CITY OF MINNETRISTA PUBLIC HEARING Subject: …consider the comments receive record before it prior...

_____________________________________________________________________________ Mission Statement:

The City of Minnetrista will deliver quality services in a cost effective and innovative manner and provide opportunities for a high quality of life while protecting natural resources and maintaining a rural character.

CITY OF MINNETRISTA PUBLIC HEARING Subject: (CONTINUATION) CODE TEXT AMENDMENT: The city

of Minnetrista will consider Ordinance 453 which will amend Chapter 5 of City Code. The purpose of the public hearing is to hear from the public and make a recommendation on the proposed amendment which would prohibit the use of property within the City for short term rentals.

Prepared By: Nickolas Olson, City Planner Meeting Date: April 23, 2018 Issue: Throughout the state and nation there is a new form of lodging on the rise called “vacation rental” or “VRBOs” (vacation rental by owner). VBROs involve the lodging of guests in traditional single-family neighborhoods, usually in typical single family homes. The draft Ordinance 453 would add language to city code clarifying the existing prohibition on the use of residential property for the commercial purpose of short term rentals. Background: This topic has been prevalent in common resort and tourism-oriented communities for several years now. People who choose this type of lodging are often looking for a more economical way to travel as a group or are seeking a different type of experience than the traditional hotel/motel or bed & breakfast establishment provides. Some concerns raised with renting out private homes are those of public safety, traffic or parking on roads; public health, safe drinking water supplies or adequate sewage treatment systems; location, impact on the neighborhoods due to factors like loud activity; and fairness, putting renters on a level regulatory playing field with resorters, who are held to a much higher standard. Early in 2017, the City Council first discussed this topic at a work session meeting. At that time, there was no action taken or direction given regarding a possible ordinance. Recently, short term rentals have been brought to the attention of the City Council and again it was discussed at a February 2018 work session meeting. After their most recent discussion, the City Council directed staff to begin work on a draft ordinance regarding the prohibition of short term rentals. On March 26, 2018, the draft Ordinance 453 was presented to the Planning Commission. This was the first time the Planning Commission had been presented with the topic of short term rentals. At that time, the Planning Commission opened the required public hearing to take comment. There was one resident present to speak. However, Staff did



receive a handful of written comments in advance of the meeting that were shared with the Planning Commission. Given the complexity of the issue and the large amount of information being provided, Staff advised and the Planning Commission ultimately decided to continue the public hearing and table the draft Ordinance 453 until their April 23, 2018 to allow for extra time to review and to give residents another chance to speak at the public hearing. Discussion: The following represents a sampling from popular websites used to advertise VRBOs. It should be noted, due to the private nature of VRBOs, there may be no way of determining the actual number of VRBOs in Minnetrista at any given time. Staff found or has been informed of a total of 19 listings with one being a non-active listing in the City. To date, there have been complaints made regarding a few of the properties listed below. 1 Home in Turtle Creek 1 Home in Palmer Pointe (Heights) 2 Homes in Trillium Bay 1 Home on CO RD 44 (Halstead Bay) 2 Homes on Minneapolis Ave 1 Home in Jennings Cove 1 Home on Crane Island 1 Home in Orchard Cove 1 Home on Stonebridge Road 1 Home in Cardinal Cove 1 Home on Stonebridge Circle 1 Home in Sunnybrook 1 Home on Tuxedo Road (non-active) 1 Home on Cedar Point Road 1 Home on Edsall Road 1 Home on Enchanted Lane 1 Home in Eagle Bluff

Typically, you see two basic approaches used to regulate VRBOs. They can be licensed or permitted which requires monitoring and inspection, or prohibiting them all together. Enforcement of a VRBO ordinance involves multiple challenges. If you choose to ban short-term rentals, you will have to figure out how to enforce a ban on what can be difficult to detect and is increasing in popularity. If you choose to permit these situations with regulations you will have to find a way to do so that doesn’t discourage participation in the regulation. In either scenario, there is a cost of enforcement. After discussion with the City Council, staff sent a notice to the above properties and placed a public hearing notice in the recent City newsletter. To date, staff has received phone calls from 5 of the properties that received a notice. Conclusion: Regulating VRBOs is a decision for each city to make. Attached with this report is an article published by the League of MN Cities on the topic. The links below will take you to two newspaper articles recently published on the topic. See: http://www.twincities.com/2016/03/02/airbnb-rentals-in-stillwater-might-see-tougher-regulations-soon/

http://www.twincities.com/2016/03/02/airbnb-rentals-in-stillwater-might-see-tougher-regulations-soon/

http://www.twincities.com/2016/03/02/airbnb-rentals-in-stillwater-might-see-tougher-regulations-soon/



http://www.startribune.com/st-paul-to-study-regulations-taxes-on-airbnb-rentals/367604571/ Recommended Action: The Planning Commission should continue the public hearing that was originally opened on March 26, 2018 and allow residents to speak on the draft Ordinance 453. After closing the public hearing, the Planning Commission should consider the comments received and the entire record before it prior to making a recommendation to the City Council. The possible recommendations to the City Council are as follows:

1. Motion to recommend the City Council adopt Ordinance 453 as written; or 2. Motion to recommend the City Council deny Ordinance 453 as written.

If the Planning Commission decides to recommend denial of Ordinance 453, reasons as to why along with any changes they would like to see should be provided for the City Council to consider. Attachments:

• Draft Ordinance 453 • League of MN Cities Article • Crow Wing County Study • Explore Minnesota Report • Public Comment

http://cp.mcafee.com/d/5fHCMUgdEI3HT7cIEK6XCQrITsopoh76QrITsoposjdETuuvd7aqqb9J6XOtS4rLK6Z8i8AvziuKKwEHY8uwmbAoWp-7bCOLMxW1oKhzFDUsKrpYQsLeCzAs_R-sjod7abfnKnjjpd7f8FELzHLsJt6OaaJXIsG7DR8OJMddK6Qn3t-jouvu7cT7c6XCM0l9X6sp46UvO-kCnmRIYLeFuASQ2NufAmPZDaIa5VW7_gLm1vph8g85U_2uDQNBMsVtxYszxI-QtceRyw2HiCmGXeI2KAdbs3jqr3PW9In0l8Qg31eIpCy04_5kQg0LUjQ-xJdcSi4WXQcP

http://cp.mcafee.com/d/5fHCMUgdEI3HT7cIEK6XCQrITsopoh76QrITsoposjdETuuvd7aqqb9J6XOtS4rLK6Z8i8AvziuKKwEHY8uwmbAoWp-7bCOLMxW1oKhzFDUsKrpYQsLeCzAs_R-sjod7abfnKnjjpd7f8FELzHLsJt6OaaJXIsG7DR8OJMddK6Qn3t-jouvu7cT7c6XCM0l9X6sp46UvO-kCnmRIYLeFuASQ2NufAmPZDaIa5VW7_gLm1vph8g85U_2uDQNBMsVtxYszxI-QtceRyw2HiCmGXeI2KAdbs3jqr3PW9In0l8Qg31eIpCy04_5kQg0LUjQ-xJdcSi4WXQcP

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1 518879v3 AMB MN415-1

ORDINANCE NO. ____

CITY OF MINNETRISTA COUNTY OF HENNEPIN STATE OF MINNESOTA

AN ORDINANCE PROHIBITING SHORT-TERM RENTALS WITHIN THE CITY OF

MINNETRISTA THE CITY OF MINNETRISTA HEREBY ORDAINS: Section 1. The City Council of the City of Minnetrista hereby amends Chapter V, Section 505.07 of the Minnetrista City Code by adding a new subdivision 16 to prohibit short-term rentals within the City as follows: Subd. 16. Short-term rentals. (a) Definitions. In addition to the definitions contained in Section 505.01 of this Code, the following definitions shall apply to this subdivision. (1) Operator means the person or enterprise or its agent who is owner or proprietor of a rental dwelling or rental Dwelling, whether in the capacity of owner, lessor, lessee, sublessee, mortgagee in passion, licensee, or any other capacity. Where the operator performs their functions through a rental agent, the managing agency or the rental agent has the same duties as the Operator. (2) Remuneration means compensation, in money or other consideration, given in return for occupancy, possession, or use of real property. (3) Rent means the Remuneration charged, whether or not received, for the occupancy or use of property for a temporary period. (4) Short-term rental means any occupancy of a Dwelling that is rented to a transient for fewer than thirty (30) consecutive calendar days. (5) Transient means any person who, at their own expense or at the expense of another, exercises occupancy or possession, or is entitled to occupancy or possession, by reason of any rental agreement, concession, permit, right-of-access, option to purchase, license, time sharing arrangement, or any other type of agreement for a period of fewer than thirty (30) consecutive calendar days. (b) Short-term rentals prohibited.

