Short-term rental ordinances advance

Some changes may be coming before a council vote

Following an Oct. 10 public hearing, a suite of proposed regulations on short-term rentals were approved by the City Council’s Community Development and Regulatory Committee.

The full council could vote as soon as Oct. 20 two ordinances that would for the first time have the city license and regulate the estimated 1,600 short-term rentals already operating in Minneapolis. The ordinances were introduced in May by Ward 3 City Council Member Jacob Frey, and the current timeline would have them in effect by Dec. 1 — more than two months ahead of a surge of Super Bowl bookings.

The influx of tourists expected for the big game prompted Minneapolis to contend with this aspect of the so-called sharing economy. Frey, who was also chief author of the rules governing ride-sharing services like Lyft and Uber, described short-term rentals as a “very innovative” business that the city needs to “embrace.”

The St. Paul City Council is scheduled to vote later today on rules requiring both hosts and bookers of short-term rentals to be licensed. The St. Paul ordinance also would restrict multi-unit building owners from renting more than half their units to vacationers or short-term tenants and require all short-term rentals to be inspected.

Other cities, including San Francisco and Portland, require owners to reside at least a portion of the year in the house or unit they’re marketing as a short-term rental. The proposed Minneapolis rules would allow short-term rentals in non-owner-occupied homes, but those hosts would be required to apply for a rental license.

Under existing rules, license fees and inspection schedules for rental properties vary depending on its rental history and the condition and upkeep of the property. That annual fee is $70 for well-maintained condominiums and buildings with just 1–3 units, but can be several hundred dollars a year for larger buildings.

Hosts who normally occupy their short-term rentals but leave when guests are present would pay a $46 annual registration fee per unit. They would also have to register those units with the city.

Hosts who stay on the property while offering part of their unit for short-term stays — renting just a room in their house to vacationers, for example — would not have to register with the city or pay the annual fee.

About 15 short-term rental operators testified at the public hearing, and several raised concerns about a $5,000 annual licensing fee for the entities that manage bookings, referred to in the ordinance as short-term rental hosting platforms. Those platforms include Airbnb, a company that lists vacation rentals in more than 65,000 cities around the world on its website.

But other platforms operate on a vastly smaller regional or local scale. For them, the annual fee would be “cost-prohibitive,” said Lance Bondhus, founder of Vacation Rental Alliance of Minnesota and operations manager for Minnestay, a short-term rental hosting platform that posts lake cabins, RVs and Minneapolis homes and condos on its website.

The committee directed staff to study a tiered license fee with a lower rate for smaller platforms. Frey said that could delay the ordinances’ arrival at the full City Council until early November.

Bondhus has watched closely as other Minnesota cities implement short-term rental regulations and was particularly critical of Duluth, where the city council limited to just 60 the number of short-term rental units in the entire city. By comparison, he said, Minneapolis was “doing an amazing job.”

“They’re making it super-easy,” he said.

Bondhus, who lives in Minneapolis and also rents his duplex to vacationers, questioned the city’s estimate that 1,600 short-term rentals were already operating in the city.

He noted that the popular short-term rental platform listed just 465 units in the entire Twin Cities metropolitan area. While not all short-term rentals are listed on just that website, there tends to be considerable overlap in the listings on various platforms, he said.