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Duluth vacation rental proposal stirs lively debate

A public meeting to discuss how Duluth should regulate people who choose to rent out their homes as vacation rental properties drew a crowd of roughly 50 people to City Hall Thursday afternoon.

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A public meeting to discuss how Duluth should regulate people who choose to rent out their homes as vacation rental properties drew a crowd of roughly 50 people to City Hall Thursday afternoon.

A moratorium on the issuance of any new vacation rental permits in Duluth has been in force since July. The Duluth City Council voted this summer to place permitting of vacation rental properties on hold for up to one year to allow time for staff to develop rules for the increasingly popular practice of offering short-term stays via websites such as Airbnb and VRBO (an acronym for Vacation Rental By Owner).

"The Airbnb model kind of exploded, and people were renting out a room in their house. They were renting out the second floor of their house. They were renting out a couch in their house. Sometimes they were having a tent pitched in the yard. So we needed to get a handle on that," said Keith Hamre, Duluth's director of planning and construction services.

Hamre said the city is considering a model that would differentiate between a vacation dwelling unit, where guests stay in quarters that are physically separated from those of the property owner, and "home-share" operations, where the property owner and guest share some common spaces during a stay.

In addition to offering a $650-per-year interim use permit for vacation rental units, Hamre suggested the city offer a home-share license for perhaps $200 a year.

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Both home shares and vacation rental unit properties would be subject to the same city inspections to ensure they are clean and safe.

City planning staff suggested that the minimum length of stay in a vacation dwelling unit be limited to three nights, and that the same requirements be applied to bed-and-breakfast operations in the city.

Ken Aparicio, who operates the Cotton Mansion, asked Hamre why the new three-night minimum would apply to conventional bed-and-breakfasts such as his own.

Hamre responded that the intent was to create "a level playing field."

"Well then you would just put us out of business," Aparicio said.

"So after 20 to 30 years of having it a certain way we would just abolish it?" Aparicio asked, referring to the proposed rule change.

"To me, a bed-and-breakfast, a vacation rental unit or a home share, they're all vacation rentals, so we would want to have a similar concept for each one," Hamre said.

"That's ridiculous," said Aparicio, suggesting the same rules then be applied to hotels and motels. "If you're going to discriminate, then discriminate against everyone at the same time."

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Home-share outfits would be allowed to accommodate shorter visitor stays of as little as one night but would be allowed to operate no more than 30 days out of a year under the city's draft proposal.

However, several home-share operators said it wouldn't be worth their while to go through all the licensing costs and headaches only to be so severely restricted.

Hamre laid out plans to drive compliance, including a $500 fine for any Duluth home share found operating or advertising without a license. He also suggested the city adopt a three-strike rule, where property owners who are found to be operating in violation of local rules would receive progressively larger fines up to $650 and the loss of a license for one year on their third offense.

Dan Matthes, who previously has rented out a portion of his Duluth residence via Airbnb, questioned the need for the city to create a new thicket of regulation.

"Airbnb is a proven good model. We already know that. It's a good model that takes care of people," he said.

Matthes suggested the market will make quick work of any poor operators and proposed that the city could make reviews - good and bad - available online to prospective visitors.

"Let us buy licenses. Let the inspectors come in. Let us pay our taxes. And everything will be fine. You don't need to come up with a new model. It works really well. A bad house on Airbnb doesn't get rented, and bad neighbors aren't really allowed," he said.

But one neighbor of a vacation rental property in Thursday's audience described difficulties with loud, disruptive behavior by visiting strangers. Although she declined to share her name out of concerns about possible reprisal, she said that local police had advised her that a citation could be issued only if unruly guests could be caught in the act of misbehaving. She commented that it was difficult for her to monitor and report activities from midnight to 3 a.m.

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"I'm very much on the side of better enforcement, because that's where my complete summer was ruined last year," she said.

When it comes to problem behavior, 2nd District City Councilor Joel Sipress noted: "I have never received a complaint from a resident about a home share. I get complaints from residents about vacation rentals - not all of them but some of them."

He suggested operations range from good to bad.

"So you may be running a vacation rental in such a way that your neighbors never complain, but you need to understand that there are other people running vacation rentals in ways that lead to complaints from neighbors," Sipress said, pointing to the need for oversight and enforcement.

Hamre said staff will consider the public commentary received Thursday as it further shapes proposed rules for vacation rentals and home shares. He said those policies could be ready for consideration by the Duluth Planning Commission in February and action by the Duluth City Council in late March. Even if adopted, any new rules likely would go into effect no sooner than late April at best.

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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