(1) Purpose. The City finds that short-term rentals constitute a commercial use of residential property, which conflict with the fundamental character of residential zoning districts, disrupt the residential character of neighborhoods, and have a negative impact on the livability of residential neighborhoods. The City further finds that, while short term rentals are prohibited

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2 518879v3 AMB MN415-1

under the current provisions contained in the City Code, an ordinance amendment clarifying those regulations is necessary. The City has received complaints from residents regarding short-term rentals, including but not limited to complaints related to noise, over- occupancy, and illegal parking. To ensure adequate housing options for residents, preserve the residential character of the City’s residential districts, preserve property values, and reduce land use conflicts, the City determines, in furtherance of the public health, safety and general welfare, that it is necessary to limit short-term rentals to hotels, motels, lodging establishments, and similar accommodations which are appropriately zoned and have the appropriate infrastructure and services for short-term use.

(2) Prohibition. Short-term rental of any Dwelling to a Transient for less than thirty (30) consecutive calendar days in a residential zoning district is prohibited. State licensed hotels, motels, and lodging establishments located outside residential districts or residential planned unit development districts are allowed, pursuant to applicable City codes.

(3) Enforcement.

a. An owner, Operator, tenant, or occupant of any building or property in violation of the provisions of this section may be charged and found guilty of a misdemeanor and may be held responsible for the cost of enforcement in addition to penalties.

b. The City may exercise any and all remedies at law or in equity to ensure compliance with this section. All unpaid costs, charges and penalties may be certified as a special assessment levy against the property.

c. The City hereby further declares the Short-Term Rental of any Dwelling as a public nuisance pursuant to Section 1510.07 of the Minnetrista City Code. The City may take actions to abate such nuisance pursuant to Section 1510 of the Minnetrista City Code and applicable state law.

SECTION 2. This ordinance shall take effect following its adoption and publication. Adopted Date: _____________, 2018. Lisa Whalen Mayor Attest: ______________________________ Kris Linquist City Clerk

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3 518879v3 AMB MN415-1

(seal)

Cities are increasingly looking for ways to regulate short-term rentals available through organizations like Airbnb.(Published )

Organizations like Airbnb (Link to: https://www.airbnb.com/?af=43720035&c=A_TC%3Dta2zq9t9w9%26G_MT%3De%

26G_CR%3D100808697856%26G_N%3Ds%26G_K%3Dairbnb.%26G_P%3D%26G_D%3Dc&gclid=CKCz-

YXbmMwCFQmSaQod4X8Dlw&dclid=CMuBhobbmMwCFYx4AQodmU0E9w) and VRBO.com (Link to:

https://www.vrbo.com/) have made things interesting for cities and residents. These are services individuals may use to arrange short-term rental of someone’s house, apartment, room, or bed for a night or more. Sometimes they cause issues for cities.

Increasingly, cities are seeking information on whether and how to regulate these “short-term rental” situations. League research attorneys are available to answer your questions.

What can cities regulate?Under state law, the Department of Health has jurisdiction to license and inspect hotels, motels, and lodging establishments unless a city or county has been delegated that responsibility.

Hotels and motels are defined as buildings, structures, enclosures, or any part thereof used as, maintained as, advertised as, or held out to be places where sleeping accommodations are furnished to the public for a stay of less than a week. This alone captures a lot of short-term situations advertised online.

Lodging establishments are defined as buildings, structures, enclosures, or any part thereof used as, maintained as, advertised as, or held out as places where sleeping accommodations are furnished to the public as regular roomers for stays of a week or more and having five or more beds to let to the public. (Lodging establishments also include accommodations for those awaiting medical treatment, their family, and caregivers.)

In short, a lot of typical AirBNB or VRBO.com situations are subject to state regulation, but that does not preclude additional regulation by the city.

The state and its delegates have invested a lot of effort into locating and requiring licensing compliance by applicable properties throughout the state offering accommodations through AirBNB, VRBO.com, or other means. However, the level of state/delegate licensing compliance of short-term rentals might inevitably remain low due to:

City Regulation of Short-Term Vacation Rentals by Owners

Page 18 of 20Cities Bulletin Print Page

4/18/2016http://www.lmc.org/page/1/cities-bulletin-print-page.jsp

• The amount of state/delegate manpower required. • The fact that new short-term rentals constantly enter the market. • Those offering accommodations not in compliance may be notified and then

take steps to avoid further detection from licensing authorities.

For these reasons, the state fully supports cities adopting some regulation of situations potentially subject to state licensing to the extent it better enables state law licensing compliance.

The short-term rental of any space having fewer than five beds and for periods of a week or more is unregulated by state law. These are situations only a city may regulate—at least until a legislative change gives regulatory authority to the state and its delegates or makes it exempt from any regulation, including city ordinance. There are plenty of situations the city can regulate.

How can cities regulate these situations?The two basic approaches cities currently use to regulate short-term rentals are licensing/permitting or prohibition. How cities regulate short-term rentals varies in what constitutes “rental,” what accommodations are subject to regulation, the location of the property, and other respects. For information on cities and counties that have taken steps to regulate these situations, contact the League Research and Information Department at (651) 281-1200, (800) 925-1122, or [email protected](Link to: mailto:[email protected]) .

Should cities regulate short-term rentals?This is a decision for each city to make. If a city chooses to ban short-term rentals, it will have to figure out how to enforce a ban on what can be difficult to detect and yet is an increasingly popular phenomenon.

If a city licenses or otherwise permits these situations, it will have to find a way to do so that doesn’t discourage participation in the regulation. There are certainly reasons to, at the very least, have a record of the short-term rentals being made available within the city and to have a person to contact in the event there are complaints by neighbors. Again, the state or its delegated licensing authority is eager to work with cities to maintain state licensing compliance.

If you have questions about short-term rentals, contact the League Research and Information Department at (651) 281-1200, (800) 925-1122, or [email protected](Link to: mailto:[email protected]) .

Read the current issue of the Cities Bulletin (Link to: http://www.lmc.org/page/1/cities-bulletin-

newsletter.jsp)



Contact Edward CadmanStaff Attorney/Special Counsel(651) 281-1229 or (800) [email protected] (Link to: mailto:[email protected])

Your LMC Resource



Vacation Dome Rental Study

Committee of the Whole PresentationNovember 17, 2014

Presented byIlan Listug

Crow Wing County Land Services

Exhibit D

Executive Summary:

Private rental of vacation and lake homes by owners ( commonly called vacation rental by owneror VRBO) has been a growing trend nationally and locally, Different approaches have beentaken by state and local jurisdictions in deciding whether and to what extent to regulate VRBOs. From a land use perspective, the central question concerning VRBOs is whether the use of asingle family home as a VRBO is compatible with the zoning district in which it is located. Thisquestion raises the closely related issue of whether and at what point a VRBO may become acommercial operation,

This report reviews the treatment of VRBOs by popular tourist states, cities, and counties inMinnesota and across the country. A special emphasis was placed on approaches taken byMinnesota counties, including survey data from 32 responding counties. This report

incorporates that data and presents a summary of the issues surrounding regulation of vacationrentals as Crow Wing County pursues a thorough, objective analysis of this issue.

In Minnesota, the issue was heavily discussed at the Legislature in 2010, however no action hasbeen taken at the state level. Existing Minnesota Department of Health (MDH) licensing lawsgoverning lodging establishments encompass a great deal of VRBO activity, however thenumber of VRBOs currently licensed by the state is minimal. MDH has licensed 18 propertieswhich would be considered VRBOs in Crow Wing County,

In the absence of state regulations, some Minnesota counties have enacted VRBO - specific landuse ordinances. In Crow Wing County, VRBOs are not specifically regulated in the Land UseOrdinance. In the past year, complaints have been received on two properties,

Survey data collected from 32 counties shows that only five counties have VRBO ordinances, anadditional seven counties state they would require a conditional use permit if the VRBO wasdetermined to be a commercial operation, and 20 counties report they do not regulate VRBOs, Of responding counties, complaints have been received on 26 properties in the past year with nocitations being issued and only one case pending in district court.

This data also highlights many of the difficulties associated with enforcement against VRBOsincluding; identification, multiple complaints against single properties, after -hours complaints, renter behavior /nuisance activity, parking, shoreline activities, and costs of enforcement, Oneregulating county reports it requires between 20 -30 hours of staff time to bring one VRBO intocompliance. Additionally, emerging legal issues regarding property rights, regulation of rentalproperties and property tax classification of VRBOs represent additional challenges to thisdiscussion.

This report concludes by summarizing some of the key issues that remain unresolved and keynext steps regarding VRBOs,

I. Crow Wing County Overview:

A. VRBO Regulations:

VRBOs may be regulated by a county under the scope of the planning and zoning authoritycontained in Minnesota Chapter 394. In general, zoning regulation challenges are subject to thedeferential rational basis standard, and are likely to withstand judicial scrutiny if the regulation isfound to have a substantial relationship to land use impacts in the area. Additionally, regulationsmost not infringe upon constitutional rights of equal protection and the 51' Amendmentprotections against taking ofprivate property without just compensation and due process.

