#897: New Orleans Vs. Airbnb Airbnb has changed New Orleans. And now landlords and preservationists are fighting over the future of the city.
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#897: New Orleans Vs. Airbnb

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#897: New Orleans Vs. Airbnb

#897: New Orleans Vs. Airbnb

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ALEX GOLDMARK, HOST:

There is this one house on Ursulines Avenue in New Orleans, and it stands out from the rest of the block. It's in Treme, a historically black neighborhood that is filled with big, old houses. And a lot of them have seen better days.

TEGAN WENDLAND, HOST:

But this one, it's perfectly kept. It's bright pink with white trim, fresh paint. It's nicely landscaped. Charlene Griffith lives here.

GOLDMARK: And when we walk up, she and her husband have just gotten back from the garden store.

WENDLAND: What did you pick up today?

CHARLENE GRIFFITH: We got some pansies. We went and got some pansies because, you know, Mardi Gras is coming. So we went with the Mardi Gras colors, something that could bring some cheer for the festivities that's to come.

WENDLAND: Purple, yellow and green.

GRIFFITH: These here are going to be in the front, those - all of these, except for these two here.

GOLDMARK: Charlene is particular. She knows what she wants, and she makes it happen - even as a kid.

WENDLAND: When she was 7 years old, she'd set up a table in her front yard.

GRIFFITH: I had what New Orleans people call a huckabuck business, which is frozen cups with different varieties of flavors.

WENDLAND: They're, like, these homemade popsicles in plastic cups.

GOLDMARK: She ran a talent show in her family's garage, charged admission.

WENDLAND: She got older. It was time for a real job.

GRIFFITH: I don't have a degree. I didn't complete college.

WENDLAND: So like a lot of New Orleanians, she went into hospitality.

GOLDMARK: Got a job at a downtown hotel and worked her way up from answering phones to cleaning lady to manager.

WENDLAND: And it could be pretty nasty work, especially around Mardi Gras time.

GRIFFITH: Housekeepers deal with a lot. We had those famous hurricanes drinks, and we have the hand grenade drinks that - people tend to become projectile.

GOLDMARK: Mardi Gras hotel hazard - and so she figures, Mardi Gras hotel hazard pay for the housekeepers - only seems fair.

WENDLAND: So she goes to the manager with her pitch.

GRIFFITH: This is beyond just general cleaning. This is bile, you know, bodily fluids (laughter) that's coming up. And he was like, Charlene, we don't offer anything like that there. And I'm like, OK, well, you should.

WENDLAND: She turns and walks away in her tidy work uniform, shaking her head. And an idea strikes her.

GRIFFITH: That's when bed-and-breakfast came into mind.

WENDLAND: So she quits her job at the hotel, and she buys the gutted-out house right next door to her for $15,000. Then she spends the next couple of years working to fix the place up.

GOLDMARK: It needed a new drywall, new plumbing. She fixed the staircase, painting.

WENDLAND: And she did most of it with their own hands.

GOLDMARK: Then Katrina hits. The roof blows off. She has to fix the place up all over again. And opening a real bed-and-breakfast - it just still feels far away.

WENDLAND: Then one day on the radio...

GRIFFITH: I heard about the Airbnb. They had did a newscast, and Mardi Gras was coming up.

GOLDMARK: Airbnb - the website, the company - was coming to New Orleans.

WENDLAND: And it would be easy. She wouldn't need a front desk or to cook breakfast for everyone, just choose an enticing name and list it on the website.

GOLDMARK: She picked historic three-bedroom, two-story modern home - all the things.

GRIFFITH: We didn't have a lot of furniture. Basically, we had the box spring and a mattress, and the property was nice and clean.

WENDLAND: And she doubled her income, nearly overnight. She went from making about 2 grand a month at the hotel to making 4, on a good month.

GOLDMARK: Changing her life. This is the kind of thing that politicians and community groups and everybody wants to see happen - somebody from the city making good, reinvesting in the neighborhood, building wealth.

