Duluth officials propose new vacation rental rules – but not everyone is happy

Not everyone is happy.
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There was some push back from Duluth's home and business owners at a meeting Thursday to talk about new rules on vacation rental properties.

The city last summer placed a moratorium on issuing new permits for all vacation rentals – including hotels and bed and breakfasts – so officials could figure out how to regulate short-term rental properties.

Websites such as airbnb, VRBO and HomeAway have led to a boom in homeowners renting out their properties – or even just rooms in their house – to travelers looking for a cheaper alternative to traditional accommodation.

But people who do this aren't regulated by the City of Duluth, and officials at City Hall put forward several suggestions on how to rectify this – many of which did not go down well with some of those in attendance.

The Duluth News Tribune and KBJR have between them reported what rules were proposed – and here are the main ones:

  • There would be a difference between a "vacation dwelling unit" – where guests stay in separate quarters from the property owner – and "home-share" operations, where guests share some "common spaces."
  • Vacation dwelling units would require a $650-a-year permit, while a home-share license would cost $200.
  • There would be a 3-night minimum stay in a vacation dwelling unit (which would include bed and breakfasts) and a maximum of 21.
  • Home-share rooms can be rented out for one night, but renters are limited to a maximum of 30 nights in a year.

Needless to say, one bed and breakfast owner was unhappy his business would be treated in the same way as "vacation dwelling units" in having to have a three-night minimum stay.

The Duluth News Tribune reports that Ken Aparicio, of the Cotton Mansion, says a 3-night minimum would "put us out of business" and questioned officials' claims they wanted to "create a level playing field" by pointing out this minimum would not apply to hotels and motels.

KBJR meanwhile reports those running home-share operations said it would be difficult to make a profit if they're only able to operate 30 days a year. The TV station says city administrators will come up with a solid plan sometime next month, before bringing it to the city council.

Airbnb currently has 49 properties listed for short-term rent in the Duluth area.

The short-term rental quandary facing cities

On short-term vacation rental sites, owners offer travelers a place to stay for a price that is typically cheaper than a hotel. It’s a method that’s becoming popular for travelers around the globe.

Duluth decided to impose the moratorium because short-term rental property owners aren't licensed by the City, unlike the full-time rental units it regulates and collects taxes on, FOX 21 reported.

The sudden growth in popularity of the sites has caught many cities off guard, with the Star Tribune reporting traditional B&B owners are among those who have been encouraging officials to take action to regulate the burgeoning industry.

The newspaper reported last week that the City of Burnsville is considering an ordinance banning short-term rentals in private homes, as "temporary occupancy threatens the essential character and stability of residential neighborhoods."

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