Short term rentals to face increased regulation from city

By JANE MCCLURE

With an eye on next year’s Super Bowl XVII in Minneapolis, rolling out the red carpet in St. Paul means allowing short-term rentals. Online services such as Airbnb and Vacation Rental by Owner provide lodging for those who eschew traditional hotels and motels. Those short-term rentals will soon be legal, as the St. Paul City Council adopted zoning and licensing rules for such businesses on Oct. 25.

St. Paul has anywhere from 250 to 300 short-term rentals, with many in area neighborhoods. The businesses have been operating illegally, as they are technically commercial uses in residential neighborhoods. The council heard testimony pro and con in October from about 30 people, with more than 50 on hand for the hearing. Traditional bed-and-breakfast owners said these short-term rentals should follow regulations and pay taxes as they do.

For owners of traditional bed and breakfast establishments, including Como Lake Bed and Breakfast owner Carla Sherman, having rules for short-term rentals creates a somewhat level playing field. “So why should it be easy for any Tom, Dick or Harry to just open their doors and not collect taxes or be inspected?” she said.

Still, Sherman’s bed and breakfast will be more restricted than the short-term rental. Como Lake Bed and Breakfast—and similar establishments—had to get conditional use permits. Such businesses must go through state lodging and food licensing inspections, and other steps that someone renting out a spare couch, a room or even a whole house will not face.

Hosts contend that sharing their homes allows them to show off the city, and in many cases, make the income needed to maintain and stay in their longtime homes. Some hosts and Airbnb contested the regulations.

Hosts were to pay a $70 annual fee; that is now reduced to $40. Short-term rental platform companies, such as Airbnb, will pay the city an annual $10,000 licensing fee, up from $7,000 proposed.

Hosts will have to pay sale and lodging taxes, carry insurance and face regular city inspections. They must also meet off-street parking requirements. Limits are placed on how many units of a multi-family building can be rented out for the short term. Owner-occupied buildings can rent more units out.

Units that aren’t owner-occupied would have to have a certificate of occupancy. Guests couldn’t hold events such as parties or receptions.

Those who rent space in their homes or separate dwellings said the regulations are too stringent. But those who live near problem properties spoke of rental units housing a dozen or more guests at a time, of streets clogged with spillover parking and of not knowing the many people going in and out of the neighborhoods each day. These neighbors wanted more regulations.

For more than a year the St. Paul Department of Planning and Economic Development (PED) and Department of Safety and Inspections (DSI) have studied proposed zoning and licensing regulations, working with a community task force. International rental platforms including Airbnb, Expedia, Vacation Rental by Owner (VBRO) and newer, local platforms weighed in.

Ward Three Council Member Chris Tolbert brought the regulations forward with the intent to legalize what is currently not an allowed use in St. Paul. He said the regulations are an attempt to balance the desire to host guests and the need to protect neighborhoods. He and other council members said the regulations would be looked at and possibly changed over time.