A case pending before the Minnesota Supreme Court may have direct impact upon how rentalregulations are viewed by courts. In Dean v. City ofWinonalproperty owners challenged a rentalordinance passed in Winona which limits the number of rental licenses available to 30% of a the

dwellings in a given area. The ordinance has been upheld in district court and the MinnesotaCourt of Appeals.

Several groups including; the American Civil Liberties Union, the Institute for Justice, theMinnesota Vacation Rental Association, the Minnesota Association of Realtors and the Centerfor the American Experiment have all joined the case raising the argument that the right to rentproperty is a fundamental right. If the right to rent property is determined to be a fundamentalright, all regulations limiting the right would be reviewed under the strict scrutiny standard ratherthan the rational basis standard. Such a ruling by the Court would have significant impact upongovernment' s ability to regulate rental property through traditional zoning ordinances. The caseis expected to be decided in early 2015.

B. Ordinance Challenges:

Given the recent rise in popularity of using single - family dwellings located in residential orshoreland residential districts as VRBOs, many land use ordinances do not clearly encompass theuse within existing definitions. A Minnesota Court of Appeals case from 2009 demonstrates thedifficulty in applying existing ordinances to regulate or stop operations of undefined VRBOs. InDouglas County v. Owen2, after receiving complaints from neighbors, the county determined that3 VRBOs (rented for 13, 53 and 19 days respectively) owned by the Owens were operating asresorts" under the zoning ordinance. The county sought to enjoin the rental of the properties

until a CUP was obtained.

The Court held, citing many deficiencies in the ordinance, that the zoning ordinance did notrestrict the rental of single - family dwellings on a short -term basis, and the use of the propertiesdid not compel the conclusion that the properties are resorts. In part because zoning laws areconstrued against the county and because the county sought to impose regulation on these homesbeyond the plain language of the ordinance, the county' s efforts to classify a VRBO within theirexisting ordinance failed and was held invalid twice by the court.

1 Ethan Dean, et al., v. City ofWinona, A13 -1028 ( Minn, Ct. App. 2014). 2

County ofDouglas v. Richard N. Owen and Judith A. Owen, A08 -1776, ( Minn. Ct. App, 2009).

C. Current Regulations in Crow Wing County: Vacation home rentals are not regulated or defined in the Land Use Ordinance.

Commercial is defined as " any use or establishment pertaining to commerce ormercantile for the sale, lease, rental or trade ofproducts, goods and services."

Single - family dwellings are a permitted use in all but the commercial/ Ll zoning districts, and are defined as a detached residence for or occupied by one family or up to 3 non- related individuals.

Hotel/moteI is not defined in the Ordinance, and is a conditional use in most districts. Resorts are defined as commercial establishments, and are primarily service - oriented fortransient guests seeking recreation'. Resorts may obtain a conditional use permit tooperate only in the ag /forest, RR 2. 5, RR5, 10, 20, and waterfront commercial zones. Bed and Breakfast Residence is defined in the Ordinance as limited to four or fewer guestrooms, must provide at least one meal per day, and the operator must live on the premisesor adjacent premises. A bed and breakfast is a conditional use in nearly all districts.

4 Septic Regulations: To protect the health and safety of residents as well as preventcontamination of surface and groundwater, Land Services may require a complianceinspection whenever deemed appropriate.

A VRBOs in Crow Wing County: The following represents a sampling from popular websites used to advertise VRBOs. It shouldbe noted, because of the private nature of VRBOs there may be no way of determining the actualnumber of VRBOs operating in Crow Wing County at any given time.

Crow Wing County Vacation Home Rental Listings: Sample as of 8 -19 -14

VRBO. com 267

Exploreminnesota. com 19

Brainerd Lakes Chamber 2

Airbnb.com 7

flipkey.com 13

lakeplace.com 25

northlandcabincare.com 21

craigslist.org 65

vacation rentals.com 31

byowner.com 56

Tota14

506

3 The Ordinance defines a traditional resort as: A commercial establishment that includes lodges, dwelling units, dwelling sites, structures or enclosures kept, used, maintained or advertised as, or held out to the public to be, aplace where sleeping accommodations are furnished to the public, and having for rent three or more cabins, rooms, dwelling units or enclosures. Resorts must be primarily service - oriented for transient occupancy for guests seekingrecreation. All cabins, rooms, dwelling units or enclosures must be included in the resort rental business and rates setby resort. The entire parcel of land must be owned, controlled and managed by the single business entity whichcomprises the commercial .establishment. In order to qualify as a resort pursuant to this definition, the commercialestablishment shall also be fully licensed and permitted under the appropriate state and local regulation. 4 Total listings may include duplicate properties listed on multiple websites

11. Approaches around the Country:

As vacation home rental numbers have soared nationally in recent years, state legislatures haveacted in different ways. Here is a summary of different approaches:

Wisconsin:

State law requires a Lodging permit issued and administered through the WisconsinDepartment of Health Services for all facilities in the state.

Vacation home rentals are classified as a Tourist Rooming House (TRH), defined as " alllodging places and tourist cabins and cottages, other than hotels and motels, in whichsleeping accommodations are offered for pay to tourists or transients," A tourist or transient is defined as someone away from their permanent residence, Rental to a tourist or transient, regardless of duration, requires a state permit. The application process also requires the owner to provide documentation of approveduse by the local zoning authority.

Example: Door County, Wisconsin: All municipalities under county zoning jurisdictionpermit short-term rentals in all zoning districts, and require registration with the countytourism commission for purposes of tax collection in addition to state licensure.

Hawaii:

Individual counties in Hawaii have jurisdiction over VRBO use of property, Most counties that allow vacation rentals in specific zoning districts and generally requirea condition use permit,

Some counties prohibit vacation home rentals (rental duration ranging from under 30days to under 90 days) unless the owner can demonstrate a legal non - conforming usecertificate dating to prior than 1986.

Florida:

State law prohibits local units of government from restricting the use, prohibiting, orregulating vacation rentals solely on the basis of classification, use, or occupancy ifnotregulated prior to 2011.

Recent changes now allow local governments to require inspections or to create certainstandards ( such as mandatory trash pick -up). Vacation rental owners also must obtain a license from the state to operate a rental unit, Example: Fort Myers Beach, Florida: Single - family dwellings located in the residentialzoning district are generally restricted to rental for transient lodging to once per calendarmonth, with a minimum stay of 7 days,

Austin, Texas:

e Enacted a qualitative restriction on the number of homes that can be rented on a short- term basis.

o Depending upon the location within the city, a cap was placed upon the number of short- term rentals that may operate in a given neighborhood.

o The city stated a concern for the mix of short-term to long term rental properties asjustification for the cap.

4

Scottsdale, Arizona:

Rentals of less than 30 days are not permitted in Single Family Residential Districts.

Portland, Oregon:

Enacted a tiered approach to short-term rental regulation.

For owner- occupied residences, an over the counter permit may be obtained for short- term rental of 1 to 2 bedrooms.

For 3 -5 bedroom homes, owners must obtain a CUP to operate a short-term rental.

Palm Desert, California:

Originally passed an ordinance requiring a CUP and 3 -night minimum stay requirementon vacation home rentals. The CUP application process cost $500 and included

additional conditions on parking, noise, maximum occupants, and days the property maybe rented annually,

In 2012, the city significantly amended its regulation and lowered fees after finding thatcompliance with the CUP requirement was very low. The city now licenses all short - term rentals annually, with a $25 per property fee. The city has found license registrationhas greatly increased with the lower fees.

111. State of Minnesota

A. State Regulation:

In 2008, the Minnesota Legislature created a Task Force charged with studying VRBOs in thestate. The group published a report in 2009. Citing a lack of knowledge about the application ofcurrent laws relating to VRBO owners, the Task Force offered a series of recommendationsincluding legislation to improve awareness and compliance with existing laws. Therecommendations included:

Adding a definition to the Department ofHealth Licensing statute defining vacationrentals as requiring a license, Clarify sales and use tax law as it applies to vacation rentals. Increase coordination between state and local officials regarding vacation home rentalregulations.

Encourage and develop a means ofproactive communication between VRBO owners andrenter about the rules and regulations that must be implemented for safe operation,

compliance, and interactions with neighboring homeowners.

In 2010, HF1072/ SF894 was introduced which would have added the Task Force definitions of

vacation home rental to the Department ofHealth licensing statute. The proposed legislationwould require VRBO owners to receive a license and comply with the licensure requirements ofthe Department of Health relating to safe operation. The bills received hearings in committee inboth houses but did not advance.

s Definition included in HF1072 /SF894: " Vacation home rental means any home, cabin, condominium or similarbuilding that is advertised or held out to the public as a place where sleeping accommodations are furnished to thepublic on a nightly or weekly basis and is not a bed and breakfast, resort, hotel or motel."

