Henry Coaxum, who wasn't fined, says he didn't realize he was doing anything wrong
When New Orleans officials this year vowed to crack down on illegal short-term rentals, they probably didn't expect to snag one of Mayor Mitch Landrieu's top political allies in the act. But when a complaint arrived in May that Henry Coaxum -- Landrieu's hand-picked chairman of the New Orleans Business Alliance -- was operating a five-bedroom home in the Kenilworth subdivision as a guesthouse, officials demanded he shut it down.
View full sizeHenry Coaxum, left, joined Mayor Mitch Landrieu, center, and Secretary of Labor Hilda L. Solis, right, for a news conference July 11 on a program for sparking economic growth in urban areas. The property in eastern New Orleans, advertised on several vacation rental websites as "Malvern Villa," features an in-ground pool, an outdoor bar and a renovated kitchen. It sleeps 18 guests and rents for $600 a night, with a two-night minimum for weekday stays and a three-night minimum on weekends, according to the sites.
Under city law, owners of properties not on the approved roster of licensed and permitted short-term rentals can get slapped with a $500 fine and at least 30 days in jail if they "offer to rent ... any living accommodation" to anyone for less than 60 days in the French Quarter or 30 days elsewhere in New Orleans.
Coaxum last week said he started advertising the Malvern Drive property in late 2009 or early 2010, hoping to entice guests in town for major events such as Jazz Fest and the Bayou Classic football game. Ultimately, the house was leased for three or four weekend stints, he said.
The run ended in May, when Coaxum said his wife found an administrative subpoena from the city's Bureau of Revenue in the mailbox. The document accused the couple of running a "non-registered vacation resort in a residential area," thus skirting city hotel-motel taxes.
Coaxum, who owns and operates several McDonald's franchises, said he had no idea the business venture violated city law and immediately stopped renting it as a vacation home, though he continues to use it to house visiting business associates -- at his own expense -- and as a long-term rental, he said.
The property remains listed on a few websites because the couple can't reach the sites' operators to get it removed, he said.
"We ceased and desisted," Coaxum said. "Honestly, I didn't know it was illegal."
Landrieu's top aide in March said city officials weren't likely to crack down on ordinary residents who rent out their homes during tourist events, opting instead to focus on unregistered proprietors who regularly rent rooms or apartments under the guise of legitimate hotels.
In the case of Coaxum's property, a neighbor filed a complaint, a city spokesman said.
Coaxum, who also serves at Landrieu's behest on the board of the public hospital service district overseeing redevelopment of Methodist Hospital, said the city didn't fine him for violating the short-term rental code, though he and his wife "volunteered to do whatever" to correct the problem.
Mayoral spokesman Ryan Berni said the administration hasn't made it a practice to fine violators of short-term rental rules but rather to force scofflaws into compliance.
As for efforts to eliminate illegal hotels and motels, Berni said officials from the city's finance and revenue offices have met with a "number" of local hoteliers to determine the number of rooms they rent and to make sure they're paying "the right amount of taxes."
"There's been increased compliance," Berni said, though he could not provide details.
Brian Furness, who owns a licensed bed and breakfast in the French Quarter, said several local innkeepers in recent months have been visited by city officials following up on a 2010 inspector general's report that found local government likely is losing millions every year from legal hotels that under-report revenue or fail to pay sales taxes altogether.
"That's a very welcome development, but it's not the same as moving against illegal short-term rentals" that operate entirely in the shadows, said Furness, who also heads the community group French Quarter Citizens.
Furness said city officials have not contacted his organization, which has compiled a long list of unauthorized guesthouses. Those businesses, he said, continue to operate, cutting into the profits of licensed competitors and spoiling the largely residential atmosphere of the lower French Quarter.
"I have no reason to believe that anything has changed," he said.
Michelle Krupa can be reached at mkrupa@timespicayune.com or 504.826.3312.