GRIFFITH: Being a African-American woman, purchasing a property here in Treme, which is the first African-American community here in the city - that's historical by itself. You know, I'm excited about it, and I want to keep it.

GOLDMARK: So why would her native city shut her business down?

(SOUNDBITE OF LEIGH MCALLISTER GRACIE'S "EDGE OF FEAR")

GOLDMARK: Hello, and welcome to PLANET MONEY. I'm Alex Goldmark.

WENDLAND: And I'm Tegan Wendland, reporter with WWNO in New Orleans.

GOLDMARK: Today on the show, how New Orleans set out to help residents like Charlene build wealth.

WENDLAND: And how it backfired.

GOLDMARK: Airbnb let Charlene go from hotel worker to hotel owner. But then everyone else got in on it, too.

WENDLAND: Even big companies.

GOLDMARK: So many homes turned into hotels that whole blocks, whole neighborhoods changed.

WENDLAND: They got fixed up, and they looked prettier. But they lost the thing that makes New Orleans, New Orleans - its residents.

GOLDMARK: Now Charlene is caught in the middle of the city's big dilemma - let in more money, and become less interesting...

WENDLAND: Or tell residents like Charlene to shut down their businesses, along with the big guys.

(SOUNDBITE OF LEIGH MCALLISTER GRACIE'S "EDGE OF FEAR")

GOLDMARK: To understand why the city would shut Charlene down, you just need to take a walk down the street to the other side of her neighborhood, where Mardi Gras traditions are in full swing.

WENDLAND: So imagine this. It's Mardi Gras morning. It's super early, like 5 a.m., and this tradition happens every year. Some say it's been going on for, like, 200 years. Off in the distance you hear clanging bells and rattles and hand drums, this walking parade waking up the whole neighborhood.

ZOHAR ISRAEL: You're going to hear the drums. And then you will see the skeletons walking in the street, yelling out, (singing) Bone Gang, North Side Bone Gang. We are the North Side Skull and Bone Gang. We come to remind you before you die...

GOLDMARK: This is Zohar Israel, and he is part of the Skull and Bone Gang.

WENDLAND: And on Mardi Gras morning, he and his friends dress up as spirits. They wear these bulbous skeleton masks, and they wear stilts and horns on their head. And they carry these big cow bones. It's really freaky, and it's super loud.

GOLDMARK: And the point is to scare people on Mardi Gras day, this day of excess - to scare them straight and be like, have just one drink, not 10. That's how to live right.

WENDLAND: And people know this tradition. They know what the spirits mean. You're supposed to play along and be afraid.

ISRAEL: The old Treme people, they knew. I mean, we have grown people that would take flight when they see the Bone Gang.

GOLDMARK: But in the last couple of years, the neighborhood has changed.

WENDLAND: There aren't as many black families as there used to be. Zohar finds more smiling, as he would say, Anglo-Saxons.

ISRAEL: So we coming down the street, and you might see them, you know, with their robes on, peeping out the door. They drinking coffee, smoking a cigarette and waving at you. You know, they don't really know.

WENDLAND: It's a little sad. He misses when people used to freak out and run away.

GOLDMARK: Now they just offer him a cup of coffee.

ISRAEL: They don't understand. They don't know anything about the Bone Gang.

WENDLAND: But those same Canadian or Swiss visitors, those visitors are Charlene's customers.

GOLDMARK: It used to be that a city would say, this neighborhood over here, it's for tourists. It's a commercial zone. And that one over there, it's residential, no hotels. But Airbnb has blurred the lines. Each new home that switches from home to hotel takes away a little bit from the old feel - Zohar would say, from the culture of the place.

WENDLAND: But Charlene says she's part of the culture, too, isn't she? And she's sharing that culture with her guests for them to become a part of the culture as well, like the time she had a Halloween party, New Orleans-style.

GOLDMARK: Which means she had to warn her guests it was going to be big.

GRIFFITH: And it would be a little loud. We, the owners, would be loud. So it would be great if they could come and take part in it. So they came, and they dressed up in their costume. My husband was dressed as Spider-Man. I dressed up as a witch (laughter) and had my little broom. And the guest came, and she dressed as a sea moss lady in, like, this really flowy dress. We had a great time. We had a great time.