5

In 2011, HF1532/ 8171190 was introduced which would have mandated that use of residentialproperty as a vacation rental must be considered a permitted residential use, but which may belicensed as rental housing by a county, The bill received no consideration, To date, nolegislation has been passed specifically defining vacation home rentals.

B. Current Department of Health Regulation:

Under Minnesota Statutes Chapter 157, hotels /motels', lodging establishments7, and resorts$ are

subject to licensure and inspections by the Department of Health (MDH) and must comply withminimum standards9 in the following areas ofhealth and safety:

Building standards, including ADA complianceProvide a safe and adequate water supplySeptic systems designed for and in compliance with MPCA Chapter 7080Removal of trash, rubbish and refuse frequently from the propertyFire protection, including egress, escapes and fire extinguishers

Under the licensing statute, any facility providing sleeping accommodations for rent for periodsless than one week is considered a hotel /motel and subject to licensure. VRBO owners ventingtheir property for periods of longer than one week would not be subject to licensure because therenters would not be considered " regular roomers" as included in the lodging establishmentdefinition.

Approximately five years ago, MDH developed a list ofproperties potentially subject tolicensure by scanning websites. MDH currently has 18 licensees in the hotel/motel category inCrow Wing County which would be considered VRBOs.

IV, Minnesota Counties

A. Summary of Minnesota Counties Survey Data: VRBO Specific Ordinances:

Four counties in the state have enacted specific VRBO Iand use ordinances. Seven counties responded that they will require a CUP if the VRBO is determined to be acommercial operation.

Twenty counties report they do not regulate VR.BOs.

6 M.S. 157. 15 Subd. 7, Motel or motel. " Hotel or motel" means a building, structure, enclosure, or any part thereofused as, maintained as, advertised as, or held out to be a place where sleeping accommodations are furnished to thepublic and famishing accommodations for periods of less than one week. 7 M.S. 157. 15 Subd. 8: Lodging establishment. " Lodging establishment" means a building, structure, enclosure, orany part thereof used as, maintained as, advertised as, or held out to be a place where sleeping accommodations arefurnished to the public as regular roomers, for periods of one week or more, and having five or more beds to let tothe public.

8 M.S. 157. 15 Subd. 11: Resort. " Resort" means a building, structure, enclosure, or any part thereof located on, oron property neighboring, any lake, stream, skiing or hunting area, or any recreational area for purposes ofprovidingconvenient access thereto, kept, used, maintained, or advertised as, or held out to the public to be a place wheresleeping accommodations are furnished to the public, and primarily to those seeking recreation for periods of oneday, one week, or longer, and having for rent five or more cottages, rooms, or enclosures. 9 Minnesota Rules Chapter 4625

MN Counties with VRBO Land Use Ordinances

ApprovedProperties

Type of Regulation Inspection RequirementsVRBOs Receiving

Complaints

IUP and County Complaints OnlyAitkin

Lodging License13 3

IUP w /Performance 1 during first year of operation, Lake Standards and MH complaints thereafter 20 2

License

IUP Application inspection, complaintsMille Lacs

thereafter12 1

CUP and County FBL Annual FBL inspections, no P & ZStearns

License inspections10 2

Cottonwood County regulates VRBOs under an FBL ordinance

Complaints and Enforcement:

Among these 32 counties, 61 complaints have been registered against 26 differentproperties in the past year.

Zero citations have been issued in the past year.

One enforcement has resulted in a pending court action (Lincoln County).

VRBO Monitoring: Six counties monitor VRBOs only after a complaint. Two counties ( Aitkin, Lincoln) actively scan for operating VRBOs. 24 counties do not actively monitor VRBOs.

Biggest Challenge;

In response to a question about the biggest challenge relating to VRBOs, the following representthe most common responses:

Neighbor complaints. Owner /Operator cooperation.

Concerns over clarity of zoning ordinance. Finding VRBOs. Gathering evidence of alleged violations. Fairness to resorts.

Fairness of complaints -only enforcement policy. Septic compliance and proper sizing. Costs and staff time associated with ordinance enforcement.

B. Enforcement Issues:

Enforcement of a land use VRBO ordinance involves multiple challenges. Survey results havehighlighted several of the main issues associated with VRBO ordinance enforcement.

7

Complaints:

Of the 32 counties responding, only 61 complaints involving 26 properties were registered lastyear. Of these 61 complaints, fifteen issues were resolved by working with property owners, zero citations were issued, and one case is pending in district court.

Identification:

Given the private nature of VRBOs, scanning websites, responding to neighbor complaints, andvoluntary contact are the most prevalent ways of identifying VRBO operations. Only tworesponding counties stated they actively seek to identify VRBOs through websites and othermeans, b respondents investigate after receiving a complaint, and a majority of counties do notactively search for VRBOs.

Cost of Enforcement:

Stearns County reports that it requires 20 -30 hours ofplanning and zoning staff time to bring aVRBO into compliance with their ordinance. Additional staff hours are required by food andbeverage license staff. Land Services staff conservatively estimates it requires a minimum of 10- 15 hours per staff of time to process a conditional use permit application through the publichearing process. With the large number of VRBOs operating in Crow Wing County, regulationof VRBOs could represent a significant challenge given current staffing levels.

Evidence of Violations:

Most activity generating complaints occurs on the weekends or afterhours. By the time staff areable to respond to the complaint, the activity likely has ended. This creates the need to rely onevidence from neighbors and other sources if an enforcement action is necessary, Additionally, it is extremely difficult to know and track how many times a vacation rental has been rented in agiven period. Depending upon the nature of the complaint, it can be difficult to receive lawenforcement zoning ordinance support for afterhours and weekend complaints

Conduct by renters: Many of the common complaints against vacation home rentals relate to the conduct of renters. This creates a very difficult environment in which to effectively enforce provisions of a land useordinance. Survey respondents list neighbor complaints, noise, traffic, parking, dogs, andshoreline activities as the most common issues, Septic and SSTS issues are the most commonland use problem reported to zoning officials.

In general, jurisdictions received very few complaints, but usually multiple complaints aboutspecific properties. Depending upon the type and scope of regulation, a more detailed cost studywould need to be conducted to determine the impacts upon current workload in Land Services. Additionally, more study would be required to explore a greater partnership with the Sherriff' sOffice on addressing after -hours enforcement issues. Active enforcement of a VRBO ordinancemay require significant staff resources, and therefore, substantial costs to taxpayers.

C. Property Tax Issues:

For property tax classifications, short -term rentals differ from long -term rentals because it isunlikely that the owner or renter could claim the property as a primary residence. Properties

M

such as lake or vacation homes that cannot be classified as residential real estate, either because

it is not the primary residence of someone or is vacant and not used for any purpose, can beclassified as seasonal residential recreational, An emerging issue is determining when propertiesused for short-term or vacation rentals can be classified as commercial for tax purposes.

This issue was highlighted in a recent tax court case. In T.C. Hewitt, LLC, v, County ofMcLeod"' a single family lake home purchased by the LLC was classified as non - homesteadresidential for 6 years until reclassified as commercial by McLeod County. The ownerschallenged the reclassification. The Court held that the owner did not overcome their burden to

demonstrate the reclassification was prima facie invalid. The Court highlighted several facts keyto their analysis:

Actual Use of the Property: the LLC organizational documents reserved around fiveweekends per year for the owners use, with the property either held out for rent or rentedfor the remainder of the year.

The property is advertised for rental on a year -round basis. The property earned a small profit or broke even for years in which it was classifiedcommercial.

The property is not anyone' s primary residence, The property was not a " vacant dwelling not used for any purpose" because it was beingused for rental purposes when held out for rent.

Conclusion:

This report represents a broad view of the VRBO issue. Several key questions emerge from theinformation provided in this report regarding determining the proper approach to VRBOs whichrequire further analysis. On a threshold level the wide variance amongst current and potential

county regulations raises questions about fairness and treatment of resort and property ownersthat may suggest a statewide approach is best. Additionally because most of the complaintsassociated with VRBOs relate the conduct of renters, land use regulations may not provide thebest tools to address the problem conduct. Existing regulations, criminal statutes, legal remedies, and exploring an increased partnership with law enforcement in responding to complaints mayprovide an adequate framework for addressing this behavior. Finally, the potential costsassociated with creating and enforcing a new regulation as well as property tax valuation andclassification changes would need to be evaluated based upon the scope and implementation of a

regulatory approach.

