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Boreal Community Media

Grand Marais 5th in State in Airbnb Arrivals.

Dec 31, 2017 07:46AM ● By Editor

Grand Marais area Airbnb rentals topped 3,330 guests and $433,000 host income.  Currently there are no lodging tax receipts from these rentals in Cook County.

By Peter Passal from the Duluth News Tribune - December 31, 2017

Recent year-end stats from Airbnb show that Duluth is the third-most-popular destination in Minnesota for its customers. Only Minneapolis and St. Paul attracted more visitors through the online booking service in 2017.

But as home sharing booms — with Airbnb recording 89 percent year-over-year growth in the use of its service in Minnesota — Duluth continues to wrestle with how to regulate this emerging industry.

Back in May 2016, the Duluth City Council passed a resolution requiring property owners engaged in home sharing to undergo an inspection, obtain a license and pay taxes on the revenues they collect from guests.

The city did nothing to restrict the number of people who could rent out portions of their own homes while living in the same premises, but it took a more restrictive approach toward property owners who weren't onhand to oversee guest stays.

The city capped the number of vacation rental licenses it would issue for off-site owners at 60, and in August it reached the 60-license threshold, freezing the growth of that market segment.

At Large City Councilor Noah Hobbs would like to double the cap, increasing it to 120 vacation rental properties. He has drafted an ordinance that could do just that. But the proposal will go to the Duluth Planning Commission for its review and recommendation before the council takes it up, likely in early 2018, Hobbs said.

The planning commission is poised to discuss the cap at its Jan. 9 meeting.

"We would ask them to make a recommendation to the City Council on whether or not to increase the cap," said Keith Hamre, director of planning and construction services for the city of Duluth.

But Hamre said city administration probably will recommend a more modest cap adjustment than Hobbs has proposed.

"Currently, we're talking about looking at following the market growth in these types of accommodation products, which has been expanding by about 10 to 11 percent annually," he said.

Council President Joel Sipress advises even greater caution.

"At this time, I would not support increasing the cap," he said. "We've only recently reached the cap, and the cap was put in place to make sure we had some protections for neighbors and neighborhoods. The cap also was put in place to make sure that we would have a chance to see the impact of the trend toward more and more vacation rentals on our housing market and on our neighborhoods before we would take further action. I think it's important to keep that cap in place and not raise it unless we really do some serious study of the impact of vacation rentals at the cap."

Hobbs, however, said he sees little reason for the city to unduly restrain the growth of the vacation rental industry in Duluth.

"The numbers show this has been a huge benefit not only for property owners in Duluth but also providing a unique experience for people visiting our city throughout the entire year," he said.

While Airbnb reported that about 9,530 people used its service to book stays in Duluth this year, Hobbs noted that the city received just one complaint related to guests staying in a vacation rental unit.

"That's a pretty good ratio, showing that these people aren't just here having bachelor or bachelorette parties and having wild weekends. It's usually a pretty tame event," he said.

But Sipress pointed to the dangers of housing market displacement.

"Given the experiences of other communities, and given how quickly we hit the cap of 60, I think it's very important that we really understand the impact of vacation rentals both on our housing market and on our neighborhoods before we consider raising the cap," he said.

Hamre said there's been no indication yet of much tightening in the local rental housing market since vacation rental properties began to proliferate in Duluth, and nuisance reports have been few.

"I think things seem to be working fairly well, with the requirements we have in place for off-street parking, with the screening of outdoor activities from residential areas. It seems to have been fairly positive. We have not studied the impact upon neighborhoods, and I haven't seen any studies out there at this point," Hamre said.

He agreed that it's tough to ascertain exactly what the long-term effects of the growing vacation rental industry could mean for Duluth.

"It's such a new product that nobody's really done the research yet to see what kind of impact it has with regards to housing stock and housing availability."

Hobbs concurred that Duluth must find its own regulatory path, saying: "There's not a science to creating these policies in a way that honors neighborhoods but still allows for a new economy and new avenues of home sharing to happen."

"I think we do have a policy that works for Duluth, and I think we can open it up a little bit more, in terms of the number of units available," he said.