GOLDMARK: Having tourists stay next door might change the neighborhood a little, but she sees it as a compromise worth making. Some of them have even become her friends.

WENDLAND: Her first guests still text her every Fat Tuesday.

GRIFFITH: We miss you guys. We know what you guys are doing. We're working on this Tuesday, when we know that you guys are partying out in New Orleans. So it just really delighted my heart.

GOLDMARK: So for, like, five or six years or so, Charlene is running this Airbnb. It's her business. She's hosting people from all over the world. And she's making some pretty significant income with no problem.

WENDLAND: So she's pretty surprised to be driving along one day, and she hears on the radio that the city is concerned about all these coffee-drinking tourists. And they're maybe going to start cracking down and making it harder for them to come.

GOLDMARK: This was about three years ago because up until then, anybody could rent out anything on Airbnb. It was technically illegal, but there was no enforcement at all. So it was a free-for-all, no limits on how many places you could rent out or where you could rent out a house on Airbnb.

And this radio spot comes at the same time that cities around the country are crafting strict regulations about Airbnb. New York and Seattle and Santa Monica, they're all doing something like this. The regulations are coming down.

GRIFFITH: So I'm like, OK, well, this shouldn't be a problem. You know, I think everything should have some regulations with it.

WENDLAND: So Charlene drives downtown to the meeting.

GOLDMARK: It's contentious and goes on for hours.

GRIFFITH: And that's when I realized, this is a big do here. This is - this is affecting a lot of people in different ways. There was people down speaking, the neighborhoods have changed. There's no children in the neighborhoods running up and down playing. There's not the old lady that normally would be sitting on a stoop doing a lookout for the community.

GOLDMARK: And after all that, when the council votes, they say, we're cool with Airbnbs. And the council passes some rules that are maybe not quite a rubber stamp, but they essentially say, Charlene, you can keep doing your thing. You can keep building your business. All you have to do now is register for a small fee and pay a tiny little tax.

WENDLAND: So Charlene, she keeps fixing up her place with nice furniture and lush curtains and keeps that paint job the freshest on the block.

GOLDMARK: These new regulations, they opened up a boom period for people to buy places to fix up and rent them out to tourists because having some light regulations is like an even bigger invitation to invest than if there were none at all - because it's the city saying, we are behind this. We made these rules, so now you have clarity. Do your thing.

WENDLAND: And whole blocks start changing.

GOLDMARK: It's easy to see when we walk from Charlene's block towards the French Quarter. At first, they're people on porches. There's one kid on a skateboard. His mother's coming home from school - and, like, a grandma hanging out with some little babies. And then, on the same avenue, just a few blocks away, the neighborhood starts to transform.

WENDLAND: More and more of the homes that we pass have these digital keypad locks instead of regular key locks so people can check themselves in.

GOLDMARK: We've walked, like - what? - five, 10 minutes towards the French Quarter...

WENDLAND: Yeah.

GOLDMARK: ...From Charlene's. And the woman at the coffee shop just pointed out - basically this whole block is Airbnb. And it feels kind of like we're in a hotel.

WENDLAND: It's weirdly quiet for a weekday - no cars, no people.

GOLDMARK: So we look up some of these addresses on a city website.

WENDLAND: These four homes are owned by one dude who owns upwards of, you know, 20 properties or more in the city. And he hires a bunch of people to, you know, clean them and, you know, check people in and check people out like this is his hotel.

GOLDMARK: And he's running a four-home hotel on the same street. But it's just - I mean, it's actually kind of a nice hotel, though not to the people who live next door.

WENDLAND: Richard Kendrick's lived here for half his life, and he's 83.

RICHARD KENDRICK: Everything in this block is B&B - everything.

WENDLAND: He says the whole neighborhood used to be filled with families, mostly black families with children.

KENDRICK: Predominantly - nothing but children around here. Now you don't see no children around here or nothing.

