Four years after a contentious fight over short-term rentals, how has regulation played out in Minneapolis and St. Paul?
Just over four years ago, just before the Super Bowl was to be held at US Bank Stadium, Minneapolis and St. Paul passed regulations on short-term rentals through online platforms.
Short-term rental platforms like Vrbo and Airbnb had been operating unregulated for years. The 2017 regulations made it officially legal to rent out a spare bedroom, an entire apartment or a house to people through an online platform, but it also laid down some ground rules.
At the time, these short-term rentals and their regulations were controversial – not just in the Twin Cities, but across the country. Opponents of short-term rentals have expressed concerns about preserving neighborhood character, restricting the supply of affordable housing, and whether and how properties should be taxed. But rental supporters were wary of regulations that could place an unnecessary burden on people trying to earn extra money, as well as enforcement challenges.
Four years later, Minneapolis and St. Paul list hundreds of short-term rental licenses between them.
Adopt short-term regulations
Minneapolis passed short-term rental regulations in 2017. It required hosts who rented a property they didn’t live in to obtain a standard rental license. Hosts who lived in a property they rented out on a short-term basis but left during guest visits had to pay an annual fee of $46. Hosts who lived and stayed in the unit during short-term guest visits did not need to obtain a license.
In late 2020, the city amended its ordinance to cap short-term rentals to one property per host other than the one they live in, and cap short-term rentals at no more than 10% of units in a building with more than 20 units. Council members cited the impact of short-term rentals on housing supply, as well as complaints about the way the property was managed.
As of March 1 of this year, most hosts will need to have a $50 short-term rental license (not the standard license previously required), which also has requirements for filing a management plan, liability insurance, notifying guests neighbors for short-term rentals, posting a floor plan in the unit and including the rental license number in all online listings. Hosts who rent a room are not required to register or be licensed.
Data from the city of Minneapolis showed 355 rental licenses being used as short-term rentals at some point in 2021, and 220 owner-occupied properties that had active registrations during that time.
Jeff Lin, who rents a house in Uptown, gave a talk at a local tech conference last year about the hardships of being an Airbnb host, but also how it has enriched his life (and helped him master the art of folding a fitted sheet).
Overall, he says, it’s been a good experience. Guests can stick thumbtacks on a map in the house to indicate where they are from. There are pins on every continent except Antarctica.
Lin made a few adjustments that he says improved the accommodation experience: among them, increasing the minimum length of stays, allowing dogs, and increasing prices.
Lin said he and his wife, who is an attorney, found some of the new licensing documents in Minneapolis unclear. He heard from friends who were unhappy with the city council’s decision to limit the number
“You can only operate one house, one property in the city of Minneapolis,” Lin said. “There are people, like a friend of mine who was trying to quit his job and become a full-time Airbnb host and wanted to buy multiple properties to do it. I can’t do it anymore.
From the city’s perspective, short-term rentals are going pretty well.
“We have a pretty active community that will let us know if they think there’s an unauthorized unit next to them,” said Kellie Jones, director of Minneapolis Home Inspection Services. Likewise, Jones said the city occasionally receives complaints from a short-term rental user about a property.
“They are held to the same standards as any rental license. So they have to follow our housing maintenance code, they need everything to be in working order,” Jones said.
St. Paul’s short-term rental orders were a little different from Minneapolis’s from the start. In 2017, the new short term rental order implement an annual fee of $40 per unit, whether the hosts live on-site or not. Caps define the maximum number of units allowed by type of building. Hosts needed proof of insurance. Units that were not owner occupied required a certificate of occupancy in case of fire.
St. Paul’s data lists 174 owner-occupied and 112 non-owner-occupied licenses in November. Saint-Paul also lists three platforms registered with the city.
“St. Paul’s experience administering these licenses has been uneventful. The number of permits issued each year has been fairly consistent, with no major fluctuations,” city spokeswoman Suzanne Donovan said in an email. Enforcement of these licenses, as with all types of licenses, is complaint-based and few concerns have been raised, she said.
Beth Ulrich became a St. Paul short-term rental host in 2019, when she and her husband listed the apartment above The Spectacle Shoppe, a St. Paul eyewear store, as Airbnb.
Ulrich said he made the decision to go with short-term rentals after realizing that not having a garage made long-term rentals more difficult. The licensing process was easy, Ulrich said; the city put in place supports and helped guide them through the process.
Many people who come to stay at the apartment are parents of Macalester College students or people who have left Minnesota but want to come back – sometimes for an entire month – in the summer.
Managing a short-term rental was a different experience in St. Paul compared to Miami Beach, where the couple also have a short-term rental. Airbnb collects taxes in St. Paul but Ulrich must pay resort taxes monthly in Miami Beach. The clientele is also different — in Miami Beach, damaged property is a much bigger issue, Ulrich said.
“We just hired a management company there because we just couldn’t fix all the problems we had,” she said.
Different cities; different rules
Cities are still finding short-term rentals. It’s still in the news, it tends to be smaller towns now, said Kellen Zale, associate professor of law at the University of Houston Law Center.
Short-term rentals have long been part of the local economy in places like Aspen or Carmel. But the advent of platforms like Airbnb and Vrbo massively intensified what had probably been just a few small transactions before them.
“More [communities] had nothing in their zoning or land use codes about anyone using their home as a short-term, transient, for-profit business at the time,” Zale said. At the same time, when these peer-to-peer transactions increase, “the scale of good and evil increases, fundamentally.”
This included party noise, a squeeze on parking in the neighborhood and, in some parts of the country, pressure on housing prices as units were pulled from the long-term rental market in favor of the short-term market. .
In Minnesota, cities have taken all sorts of different approaches to regulating Airbnbs, said Nancy Polomis, an attorney at Hellmuth and Johnson who specializes in real estate law and homeowners associations and followed short-term rental regulations in Minnesota.
Edina’s Ban on short-term rentals has been on the books for decades, while Eagan passed a ban in 2018.
While much of the buzz around short-term rentals has passed with major cities like Minneapolis, St. Paul, Rochester and Duluth having already passed regulations, other cities are still adding them to their books.
These days, she said, many cabin country jurisdictions have looked at the regulations as many properties in their area are being purchased with the intention of listing them as short-term rentals, Polomis said. .
While the fights of the past decade over major cities imposing short-term rental regulations seem to have died down, regulation of short-term rentals continues, just on a smaller scale, as more more places are adopting regulations and others are changing theirs.
One thing that seems pretty clear, Zale said, is that short-term rentals aren’t going anywhere.
“There was this existential debate a few years ago,” Zale said. “Now we just have to appropriately regulate the effects they have, because they don’t go away.”