Duluth seeks to revamp vacation rental rules

He is one of many who have found themselves on a long waiting list for one of the 60 vacation residence permits authorized by the city under an ordinance in force.

But Duluth City Council recommends that more vacation rental properties be allowed on the scene, but with higher fees.

While 3rd District councilor Roz Randorf backs the plan and is one of the council’s four sponsors on a resolution in favor of the idea, she would prefer vacation rental properties to be spread more evenly across the city. .

More than half of the city’s vacation rental properties are located in the Randorf neighborhood, which includes Park Point, downtown Duluth, and the Hillside neighborhoods, and she has toyed with the idea of ​​trying to restrict the maximum number of vacation rentals in a particular neighborhood. , but that suggestion failed to gain traction with the rest of the board, Randor said.

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Sola said there was little mystery in the popularity of certain neighborhoods with waterfront or majestic views of Lake Superior.

“It’s all about location, location, location,” he said, noting that summer demand for his beachfront vacation rental has been strong, with more than half of customers. traveling from out of state to stay in the house.

The business can be lucrative, with some properties charging $ 700 to $ 1,000 per night.

Sola, who also owns the South Pier Inn, said booking guests through VRBO or Airbnb is different than booking a conventional hotel because a family setting is more likely to attract family reunions.

An eight-bedroom vacation rental property project on West Fifth Street with stunning city and harbor views reignited debate over Duluth’s regulation of these operations earlier this year. Under current rules, the property could have accommodated up to 17 people at a time, with guests coming and going on alternate days.

Randor said this creates challenges for the community and for nearby neighbors concerned about potentially large and loud gatherings. She noted that in some cases there is little distance between a vacation rental home and a traditional residence.

A balance can be difficult to find.

Popular Airbnb rentals in Duluth, shown on Monday, July 26, 2021, in this screenshot range from a one-room rental for $ 59 to a four-bedroom condo for $ 432.

Popular Airbnb rentals in Duluth, shown on Monday, July 26, 2021, in this screenshot range from a one-room rental for $ 59 to a four-bedroom condo for $ 432.

“We need to create livable neighborhoods. People should have property rights, but those rights are limited when they start to negatively affect neighbors, ”Randor said.

In the case of the Fifth Street vacation rental, she was able to convince the owner to make a voluntary compromise and not accommodate more than 13 people at a time.

A proposed change in ordinance would limit occupancy to nine people for any establishment with four or more bedrooms.

Lisa Kappenman lives next door to the Fifth Street vacation rental, which has yet to open. She thanked the owner for taking action to do everything according to the book. But she is still worried about the impact the operation will have on her living conditions.

Kappenman said a number of unlicensed vacation rentals continue to operate under the radar.

“I don’t think anyone is really capable of monitoring and enforcing the rules. … It’s too lucrative, ”she said.

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In general, City Councilor Zack Filipovich said council has been talking about revisions to the ordinance since February.

“I started having conversations with other city councilors and staff, saying: Let’s rework this ordinance in depth and try to achieve efficiencies. Let’s find ways to tighten the rules and find ways to make these demands a little less controversial when they arise, ”he said. “And I think we hit all of those points.”

Filipovich said there are legitimate concerns that the offer of unlimited permits for vacation rentals could lead to a massive conversion and loss of much needed traditional housing. The council proposed that the city consider increasing the cap by an amount equivalent to 10% of new housing units built each year, up to a maximum of 10 units per year for the next six years.

“This is one of the ways I think this change could balance the market demand for more holiday accommodation and the need to increase or at least stay intact the supply of local accommodation,” he said. -he declares.

Randor said the city is also looking to raise fees with some of that money going into a housing trust fund that will be used to help develop more affordable housing in the city.

Duluth could revamp his rules for vacation rental properties, motivated in part by plans to rent eight rooms at this West Fifth Street property (pictured Monday, July 26, 2021) to a maximum of 17 people at a time.  The owner has voluntarily agreed to reduce this to a maximum of 13 guests.  (Steve Kuchera / skuchera@duluthnews.com)

Duluth could revamp his rules for vacation rental properties, motivated in part by plans to rent eight rooms at this West Fifth Street property (pictured Monday, July 26, 2021) to a maximum of 17 people at a time. The owner has voluntarily agreed to reduce this to a maximum of 13 guests. (Steve Kuchera / [email protected])

While the city currently charges $ 800 for a six-year permit, she said the city is considering a proposal to double that fee.

Adam Fulton, deputy director of planning and economic development at Duluth, said it was difficult to accurately gauge the amount of pent-up demand for vacation rental licenses. The city last asked interested contestants to enter a drawing to determine their place in the queue in the spring of 2019. Since then, it has processed about 80% of a waiting list of about 35 games, through churn and attrition.

As the list of more than two years gets shorter, preparations for a new draw for candidates begin.

Joe Marty bought a house in the city while enrolled at the University of Minnesota Duluth about eight years ago and has retained ownership of the property despite leaving for work some time ago. He now lives in Richfield, Minnesota and rents the property long term.

He and his family always enjoy reconnecting with their friends and family in the Duluth area, but the high cost of hotels has discouraged them from coming as often as they like.

Airbnb rental rates in Duluth, shown on Monday, July 26, 2021, in this screenshot vary widely, ranging from $ 30 per night in Lincoln Park to hundreds in other neighborhoods, including Central Hillside and Park Point. .

Airbnb rental rates in Duluth, shown on Monday, July 26, 2021, in this screenshot vary widely, ranging from $ 30 per night in Lincoln Park to hundreds in other neighborhoods, including Central Hillside and Park Point. .

“I was like, if people pay that much to stay there in hotels, I wonder if we could open an Airbnb? So that’s where the idea came from, and then we could go when we want too, ”he said.

When Marty learned of the existence of the cap and the waiting list, he asked if he was on it, but was told there was no way to line up until the next one. permit lottery, which has been delayed by the COVID-19 pandemic.

Marty said he was disappointed to learn that at the moment there was no chance of converting his house into a vacation rental, but he is hopeful that the situation could change.

Shaina Nickila, president of Lake Superior Area Realtors, said they have clients interested in purchasing properties to use as VRBO or Airbnb properties, “and I need to direct them to the municipality in charge to find out if there is has availability “.

“I told them to err on the side of caution because it’s not a sure thing,” Nickila said.

But she agreed that the number of homes on the market was insufficient, so there is a difficult balance to be found.

“The market is very tight. Our inventory is very low, and we need housing of all kinds in all price ranges for everyone. So this is a concern. But we also want to support our investor clients and our clients, ”said Nickila.

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