10 T.C. Hewitt, LLC., v. County ofMeLeaod, June 27,2014,

Land Services Department

VRBO Report SummaryCommittee of the Whole

November 18, 2014

Scope of Study

Reviewed VRBO treatment by cities, states, and counties around the country & MN

Survey data obtained from 32 Minnesota Counties

VRBO Regulations

CWC Land Use Ordinance does not regulate VRBOs

Property Rights & Dean v. City of WinonaExample from Douglas County v. Owen

Crow Wing County Overview: An estimated 500+ VRBOs are operating in CWC at any given timeMinnesota Department ofHealth is aware of 18 properties they consider a VRBOLand Services has received complaints on two VRBOs in the past year

Approaches around the Countrya States: Wisconsin, Florida, Hawaiim Cities: Austin, TX, Scottsdale, AZ, Portland, OR, Palm Desert, CA

Minnesota Approach:

Task Force recommends adding a Vacation Home Renal definition to licensing statuteNo legislation has been passed on this issue

Minnesota Department of Health licenses lodging establishments and enforcesregulations on health and safety

Hotel /Motel definition includes the use of a structure to provide sleepingaccommodations to the public for periods of less than one week,

Providing sleeping accommodation for more than one week would not be regulatedunless S or more rooms are rented,

MDH follows the definitions closely and seeks to apply any VRBO

Minnesota Counties Survey: o Survey sent to all 87 counties; 32 responses received

20 Counties do not regulate VRBOs

7 Counties state they will require a CUP if a VRBO is determined to be commercial4 Counties have VRBO land use ordinances

Aitkin: IUP required; 13 approved VRBOsLake: IUP required; 20 approved VRBOsMille Lacs: IUP required; 12 approved VRBOsStearns: CUP required; 10 approved VRBOs

61 complaints against 26 properties have been registered in the past yeare Zero citations have been issued, one enforcement action is pending in district court

Enforcement Issues:

VRBOs are difficult to identify; most found through complaints, monitoring is costlyStearns County reports 20 -30 hours in staff time to bring one a VRBO into complianceEvidence of violations is difficult to obtain; complaints come after -hours or on weekends

Conduct of renters is the most common source of complaint; this conduct may be difficultto regulate under a land use regulation

Septic system capacity and compliance can represent the most serious land use issuessurrounding VRBOs and may be handed through existing requirements

Property Tax Classification: Different treatment of short-term v. long -term rentalsTC Hewitt v. McLeod: emerging issue of when a VRBO is commercial for property taxclassification purposes

Regulating VRBOs may also implicate how these.properties are treated for tax purposes

EXPLORE MINNESOTA TOURISMSTATE OF MINNESOTA

IKF ® © EMT

MINNESOTA VACATION HOME RENTAL

TASK FORCEREPORT AND RECOMMENDATIONS

2008 Legislative Session Chapter 291- S. F. 3158

January 2009

121 Seventh Place East, Suite 100

St. Paul, MN 55101 -2114 USA

Telephone: 500- 657 -3637

Web sites: www .industry.exploreminnesota.com . www.exploreminnesota.com

Exhibit E

Minnesota Vacation Home Rental Task ForceReport and Recommendations

Table of Contents

ExecutiveSummary ............................................... ............................... 3

Recommendations................................................. ............................... 4

Background, Opportunities and Concerns ........ ............................... 5

ExistingSituation ................................................... ............................... 7

Existing Minnesota Regulations ........................ ............................... 8

Recommendations................................................ ............................... 9

NextSteps ............................................................... ............................... 11

Appendices:

Appendix A - Legislative Language Regarding VacationHomeRental ................................... ............................... 12

Appendix B - Minnesota Vacation Home Rental Task Force ....... 13

Appendix C - Vacation Home Rental Regulations in SelectCitiesand States ........................... ............................... 16

Appendix D - Vacation Home Rental Regulations in SelectedMinnesota Counties ....................... ............................... 21

Appendix E - Stearns County Zoning Ordinance ......................... 23

Appendix F - Minnesota Department of Health StatutoryLanguage Recommendations ...... ............................... 25

Appendix G - Minnesota Department of Revenue StatutoryLanguage Recommendations ...... ............................... 35

Appendix H - Minnesota Seasonal Recreational PropertiesOwners Coalition Concerns ........ ............................... 36

2

Explore Minnesota Tourism


11 A

iviinnesota Vacation Home Rental Lodginis '

Task Force Report Recommendations

Executive Summary

At the direction of the Minnesota State Legislature, Explore Minnesota Tourism

led a task force studying vacation home rental lodging.

This task force of 30 members included representatives of Minnesota state

departments including Health and Revenue, planning and zoning organizations, the University of Minnesota Tourism Center, several tourism businesses andtourism industry associations, associations for realtors and vacation home ownersand home owners impacted by vacation home rental.

The primary focus of this task force was to ensure that vacation home rentalsoperating as businesses are a safe lodging alternative that are managed andregulated on a level playing field with other lodging options, such as resorts andbed and breakfasts. An additional focus was the need to develop a workablemeans of mixing commercial and residential uses among properties on the samelake, or within the same area or building.

The rental of privately -owned vacation homes is common throughout the worldand is a growing practice in Minnesota. Vacation home rentals are offered throughcompanies that specialize in this business, or directly by the home owners.

The number of vacation homes offered for rent in Minnesota is unknown, but

hundreds of Minnesota homes are promoted on various vacation home rental

Web sites. There are more than 100,000 seasonal, recreational or occasional usehomes in Minnesota.

The task force identified current regulations that apply to Minnesota vacationhome rentals in the areas of health and safety, taxes, and zoning. The task forcealso researched vacation home definitions, laws, permits, licenses and related

issues in several other states.

The task force determined that although current Minnesota regulations alreadyapply to vacation home rentals, the language of the regulations does not specificallyrefer to this type of accommodation. As a result, most people who rent their vacation

homes are probably unaware of the regulations that apply to this practice.

3Explore Minnesota Tourism

Minnesota Vacation Home Rental Task Force

Report and Recommendations

Recommendations

Although Minnesota vacation home rentals are intended to be regulated under

existing statutes and rules, the task force recommends that the management andregulation of vacation home rentals in Minnesota be clarified.

Specifically, in Minnesota Department of Health statutes: Add the definition of vacation home rental in M.S. 157.15 Definitions;

Reference the vacation home rental category in M.S. 157.16Licenses/ Required Fees; and

Add an exemption for charitable donations in M.S. 157.22 Exemptions.

Minnesota Department of Revenue statutes should be revised to:

Define an isolated and occasional sale of a vacation home rental that

would not be subject to sales and use tax in M.S. 297A.67, Subd. 23

Occasional Sales.

There needs to be coordination among state and local jurisdictions anddepartments regarding regulations related to vacation home rentals.

Proactive communication of the rules and regulations must be implemented,

so those who offer vacation home rentals provide safe accommodations in

compliance with state and local laws and regulations and also maintain a positive

relationship with their neighboring homeowners and businesses.

Note: The Minnesota Seasonal Recreational Property Owners Coalition, represented on the Task Force, disagreed wifli recommendations in this report. (See Appendix H.)




Background

The rental of vacation homes is growing throughout the world. Spurred by the ease ofInternet marketing, the need of owners to cover increasing costs including utilities andproperty taxes, and overall consumer interest in savings and demand for lodgingalternatives outside of the traditional hotel /motel offerings, Minnesota' s second -home

owners are becoming active operators in the vacation home rental market.

On a national level, in Hawaii, "individual vacation units" made up 7.9% of total

visitor units (5, 786) for 2007. The North Carolina Vacation Rental Managers

Association recently studied their vacation home rental industry and identified 23, 000vacation home rental units with a total of 92,000 bedrooms and an average length of

stay of 4. 6 nights.

The potential exists for vacation home rental to become a significant business

operation in Minnesota. The 2000 U.S. Census found that Minnesota had 105,609

housing units classified as " for seasonal, recreation, or occasional use," out of

2,065,946 total housing units (5 %). These types of housing, although traditionallythought of as cabins by a lake, also include options such as condominiums in metroareas, or " scrapbooking" houses throughout the state. ( Scrapbooking houses areaccommodations that have been developed specifically for gatherings of people whoscrapbook as a hobby.) They are commonly located in areas surrounded by seasonaland year - around residences that are not used for commercial purposes.

Opportunities and Concerns

Minnesota' s lodging options are evolving. The number of resorts is steadily declining, largely due to increasing costs of operation and the overall value of lakeshoreproperty. Within the last 20 years, Minnesota has added about 200 bed and breakfastoperations that offer unique lodging alternatives to the traditional hotel /motel incommunities large and small throughout the state.

In more recent years, vacation home rentals have been emerging in Minnesota. Onecharacteristic of vacation home rental that further distinguishes it from most other

types of lodging is that there is not an on -site manager. To make this is a safe, viable, and economically beneficial development, there is a need to provide both guidanceand regulation to these entrepreneurs. The opportunity to address a consumer marketinterested in this lodging option can generate economic benefits throughout an area.


