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Minnesota lawmakers, hoteliers still not sure what to make of vacation rental apps

Nov 28, 2019 10:47AM ● By Editor

By Matthew Guerry from The Grand Forks Herald -  November 27, 2019

Eleven years after its launch, vacation home rental service Airbnb continues to pose regulatory and safety questions for Minnesota policymakers and and hospitality providers.

The widespread use of the service and others like it has made it difficult for the state Department of Health to identify which residences are being rented out and to determine whether they meet Minnesota lodging standards. Some lodging industry professionals, meanwhile, say the services have an unfair advantage over the hotels and resorts that are burdened by rules, requirements and fees.

Scott Mehlhaff, who together with wife Chris Holland-Mehlhaff owns a hotel on Detroit Lake and in Grand Marais, said there is little precedent for the competition that Airbnb and its ilk present. Having been in Holland-Mehlhaff's family for several decades, the hotels have adapted to changes like the advent of the internet and the rise of luxury condo hotels.

"This is a change that is a little different," Mehlhaff said of web-based home rental platforms. "Now we have competition that's popping up that doesn't have to play by the same rules."

Health and safety

Hotels, lodges, resorts and bed-and-breakfasts in Minnesota are licensed to operate either by the state Health Department or a local health agency to which it delegates. Licensees currently pay a base fee of $165 a year plus an additional $11 for every unit they rent out, as well as an annual $40 hospitality fee. 

State regulators require lodging establishments to be inspected for health code compliance once every two years. Those that offer food service or have swimming pools are more regularly inspected.

Holding some owners of online vacation rental listings to the same standard can be difficult. According to Angie Cyr, who manages the state Health Department's lodging program, requirements can vary depending on how long a home or apartment is made available to rent.

For example, an Airbnb host who only rents out their home for stays longer than one week, she said, would not have to obtain a license. Those who offer shorter stays, she said, would have to register their homes as a hotel or motel.

The catch, she said, is in locating the residences that are being rented out without permission. Lacking the staff resources to search for them on its own, she said that the Health Department largely relies on complaints. The agency could not immediately provide the number of licensed, web-based vacation rentals that are active in Minnesota. 

"There’s probably a lot out there," Cyr said.

For its part, Airbnb has published informational guides on how to rent out a home responsibly. Through a spokesperson, the company said that approximately 10,000 listings are currently available to rent in Minnesota.

A host safety guide, among other things, suggests that hosts provide their guests with local emergency service contact information and fire escape plans. Another guide includes a general outline of regulations that may apply to home rentals and recommends that hosts contact their local government offices for more information.

"We're committed to working with local officials to help them understand how Airbnb benefits our community," one guide reads. "Where needed, we will continue to advocate for changes that will allow regular people to rent out their own homes."

Earlier this month, the company announced plans to establish a 24/7 incident report hotline for neighbors of Airbnb rental units as well as a ban on house parties. 

Still, renting a room or vacation home that isn't subject to public oversight can pose health and safety risks. As a precaution, Cyr said that a traveler can check the address of the vacation home they plan to rent against Health Department licensing records, which are publicly available.

Hosts who don't know or try to dodge state regulations can also put themselves at risk. 

When the state Health Department finds out about an unlicensed home rental operation, Cyr said the first course of action is to try to bring it into compliance. If the owner continues to do businesses without a license, she said they risk a fine of up to $10,000.

The owners of a vacation rental with a pool, she added, cannot allow their guests to swim in it unless it meets the same standards that apply to commercial swimming pools. They risk opening themselves to liability claims otherwise, she said. 

On its website, the company states that it provides property and liability insurance to hosts that offer coverage of up to $1 million.

A question of fairness

Mehlhof speculates that some vacation rental home owners may have been able to pay lower taxes on their properties because they are zoned for residential use rather than commercial. That will change in 2020, when the Revenue Department will require county assessors to reclassify properties primarily used for short-term rentals as commercial.

Tax bills calculated during 2020 property assessments will be payable the following year.

In March, the city of Detroit Lakes approved a measure that, among other things, requires vacation rental home owners to register for a permit. The ordinance requires owners to obtain a state license in order to business as well as a property inspection.

Cyr said that the governments of Crow Wing, St. Louis and Cook counties are currently considering similar measures of their own.

While the explosion of the home rental market has raised a "fairness question across the market," Minnesota Hospitality Association lobbyist Ben Wogsland said that hoteliers and resort owners do not wish for it to disappear entirely. Mehlhoff suggested that services like Airbnb may even help to restore the personal touch to travel that many traditional establishments have abandoned in an age of online booking.

But, Wogsland said, "we believe they should play by the same set of rules."

To read the original article, follow this link to the Grand Forks Herald website.