Short-term rentals of residences in Crow Wing County may be money-makers for some, but can cause headaches for their neighbors.
Crow Wing County Land Services Director Gary Griffin presented a revised draft of a short-term rental licensing ordinance to the county board at the Tuesday, Nov. 19, committee of the whole meeting.
“The purpose is to have some regulation of the short-term rentals, but we say right in here that we want to continue the allowed use of private vacation homes,” Griffin told commissioners.
Vacation rentals by owner, or VRBOs, are not specifically regulated in the county’s land use ordinance, which defines bed-and-breakfast residences, resorts and commercial use.
Problematic tenants have been a long-standing issue with some rental neighbors, and the contentious issues -- and what, if anything, to do about it -- have come up before the board.
“I think it’s important that folks understand we just are trying to get at probably 5% to 10% of some of these properties that are the ones that are causing these issues,” Griffin said.
The short-term rental licensing county ordinance also covers issues like adequate septic/solid waste systems for the number of tenants, occupancy limits, noise and parking restrictions.
Vacation rentals by owner
Concerns associated with short-term rentals include public safety, traffic, parking, safe drinking water, adequate sewage treatment systems and disturbances such as noise and trespassing.
Commissioners Rosemary Franzen and Paul Koering remained steadfast in opposition to the four-page draft of the proposed short-term rental licensing ordinance and Griffin acknowledged it was a contentious issue.
“I think it’s a huge mistake. I think this county board is messing with the economy of Crow Wing County. The economy of Crow Wing County is not manufacturing. It’s people coming up here to use these lakes,” Koering said.
The licensing ordinance would define a short-term rental to include “any home, cabin, condominium or similar building that is advertised as, or held out to be, a place where sleeping quarters are furnished to the public on a nightly, weekly or for less than a 30-day time period.”
“This would be for the whole county -- wouldn’t matter if you’re in an incorporated city or not,” Griffin said of the proposal to require an annual county license.
Commissioner Doug Houge said in favor of the proposed ordinance, “I just want it to be an even, fair playing field for everybody.”
The preliminary county budget includes the cost of purchasing software that checks rental advertising sites and grabs data to get distinct counts in a designated area and revenue from proposed licensing fees for short-term rentals.
“I don’t want this at all,” Franzen said of the proposed county ordinance. “But since we are required to have something now, I want the very least descriptive that we could possibly have and follow the law.”
Proposed county ordinance
The name, address, telephone number and email address of the agent, representative and/or local 24/7 contact person for the short-term rental is required to apply for a license in the draft.
“The idea is if the neighbors are having a problem with the renter that they don’t call us,” Griffin said of the contact information that will be provided to the rentals’ neighbors.
Renters choose VRBOs “because they seek a more economical way to travel as a group or are seeking a different experience than your typical hotel or resort,” according to Griffin.
The Minnesota Department of Revenue states if a house’s primary use is as a short-term rental, it shall be classified as 3a Commercial for the 2020 assessment, payable 2021.
“We don’t really need to identify. We need to identify because the Department of Revenue said they need to identify and classify,” Franzen said.
In the county, there are about 575 vacation rentals by owner according to Host Compliance, an online compliance monitoring company that checks rental advertising sites and grabs data to get distinct counts in a designated area.
“What we’re going to do here in Crow Wing is we’re going to get this data on all these properties, and if we see that it’s been rented for more than 50% of the year, those are the only ones that are getting changed to ‘commercial,’” Griffin said of the budgeted software.
There has been an increase in the number of VRBOs in the county on VRBO.com, one of the most popular websites for short-term rentals, from 325 last year to 477 this year, according to the county land services department.
“The resorts, in my mind, are full in the summertime,” Koering said. “If they’re spending money at our stores and our restaurants and everything, that’s good for our economy. But if some of these rentals go away, there’s no place for anybody to stay when they come up here.”
A previous board previously discussed VRBOs in 2014 when a group of property owners on Lake Hubert in Nisswa brought forth nuisance concerns, and again last summer at another committee of the whole meeting. Brekken was elected last year and brought up the topic again.
“Let’s just get more regulations on everybody and screw with our economy here in Crow Wing County,” Koering said sarcastically at Tuesday’s meeting. “That’s all it’s doing as far as I’m concerned.”
Only a small number of VRBOs in the county are licensed by the Minnesota Department of Health under the hotel/motel classification, but enforcing regulations on VRBOs would require time and county staff resources to enforce any regulation the county puts in place.
“Crosby has become -- and I didn’t know this -- because of the biking trails, Crosby has had an explosion of rentals. Crosby has become a (vacation) destination, nationwide,” Koering said.
The Minnesota Department of Health has licensing jurisdiction over food, pools and lodging services. In the state, a lodging license is required for short-term rentals from the department under the “hotel/motel” classification if rented a week or less at a time, to be renewed annually.
The state does not have a specific definition for “vacation home rental,” but many of the legal and regulatory issues related to these rentals are covered in statutes and regulations that apply to hotels, motels and lodging establishments.
“In talking to the people who are doing vacation rentals, there’s not the pushback in regards to the ordinance -- and I think we’re talking a fee of like $300 a year, so we know who’s doing it. … The fight gets to be, again, the taxing of the commercial,” Commissioner Bill Brekken said.
No state legislation has been passed specifically defining vacation home rentals, but the Minnesota Department of Revenue states lodging and related services, including vacation home rentals, are subject to Minnesota sales tax, and local sales and use taxes where they exist.
Griffin told commissioners at September’s committee of the whole the revenue generated by the short-term rental licensing fees in the draft of the county ordinance would be more than enough to cover the associated costs of enforcing it.
“I can tell you that Gary and his staff have looked at this issue very thoroughly and is going to take the most conservative approach. By that, we mean you had to have rented the place more than half of the year for us to classify as ‘commercial,’” County Administrator Tim Houle said.
Minnesota Department of Health
The state health department has jurisdiction to license and inspect these properties, but given the rapid growth in the number of short-term rentals, many operate without a license or inspection by the health department or a delegated authority.
“If you are licensed through the Minnesota Department of Health, the annual (county) license fee will be zero, but you still need to have a license through us,” Griffin said of the ordinance draft.
According to the American Planning Association, many short-term rental hosts do not have homeowners and liability insurance, and in the event of death, injury or property damage, there may not be insurance coverage or sufficient assets available to cover the liability.
Griffin will revise the draft after Tuesday’s meeting and the board will consider the proposed ordinance again before putting it out there for public comment and voting on it.
“We tried to craft an ordinance that was very narrowly tailored to the specific complaints that we’ve received,” Houle told the board. “And so what we’ve heard, over and over, ‘Don’t go too far. Don’t overreach,’ and so what you have in front of you is a relatively modest ordinance.”
Proposed ordinance highlights
Applicant must provide documentation that the septic is sized appropriately for the advertised occupancy.
Overnight occupancy of a short-term rental shall be limited to no more than four adults per bedroom plus one additional person per building, or no more than the subsurface sewage treatment system is designed to handle, whichever is less.
Quiet hours are between the hours of 11 p.m. and 7 a.m. The owner of the short-term rental is expected to enforce this rule.
Parking cannot restrict access by emergency vehicles or the traveling public and shall not impede any ingress or egress of the property owner.
Source: Crow Wing County Short-Term Rental Licensing Ordinance draft