Minnesota ! Vacation Home Rental Task Force


These new lodging options need to operate on a level playing field with otherbusinesses that offer sleeping accommodations. Specific legal and regulatory concernsinclude:

Payment of federal, state and local taxes

Licensing by the Minnesota Department of HealthBuilding code requirements such as the Americans with Disabilities ActSeptic, plumbing and water quality complianceFire safetyCapacity issuesZoning compliance (commercial or residential) Identifying and posting contact information on managementInsurance requirements

In addition to legal concerns, operating a commercial business venture alongsideneighboring residences (many of which are converting from seasonal to year -roundhomes as their owners retire), can lead to conflict. These conflicts, if not addressed on

a voluntary basis, will lead to a need for additional regulation. These types of issuesinclude:

Overcrowding /maximum occupancyMaintenance

24- hour - per -day contact availability with local manager for guests and neighborsNoise

Business signage

Parking capacity/ RV parkingDriving responsiblyGarbage

Responsible use of recreational equipment

Outside campingTrespassingMalicious complaints

Licensing processEnforcement




Existing Situation

Initially, the task force, through the University of Minnesota Tourism Center, lookedat other states and communities that have addressed the development of vacation

home rental. The Tourism Center gathered information on:

Arizona, including SedonaColorado, including Steamboat Springs and Estes ParkFlorida

Hawaii

North Carolina

South Carolina

South Dakota

Texas

Wisconsin

Palm Springs

All of these areas have existing but varied vacation home rental regulations, definitions, licensing, fees and taxes. Regulations deal with issues from safety toparking, as well as enforcement fines. See Appendix C for a summary.

The Tourism Center also looked at a sampling of Minnesota counties: Cass

Cook

Crow WingHennepin

Goodhue

Lake

Olmsted

Stearns - has existing regulations regarding vacation home rental (Ordinance 204enacted in June, 2008. See Appendix E for a summary.) St. Louis

Explore Minnesota Tourism used these same counties to search a sample of the

vacation home rental Web sites. Within these counties, www.vrbo.com listed 344

Minnesota homes; www.alwaysonvacation.com listed 67 and www.homeaway.com

listed 141. See Appendix D for a summary.

Although only three Web sites were examined, based on a Google search, there areat least 816 listings of Web sites that promote vacation home rentals. It is unknown

how many list Minnesota properties. Listing services also do not usually bear legalresponsibility for the information.




Existing Minnesota Regulations

Many of the legal and regulatory issues related to vacation home rental are currentlycovered in state statute. According to the Minnesota Department of Health (MDH), Minnesota Statutes Chapter 157 and Minnesota Rule Chapter 4625 (although not

specifically defining vacation home rental) would apply to a facility offering sleepingaccommodations to the public. Currently, businesses renting for a week or more withfive or more -units are included in MDH licensing requirements.

Licensing by MDH would require verification of a number of issues including buildingcode requirements such as the Americans with Disabilities Act; septic, plumbing andwater compliance; fire safety; capacity issues and posting contact information aboutmanagement. In this process, MDH also requires verification of local zoning complianceas well as a tax identification number.

Within Minnesota Department of Revenue oversight, for sales and use tax

requirements, short term rentals of lodging are taxable under Minnesota Statute297A.61 subd. 3 unless the sale qualifies as an occasional sale under Minnesota Statute

297A.67 subd. 23 Occasional Sales. Vacation home rental is not specifically defined, but included under the more general intent of the occasional sales statute. Propertytax and individual income tax statutes would also apply.

Real Estate licensees, who provide property rental and management services aslicensed under chapter 82, are allowed to operate vacation home rental management

businesses without an additional license. The vacation home rental unit or units

themselves require additional licensing, which may be provided by the unit owner orthe rental management company or broker.

Shoreland rules are currently being updated by the Minnesota Department of NaturalResources through a stakeholder committee review process. Vacation home rental has

been identified for consideration in this revision process.

Cities, counties and townships have their own zoning and nuisance ordinances. Thereare 87 counties and 853 cities in Minnesota with planning and zoning authority. Zoning decisions are made at the local level. Education and communication are theoverall key to developing workable local implementation. Tools or model ordinancelanguage can be provided to assist in local decisions.

Regardless of the existing laws and statutes that govern vacation home rental, it was agroup consensus that these requirements for vacation home rentals are not known, communicated and /or commonly followed at this time.




Recommendations

1. Regulation of Minnesota vacation home rental properties needs to be clarified in

state statute and rules.

Minnesota Department of Health Regulations:

Specifically, three changes are recommended to statutes regarding licensing by theMinnesota Department of Health:

Amend M.S. 157.15 Definitions, by adding a definition for vacation homerental; the recommended language would appear under Subd. 20 Vacation

Hoene Rental.

Vacation home rental means any home, cabin, condominium or similarbuilding that is advertised or held out to the public as a place where sleepingaccommodations are furnished to the public on a nightly or weekly basis and isnot a bed and breakfast, resort, hotel or motel."

Add references to the vacation home rental category to M.S. 157.16 LicensesRequired; Fees.

Add a licensing exemption for one donation annually for eligible charitabledonations of weekend stays or periods of a week or less for fundraising in M.S. 157.22 Exemptions.

See Appendix F for language.

Minnesota Department of Revenue Regulations:

One change in statute is recommended by the Minnesota Department of Revenue:

Amend Minnesota Statutes 2008, section 297A.67 subd. 23, to define an

isolated or occasional sale of a vacation home rental that would not be subject

to sales and use tax. The definition adopts the "number of days" used for

federal income tax purposes for the purpose of consistency and familiarity.

See Appendix G for language.


Minnesota Vacation dome Rental Task Force


2. Communications Regarding Vacation Home Rental

A proactive communication plan needs to be implemented to ensure awareness of the

regulations, licenses, taxes and operational courtesies that need to be addressed when

renting vacation home properties.

Currently, requirements for licensing, fees, taxes, inspections and enforcement for theoperation of a vacation home rental property in Minnesota are neither clearly definednor widely known. Lacking clear direction, unlicensed and unregulated vacationhome rentals are growing throughout Minnesota. Following the outcome of the 2009Legislative session, communicating this information is critical to compliance.

Target audiences for the communication of vacation home rental operation

requirements include:

Vacation home rental property ownersVacation property owners associationsVacation home management and rental companies

Nearby residentsLake associations

Organizations and mediums to potentially use in communicating include: Governing agencies at a state, local and county levelTourism and hospitality trade associationsRealtors and realtor associations - CEU' s and desk top reference guidesContinuing education sources for realtorsPromotional organizations - chambers of commerce, convention and visitors

bureaus, state tourism office

Annual licensing and permitting processesLaw enforcement agencies

Insurance agencies

Electric utility companies serving vacation rental areasProperty tax statements for recreational propertyVacation rental websites

Communications must be clear, concise, and consistent and have contacts for further

information, both phone and Web based. Explore Minnesota Tourism will create a

Web site or Web page that includes all current information about requirements for

vacation home rentals. Both public relations and public information meetings need to

be utilized to reach the targeted audiences.




Next Steps

Recommendations for statutory changes will be initiated by tourism industryassociations and pursued in the Minnesota Legislature. Following the 2009legislative session, Explore Minnesota Tourism will coordinate with the task force to

implement needed communications efforts.




APPENDIX A: LEGISLATIVE LANGUAGE REGARDING VACATION

HOME RENTAL

CHAPTER 291-- S. F.No. 3158

An act

relating to commerce; requiring Explore Minnesota Tourism to studyvacation rental lodging; creating definitions; requiring a report. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1. MINNESOTA VACATION RENTAL LODGING STUDY.

Explore Minnesota Tourism shall conduct a study of vacation rental lodging inMinnesota and report to the legislature any recommendations needed to protectconsumers, ensure tax compliance, promote safe rentals, and promote tourism in

Minnesota. Explore Minnesota Tourism shall consult with the Minnesota

Department of Revenue, Minnesota Department of Health, political

subdivisions, and representatives of the tourism industry including resorts, bedand breakfast establishments, cabin owner associations, conventions and visitor

bureaus, and others to determine and recommend regulations or legislation to

define and promote the vacation rental lodging. Explore Minnesota Tourismshall report by January 15, 2009, to the chairs and ranking minority members ofthe house of representatives and senate committees with jurisdiction over anyrecommendations developed from the study, including any proposed legislation. EFFECTIVE DATE.This section is effective the day following final enactment. Presented to the governor May 8, 2008Signed by the governor May 12, 2008, 1: 09 p.m.