WENDLAND: And he says he only knows two of his neighbors now.

GOLDMARK: Lots of blocks have been bought up by big out-of-town investors. There's this one company from San Francisco that bought, like, 200 houses and then hired managers and cleaning staff, running it like a giant hotel and making it more expensive for locals to buy houses to live in.

WENDLAND: Kristin Giselson Palmer was running a nonprofit for low-income homeowners at the time of this boom. And she started getting calls about Airbnb.

KRISTIN GISELSON PALMER: What we started seeing during that period was that out-of-town investors would come in and buy property at a much-inflated cost - right? - because they're looking at purchasing a house different than the way a homeowner purchases a house, right?

WENDLAND: So she ran for city council, partly on a platform to crack down on Airbnbs.

GOLDMARK: Well, she's not mad about Charlene, but she wants to get rid of these big investors.

WENDLAND: And it worked. She wins. A new slate of city councilors takes over, and they're looking to rein in Airbnb.

GOLDMARK: So the city does it all over again - another big meeting. And Teagan, you were there, good reporter that you are.

(SOUNDBITE OF ARCHIVED RECORDING)

PALMER: First off, good morning. And thank everybody for being here.

WENDLAND: Yeah, there was a huge turnout. There were people pissed off on both sides, for and against, and a long line for these little yellow cards that you have to fill out in order to get up to the podium and speak. And the chambers were overflowing. It was tense, heated.

(SOUNDBITE OF ARCHIVED RECORDING)

UNINDENTIFIED PERSON #1: It's a bachelor party every weekend. And with drunken men, you can imagine what the sidewalk smells like by 2 in the morning.

UNINDENTIFIED PERSON #2: They talk about their businesses as though they're running charities - oh, my short-term rental enables me to run an international embassy for injured kittens - but they're not.

GOLDMARK: (Laughter) Even the complainers at a city meeting in New Orleans have personality.

WENDLAND: And then it's Charlene's turn to speak.

(SOUNDBITE OF ARCHIVED RECORDING)

GRIFFITH: My name is Charlene Griffith. I live at Ursulines Avenue. I've been living here 50 years. And I'm here today just to say people need to wake up. There is so much blight. Short-term rental has really revitalized a lot of communities.

WENDLAND: And when the city council takes all of this in and votes on the new rules, they totally flip. They go from about as loose and permissive as they can be to some of the strictest in the country. It's almost a ban.

GOLDMARK: And this happens last fall. The city puts the rules into place, but they also say, we're going to study this. We're going to see how everything is working out. And essentially, they're saying, we might change everything all over again this coming spring. But for now, Councilwoman Palmer has what she wants. The only short-term rentals that are allowed are by people who actually live on the property they're renting out - like, an extra bedroom.

PALMER: So basically, you will not have whole house short-term rentals. You can only have a short-term rental if you live in the property.

GOLDMARK: The city also says that certain areas - they are go zones. They're commercial, and they're fine for Airbnbs. But other places - residential neighborhoods like where Charlene lives - only very few situations are now allowed. So your spare bedroom - yeah. That's OK. Even if you have an extra apartment that is attached to your house where you live, that's also OK. But if you don't live in the house - like, if you are a big out-of-town investor with four homes on one block - that's not OK anymore. Or if you are a local hometown businesswoman and you bought and fixed up the house next door, that is also not OK to rent out to tourists anymore.

WENDLAND: And that shuts a lot of people down. Airbnb - the company says they've never seen this before.

GOLDMARK: Stephen Sheppard says, also not such a great idea. He's an economist at Williams College in Williamstown, Mass. And he's been studying Airbnb for the past three years.

STEPHEN SHEPPARD: The problem about mucking around with these sorts of regulations is you could - if you don't balance it and get the balance right, you could end up, you know, trying to keep housing affordable by choking off investment.

GOLDMARK: One thing that economists do know about short-term rentals is that they increase overall property values. So Sheppard - he did a study using data from New York, and he found that when you double the number of Airbnbs, it drives up property values by 6 to 13 percent.

