Minneapolis and St. Paul duplex, triplex and apartment building owners have discovered an additional and often lucrative income stream: short-term rentals. Whether it’s renting out a one bedroom unit for a weekend, or the week of the Super Bowl, the revenue these properties generate often exceeds what a full-time tenant would pay each month for rent.
Enter the cities of Minneapolis and St. Paul. In recent weeks, city councils in both have passed ordinances requiring both the online platforms that advertise properties, like Airbnb and VRBO, and the property owners themselves to apply for rental licenses as well as pay an annual renewal fee.
Doing this allows each municipality to do property inspections, collect sales tax, and enforce parking requirements.
Similar regulations have already been passed in local suburbs like Eagan, Lakeville and Stillwater, as well as cities including San Francisco and Austin, Tex.
In Minneapolis, owners who rent a property they live in but move out of for guests will have to pay $46 for an annual rental license and may be subject to inspections. Owners who remain on the premises where they live while hosting guests aren’t subject to regulations or required to pay licensing fees.
Property owners who conduct short-term rentals in locations where they do not live, on the other hand, will be required to get a standard rental license and be subject to the same inspections traditional landlords are.
Only rental properties that have a Tier 1 or Tier 2 designation may apply for short-term rental licenses. License holders who already have that designation do not need to reapply. The short-term designation fee for
Properties being converted to rental properties must pass an initial city inspection, which is $1000, and pay an annual fee of $70 for a Tier 1 property or $112 for those designated Tier 2.
Minneapolis will also charge large online platforms like Airbnb, Expedia and HomeAway an annual fee of $5000.
The city of St. Paul will charge short-term rental property owners an annual fee of $40.
Owners of single family homes, duplexes and triplexes are restricted to having only one of the units in each property as a short term rental. Four to eight unit building owners may rent out half of the units on a short-term basis.
The city will also be charging online platforms an annual licensing fee of $10,000.
The online platforms have stated they intend to explore their legal options to challenge the ordinances.