APPENDIX B: MINNESOTA VACATION HOME RENTAL TASK FORCE

Tim Aarsvold

Geneva Beach Resort

105 Linden Avenue

Alexandria, MN 56308

320/ 763- 3200

[email protected]

Jane & Gary Bales18 Harbor View Lane

Federal Dam, MN 56641

218/ 654-3030

[email protected]

Angie BergStearns County Administration Center705 Courthouse Square

St. Cloud, MN 56303

320/ 656- 3600

Angie.berg@co. stearns.mn.us

Christine Berger

MN Association of Realtors

5750 Lincoln Drive

Edina, MN 55436

952/ 215 -8471

[email protected]

Joel Carlson

Legal Research - Government Affairs

6 West Fifth Street Suite 700

St. Paul, Minnesota 55102

651/ 223 -2868

[email protected]

Chuck DoughertyMinnesota Bed & Breakfast Assn.

101 Water Street South

Stillwater, MN 55082 -5150

[email protected]

13

John Edman


100 Metro Square

121 7t" Place East

Saint Paul, MN 55101

651/ 296-4783

[email protected]

Gary EdwardsMN Dept. of Health

625 North Robert Street

St. Paul, MN 55155 -2516

651/ 201 -4513

[email protected]

Tom Ellerbe

MN Dept. of Revenue

600 N. Robert St., M.S. 2230

St. Paul, MN 55146 -2230

651/ 566 -6136

[email protected]

Henry ErdmanMN Seasonal Recreational

Property Owners Coalition331 Winona Street West


651 / 247 -1701

[email protected]

Jeff Forester

MN Seasonal Recreational

Property Owners CoalitionTwo Appletree Square, # 235

Bloomington, MN 55425

952/ 854- 1317

jeff@msrpo. org


Jim Franklin

Minnesota Sheriffs Association

1951 Woodlane Drive

Woodbury, MN 55125651/ 451 -7216

Franklin@mnsheriffs. orR

Annalee Garletz

Association of Minnesota Counties

125 Charles Avenue


651/ 789 -4322

[email protected]

Mike Grove

Twin Springs Resort

3837 North Pleasant Lake Dr NW

Hackensack, MN 56452

[email protected]

Kent Gustafson

University of MN Tourism Center120 BioAgEng1390 Eckles Avenue


612/ 625- 8274

[email protected]

Ken Klos

Greenwood Township /Lake Vermilion7595 Timberlore Trail West

Cook, MN 55723

218/ 666 -0359

[email protected]

Mark Lauderbaugh

38615911, Street NW

Maple Lake, MN 55358

320/ 963- 2017

[email protected]

14



Joe Mathews

Association of MN Counties

125 Charles Avenue


651/ 224 -3344

mathews@mncounties. orLY

Kevin Matzek

Hospitality Minnesota305 Roselawn Avenue East


651/ 778-2400

[email protected]

Mark NovotnyHyde -A -Way Bay Resort3489 Ford Drive NW

Hacksensack, MN 56452

218/ 675 -6683

[email protected]

Jennifer O' Rourke

League of Minnesota Cities

145 University Avenue WestSaint Paul, MN 55103

651/ 281 -1261

[email protected]

Marissa Papineau

MN Department of Revenue

600 N. Robert St.


651/ 556 -6974

[email protected]

Julie RingLocal Public Health Association of MN

125 Charles Avenue


651/ 789-4354

[email protected]


Gretchen Sabel

Pollution Control Agency520 Lafayette Road


651/ 296 -6300

[email protected]

Ingrid Schneider

MN Tourism Center

University of MN Tourism Center120BioAgEng1390 Eckles Avenue


612 - 624 -2736

[email protected]

Dave Siegel

Hospitality Minnesota/ Associations305 Roselawn Avenue East


651/ 778- 2400

[email protected]

Kent Sulem

General Consul

Minnesota Association of Townships

805 Central Avenue East

P.O. Box 267

St. Michael, MN 55376

763/ 497 -2330

[email protected]

Colleen Tollefson


100 Metro Square

121761 Place East


651/ 297-2635

Colleen. [email protected]

is



Heather VanValkenburgDirector of Government Affairs

MN Association of Realtors

5750 Lincoln Drive

Edina, MN 55436

952/ 912-2661

[email protected]

Cathy WicksSales and Use Tax Division

Department of Revenue

600 North Robert Street

Saint Paul, MN 55146 -6300

651/ 556 -6818

[email protected]


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APPENDIX C: Vacation Home Rentals in Select States and Cities

August 2008)


Sedona, AZ (2007) Steamboat Estes Park, CO (2004) Palm Springs, TX?

Springs, CO 2008)

Existing Yes — Article 6 of Yes Yes Yes — Chapter 5.25

vacation Land Development

home Code

regulations

Definitions Rental of single Vactain Home Leasing, renting any More than one

family or mobile Rental to a single unit for a total residential buildings

home for less than party. Not more duration of less than rented for less than 28

30 days than two occasions 30 days vacation home consecutive days to

for not more than rental— residential the same renter

29 consecutive unit leased or occupied

days. on a unit basis

Detail Prohibits rental Maximum of 16 Need to operate within Compliance with all

more than 30 days people/ 200ft. Two residential character city fire, noise, parking noise / traffic /design) building, & health

spaces / four Two guests / room codes. 24- hour / dayvehicles. No with maximum of contact with local

unreasonable eight people; one manager.

noise, outdoor parking lot per threesleeping, guest cars NO RV,

commercial local manager required

kitchens,

advertisingFee/ License 500 application Business license fee: Initial fee: $25.00

fee, $50 annual varies by number ofrenewal units

Enforcement 2500 fine & six 1000 fine/ day Inspection with Misdemenor for each

months in Jail operate without reasonable notice day of violation. license (three License revocation Fifteen days allowed

months to after warnings to complete

transition) compliance. After

Inspection with 24- fourth violation,

hour notice license can be revoked

Tax Lodging tax Commercial sales tax 11. 75% lodging tax



Notes:

Sedona ordinance has become subject of court challenges

Hawaii (2007): " Individual vacation units" made up 7.9 % of total visitor units (5, 786)

Maui County, Hawaii, VHR policies part of bed and breakfast ordinance (Chapter 19.64) North Carolina VHR profile completed for North Carolina Vacation Rental Managers AssociationTotal number of VHR's: 23,000

Total value: $9. 6 billion

Total' number of bedrooms: 92, 000

Average length of stay: 4.6 nightsTotal number of VHR management companies: 142

University ofMinnesota Tottrisnt Ce)iter— August 2008



APPENDIX D: Vacation Home Rental Regulations in SelectedMinnesota Counties

21


Cass Cook Crow Hennepin Goodhue Lake Olmsted Stearns St. Louis

Win

Existing No No No No No No No Yes No— vacation vacation P & Z Lodging P & Z 6/ 17/ 08) Possiblyhome rental ordnances Depart- more than Depart- Ordinance town - regulations There is a ment 30 days ment 204 ship

lodging reports no requires Indicate

establish- problems) conuner- vacation

ment" cial & home

ordinance condition- rentals

al use not a

erinit roblem

Definitions Lodging More than Any grouphouse" — 30 days of rooms

sleeping forming arooms single

furnished habitable

to public/ area

five+ beds)

Details License Any use Application

required; may be requires

fees set; allowed as water test,

inspection condition- sewage

standards; al use inspection,

construc- when it can to scale

tion plan be drawingreviews; regulated

penalties to preserve Max. 12

set the stated people, or

general one

purpose of person /50

the district gallons

water/ daysewage can

handle.

No signs or

RV' s

No more

than

two /parcel

Fees/License Cond. Use License

200; required

Recording based on

fee =$46 number of

rooms

21




Many vacation home rental property owners advertise their properties on theInternet, The following chart lists the totals for rentals in selected counties on threepopular Web sites. Although only three Web sites were examined, based on aGoogle.com search, there are at least 816 listings of Web sites that promote vacation

home rental.

All Ely properties are listed in Lake CountyIn some cases, it is difficult to determine whether a property is in Cass or CrowWing County

The 2000 U. S. Census data, and found that Minnesota had 105, 609 housing unitsclassified as " for seasonal, recreation, or occasional use" ( i. e., seasonal) out of 2, 065, 946

total housing units ( 5 %).

University of Minnesota Tourism Center - August 2008


www.vrbo.com www.alwaysonvacation.com www.homea,,vay.com All

three

Web

Sites

CountyCass 33 4 3 40

Cook 110 23 82 215

Crow

Win

95 15 23 133

Goodhue 2 0 1 3

Hennepin 27 1 8 36

Lake 22 4 5 31

Olmsted 2 0 0 2

St. Louis 51 19 17 87

Stearns 2 1 2 5

TOTAL 344 67 141 552

All Ely properties are listed in Lake CountyIn some cases, it is difficult to determine whether a property is in Cass or Crow

Wing County

The 2000 U. S. Census data, and found that Minnesota had 105, 609 housing unitsclassified as " for seasonal, recreation, or occasional use" ( i. e., seasonal) out of 2, 065, 946

total housing units ( 5 %).

