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Duluth looks to adopt new vacation rental rules

A proposed ordinance will likely go to a vote.

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Popular Airbnb rentals in Duluth, shown Monday, July 26, 2021, in this screenshot, range from a one-room rental for $59 to a four-bedroom condo for $432.

A long-debated ordinance to revamp the rules governing vacation rental properties will head to the Duluth City Council Monday.

At large Councilor Zack Filipovich said the issue of vacation rentals has been a bone of contention since 2020 , when the council rejected a proposal by the Duluth Planning Commission to lift the 60-unit limit on how many homes in the community could be converted to rentals for visitors.

But the issue of how to regulate the properties has continued to simmer and bubbled over again early this year, when the owner of an eight-bedroom house sought a license to convert the residence to a vacation rental. Under current rules, he would have been authorized to host as many as 17 guests at a time, causing neighbors to raise concerns about such a high-density operation opening next door. The owner of that property voluntarily agreed to limit the number of allowable guests to 13 to allay neighborhood concerns, but the situation prompted the Council to revisit the city’s vacation rental rules.

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Duluth may revamp its rules for vacation rental properties, prompted in part by the plan to rent out eight bedrooms at this West Fifth Street property (pictured Monday, July 26, 2021) to up to 17 people at a time. The owner voluntarily agreed to reduce that to a 13-guest maximum. (Steve Kuchera / skuchera@duluthnews.com)

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Councilors Terese Tomanek, Roz Randorf, Janet Kennedy and Filipovich took the lead in looking to update the city’s approach to vacation rentals.

“It was not easy, because this is a very controversial issue, and everyone has different points of view on it. So, I’m really kind of proud that we’ve all been able to get together and come to a grand compromise,” Filipovich said.

The resulting prospective ordinance that is expected to go to a vote before the Council Monday would be more restrictive compared to the status quo regarding size. It reduces the number of guests any single rental property can host to nine — and that would only be permissible for a residence with four or more bedrooms.

Vacation rental properties that are already licensed to host more than nine guests would be allowed to maintain that capacity under a grandfather clause, unless the property ownership changes.

While the revised ordinance would clamp down on the guest capacity of vacation rental properties, it would be more liberal when it comes to the ceiling placed on vacation rentals. The cap would be allowed to increase by a number equivalent to 10% of the new housing units Duluth gained the previous year — up to a maximum of 10 additional vacation rental licenses annually for the next six years.

As a result, even if Duluth grows at a rate of more than 100 new housing units for six consecutive years, the city could issue no more than 60 additional vacation rental licenses, for a total of 120, when combined with the current count of outstanding licenses.

“We are slowly, and I would say responsibly, increasing the cap, by tying that to the number of other housing units that we’re able to build in the city of Duluth,” Filipovich said.

“It allows for the increase of these full-time vacation dwelling units, while at the same time not eating away at our housing stock in a significant way,” he said.

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As for cost, the amended ordinance would increase the fee Duluth charges for rental licenses from $621 to $1,600, with half the proceeds to be directed into a newly created Housing Trust Fund designed to increase the city’s inventory of affordable housing.

The city also would offer home-share permits and a short-term vacation dwelling permit that would allow property owners to rent out their homes for no more than 21 days per year at an annual cost of $250, with again half the proceeds directed to the Housing Trust Fund. There would be no cap on the number of these permits that could be issued.

“This will allow folks to go away for the weekend, rent out their place for up to 21 days a year, earn some pocket cash, and use that to either fix up their property or spend it in local businesses and support our local economy,” Filipovich said.

072821.N.DNT.VacationC4.jpg
Duluth may revamp its rules for vacation rental properties, prompted in part by the plan to rent out eight bedrooms at this West Fifth Street property (pictured Monday, July 26, 2021) to up to 17 people at a time. The owner voluntarily agreed to reduce that to a 13-guest maximum. (Steve Kuchera / skuchera@duluthnews.com)

Peter Passi covers city government for the Duluth News Tribune. He joined the paper in April 2000, initially as a business reporter but has worked a number of beats through the years.
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