responded to the same disruption (Katrina) in the same time frame as the Road Home program, but with very different priorities and outcomes. The Road Home put $13 billion behind the goal of transitioning to permanent, market-rate housing. The effects of that choice included fueling speculative development, tearing down affordable housing, aggravating inequities, displacing an enormous number Black residents, and deracinating Black communities. What if that money were invested instead in Jane Place’s goals of creating secure, affordable rentals and fighting displacement? What if it were coupled with policies aimed at curbing STRs and protecting tenants’ rights? New Orleans would be an utterly different city.
There’s nothing inevitable or pre-ordained about how New Orleans’ redevelopment played out, or how it will develop in the future. It’s a choice, a question of what those with the resources decide to invest in, and what the housing market is designed to incentivize. Jane Place demonstrates how different choices are possible, and how market structures could be successfully (re)designed to create secure, affordable homes that value and preserve Black communities.