WENDLAND: Which makes it more worthwhile to renovate, and it brings in more money to the community.

GOLDMARK: Which seems like it should be a good thing for a place like New Orleans, where mayors and government officials have just struggled so much since Hurricane Katrina to find any way to get people to fix up neighborhoods and fix the blighted housing. So Airbnb seems to be doing that. How is it not a solution?

WENDLAND: Sheppard says there are, of course, winners and losers. And you have to weigh them against each other, which he did.

GOLDMARK: You're saying that you can divide a city into two groups - people who use Airbnb, either to rent out their house or to stay there as tourists, and everybody else who doesn't use Airbnb. And you're saying, the users, they win, and the people who don't use Airbnb, they lose.

SHEPPARD: I think that's a fair characterization of my viewpoint, yes. So I think it makes people who are seeking housing in the city but who are not making their homes available on the short-term rental market, I think it makes them worse off.

GOLDMARK: Airbnb is bringing more money into these neighborhoods, but the other side of rising property values is rising rents. And so it's pushing people out, and their weirdness with them.

WENDLAND: So the city is stepping in. But these new regulations, they're not just kicking out the big San Francisco investors and getting rid of those blocks that have been turned into hotels. They're shutting people like Charlene down, too.

GOLDMARK: What the city is trying to do is balance this trade-off of prosperity with preserving culture. And the city is making a bargain. It's just decided on the compromise, we want to stay more of the same, more weird, even if it means we stay a little bit poorer.

WENDLAND: And Charlene's definitely a little poorer lately.

GRIFFITH: I'm trying to - how could you say - still claw my way, claw my way, hold on, hold on, hold on, and try to make some funding because I don't want to dismantle this whole house.

WENDLAND: When Charlene walks into her empty Airbnb now, it's pristine but like a museum - empty. The staircase she revarnished - gathering dust. The beds are perfectly made up for guests with matching sheets, only now, they're under plastic wrap.

GRIFFITH: Normally, it wouldn't have this plastic on it. It would, you know, just be welcoming for guests to come in and take their leisure here. But that's what you do when a place is sitting in limbo.

GOLDMARK: She's hoping that when the city council finishes up that study in the spring, that they'll make an exception for people like her, maybe grandmother her in.

GRIFFITH: I'm still mind-boggled by it because it's - they've flip-flopped me so much, flip-flop, flip-flop, back-and-forth. Yes, no, yes, no, yes and no - but no, but it could be a yes.

WENDLAND: For now, the money's not coming in. But she's got a new gig.

GRIFFITH: I spent half of my day out Ubering because that's what I'm doing to try to hold this property out until the city may make a decision on what they - what they going to do.

GOLDMARK: She says she likes getting to see all the houses around town, especially the ones that have been fixed up and are all decorated, maybe by other Airbnb owners - even if the houses are empty now, with no tourists or locals in them.

(SOUNDBITE OF MUSIC)

WENDLAND: Today's episode was produced by Alexi Horowitz-Ghazi and Megan Tan. PLANET MONEY's editor is Brian Urstadt.

GOLDMARK: We are on Twitter and Instagram, @planetmoney. That's where you can see a picture of what Charlene and her house looks like. And if you have something happening in your city that you think we should do a story about, send us an email. We are planetmoney@npr.org. I'm Alex Goldmark.

WENDLAND: And I'm Tegan Wendland from NPR member station WWNO in New Orleans. Thanks for listening.

(SOUNDBITE OF MUSIC)

ISRAEL: See, we also have to defend ourselves 'cause, you know, you never know when someone get drunk and, you know, want to run up on you. So we have to have some things that can warn them off from us.

WENDLAND: You're - I mean, you're holding a spear with - it looks like a deer antler on the end (laughter).

ISRAEL: Right, right, right. It's more like a defense mechanism. And it's also for balancing, too. The stilt walker's a little tired, he can kind of lean on the stick, you know, to keep him up, OK?

WENDLAND: And then poke the drunks with the antler on the end if you need to.

ISRAEL: Well, it never had to happen, but if need to. He also has a sword.

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