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Duluth to hit vacation rental limit: higher cap proposed

Residents who wish to offer a Duluth property for rent as a vacation getaway soon could be out of luck unless they have already received the city's approval to do so.

If the Duluth City Council approves five more interim use permits for vacation rental properties on Monday night, as expected, it will trigger a freeze.

But the duration of that freeze remains uncertain, as at least one councilor aims to propose a higher cap.

Back in May of 2016, when the council adopted a new ordinance governing vacation rentals, it set an upper limit of 60 on the number of permits it would issue for such operations. And should the permit requests to be considered Monday receive approval, it would push that number to the very brink.

"What's next?" asked At Large City Councilor Noah Hobbs of Keith Hamre, Duluth's director of planning and construction services at a Thursday night agenda session meeting.

"The City Council will need to determine if you want to raise that limit or not," Hamre responded.

Hobbs asked if the city had received many complaints about the 55 vacation rental properties already operating with permits in Duluth.

Hamre said that since the city policy went into effect over a year ago, his department has received just one incident report of a vacation rental property operating out of compliance.

Duluth's ordinance sets rules against properties that operate unsafely, with deficient parking or that cause neighborhood disturbances. It also requires operators to collect and submit lodging taxes to the city.

A first violation of the ordinance typically prompts a warning. A second violation requires the property owner to appear before the Duluth Planning Commission and agree to a remediation plan. And a third violation can lead to the revocation of the conditional use permit that allows for a vacation rental property to operate.

David Montgomery, chief administrative officer for the city of Duluth, said Hamre and his department will assess how the system regulating vacation rental properties has been working as it moves into 2018.

"From the city's perspective, we plan on having a review period, and I think originally that was part of the intent of council," Montgomery said.

Hobbs said he has a draft resolution waiting that would raise the cap on vacation rental properties to 120 — double what's now allowed in Duluth.

"I think it's a needed service, especially during times when we have events such as Grandma's (Marathon) or the Tall Ships (Festival). It allows for us to capture tax dollars that we otherwise wouldn't and to ensure a level of safety," he said.

Although there were concerns that with the growing popularity of vacation rental booking websites such as Airbnb or VRBO, the city would be flooded with applications, Hobbs said he believes time has shown those fears to be largely unfounded. Nevertheless, he acknowledged the council's initial go-slow approach probably was prudent.

As for concerns that the operation of vacation rental properties would displace affordable housing, Hobbs noted that most of the homes offered for short-term guest stays are top-end properties, versus starter homes or low-cost rentals.

Hobbs also pointed to the low number of complaints regarding vacation rental properties and said he hopes to bring his resolution raising the limit on such operations to 120 permits before the end of the year.

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