University of Minnesota Tourism Center - August 2008




APPENDIX E: Stearns County Zoning Ordinance

This Section last annended June 17, 2008)

6.49 Vacation/Private Home Rental

6.49.1 Performance Standards

A Vacation/ Private Home Rental shall be subject to the administrative requirements

of Section 4.18 of this Ordinance and the following performance standards: A. Submittal of an application signed by the property owner and including the

following: a current water test from an accredited laboratory with test resultsfor nitrate - nitrogen and coliform bacteria, a compliance inspection of the

existing subsurface sewage treatment system and a to -scale drawing of thelocation and dimensions of the structure intended for licensing and allassociated accessory structures, parking areas, shore recreation facilities andsewage treatment systems.

B. The occupancy of a Vacation/ Private Home Rental shall be limited to nomore than two persons per bedroom plus two additional persons per

building, not to exceed a maximum of 12 persons; or no more than 1 personfor every 50 gallons of water per day that the building' s sub - surface sewagetreatment system is designed to handle, whichever is less.

C. Parking shall meet the requirements of Section 7.15 of this Ordinance. Designated parking areas shall be off - street parking.

D. On premise signs are prohibited.

E. The Vacation/ Private Home Rental shall be connected to an approved subsurface

sewage treatment system. The subsurface sewage treatment system

shall be designed and constructed with a design flow of 50 gallons of water

per person per day to handle the maximum number of guests for which thefacility is permitted. The sub - surface sewage treatment system shall includea flow measurement device. Flow measurement readings and monitoring ofthe sub - surface sewage treatment system shall be recorded monthly andrecords shall be made available to the Department upon request. The use of

holding tanks for Vacation/ Private Home rental units shall be prohibited. F. Rental of recreational vehicles shall not be allowed.

G. The Planning Commission may impose conditions that will reduce theimpact of the proposed use on neighboring properties and nearbywaterbodies. Said conditions may include but not be limited to a fence orvegetative screening along a property line or a native buffer along the shoreline.

H. The owners of Vacation/ Private Home Rentals shall ensure that the noise

standards of Minnesota Rules, chapter 7030; or successor rules, are met.

The Planning Commission may impose a quiet hours standard in order toassist in achieving this goal and to reduce the potential impacts onneighboring properties.




The owners of Vacation /Private Home Rentals shall, at a minimum, complywith Minnesota Statutes, chapter 504B; or successor statue and make

available to all tenants the Minnesota Attorney General' s annual statementsummarizing the significant legal rights and obligations of landlords andresidential tenants, as described in Minnesota Statues, section 50413. 275; or

successor statute.

The licensee shall keep a report, detailing use of the home by recording, at aminimum, the name, address, phone number and vehicle license number of

all guests using the property. A copy of the report shall be provided to theDepartment upon request.

No more than two Vacation /Private Home rentals will be allowed on a

parcel. Construction of more than one single family dwelling unit or GuestCottage shall only be allowed on a parcel that meets the requirements ofSections 10.2.8 and 10.2.12 of this Ordinance. More than two

Vacation/ Private Home rentals on the same parcel or on contiguous parcels

under common ownership shall constitute a resort and must meet thestandards set forth in Section 10.2.23 of this Ordinance.

6.49.2 License Required

A Vacation /Private Home Rental shall be licensed by the County and shall meetthe requirements of Stearns County Ordinance Number 204; or successorordinances.



APPENDIX F: MINNESOTA DEPARTMENT OF HEALTH

STATUTORY LANGUAGE RECOMMENDATIONS

Subd. 2.

Repealed, 1996 c 451 art 4 s 71]

Subd. 3. Commissioner.

Commissioner" means the commissioner of health.

Subd. 4.Boarding establishment.

Boarding establishment" means a food and beverage serviceestablishment where food or beverages, or both, are furnished to five

or more regular boarders, whether with or without sleepingaccommodations, for periods of one week or more.

Subd. 5. Food and beverage service establishment.

Food and beverage service establishment" means a building, structure, enclosure, or any part of a building, structure, or enclosureused as, maintained as, advertised as, or held out to be an operation

that prepares, serves, or otherwise provides food or beverages, or

both, for human consumption.

Subd. 6. Food cart.

Food cart" means a food and beverage service establishment that is a

nonmotorized vehicle self - propelled by the operator. Subd. 7.Hotel or motel.

Hotel or motel" means a building, structure, enclosure, or any partthereof used as, maintained as, advertised as, or held out to be a place

where sleeping accommodations are furnished to the public andfurnishing accommodations for periods of less than one week.

Subd. 8. Lodging establishment.

Lodging establishment" means a building, structure, enclosure, orany part thereof used as, maintained as, advertised as, or held out to

be a place where sleeping accommodations are furnished to thepublic as regular roomers, for periods of one week or more, and

having five or more beds to let to the public. W




Subd. 9. Mobile food unit.

Mobile food unit" means a food and beverage service establishment

that is a vehicle mounted unit, either motorized or trailered,

operating no more than 21 days annually at any one place or isoperated in conjunction with a permanent business licensed under

this chapter or chapter 28A at the site of the permanent business bythe same individual or company, and.readily movable, withoutdisassembling, for transport to another location.

Subd. 10. Person.

Person" has the meaning given in section 103I.005, subdivision 16.

Subd. 11. Resort.

Resort" means a building, structure, enclosure, or any part thereoflocated on, or on property neighboring, any lake, stream, skiing orhunting area, or any recreational area for purposes of providingconvenient access thereto, kept, used, maintained, or advertised as, or

held out to the public to be a place where sleeping accommodationsare furnished to the public, and primarily to those seeking recreationfor periods of one day, one week, or longer, and having for rent fiveor-- mere cottages, rooms, or enclosures.

Subd. 12. Restaurant.

Restaurant" means a food and beverage service establishment,

whether the establishment serves alcoholic or nonalcoholic beverages,

which operates from a location for more than 21 days annually. Restaurant does not include a food cart or a mobile food unit.

Subd. 12a. Seasonal permanent food stand.

Seasonal permanent food stand" means a food and beverage service

establishment which is a permanent food service stand or building, but which operates no more than 21 days annually.

Subd. 13. Seasonal temporary food stand.

Seasonal temporary food stand" means a food and beverage serviceestablishment that is a food stand which is disassembled and moved

from location to location, but which operates no more than 21 days

annually at any one location.

Subd. 14. Special event food stand.

Special event food stand" means a food and beverage service

establishment which is used in conjunction with celebrations and

special events, and which operates no more than three times annuallyfor no more than ten total days.




Subd. 15. [Repealed, 1998 c 407 art 2 s 109

Subd. 16.Critical control point.

Critical control point" means a point or procedure in a specific food

system where loss of control may result in an unacceptable healthrisk.

Subd. 17.HACCP plan.

Hazard analysis critical control point ( HACCP) plan" means a

written document that delineates the formal procedures for followingthe HACCP principles developed by the National AdvisoryCommittee on Microbiological Criteria for Foods.

Subd. 18.Hazard.

Hazard" means any biological, chemical, or physical property thatmay cause an unacceptable consumer health risk.

Subd. 19. Statewide hospitality fee.

Statewide hospitality fee" means a fee to fund statewide food, beverage, and lodging program development activities, includingtraining for inspection staff, technical assistance, maintenance of astatewide integrated food safety and security information system, and other related statewide activities that support the food, beverage,

and lodging program activities.

place "

Vacation home rental means anv home, cabin, condominium or

similar building that is advertised or held out to the public as aaccommodationswhere sleeping

breakfast, resorthotel

or motel.

History:

1995 c 207 art 9 s 41; 1996 c 451 art 4 s 47- 55, 70; 1997 c 203 art 2 s 19 -21;

1998 c 407 art 2 s 87 -91; 1 Sp2005 c 4 art 6 s 43




3) any building owned, operated, and used by a college or universityin accordance with health regulations promulgated by the college oruniversity under chapter 14;

4) any person, firm, or corporation whose principal mode of businessis licensed under sections 28A.04 and 28A.05, is exempt at that

premises from licensure as a food or beverage establishment;

provided that the holding of any license pursuant to sections 28A.04and 28A.05 shall not exempt any person, firm, or corporation fromthe applicable provisions of this chapter or the rules of the state

commissioner of health relating to food and beverage serviceestablishments;

5) family day care homes and group family day care homes governedby sections 245A.01 to 245A.16;

6) nonprofit senior citizen centers for the sale of home -baked goods;

7) fraternal or patriotic organizations that are tax exempt under

section 501( c) (3), 501( c)( 4),* 501( c) ( 6), 501( c) ( 7), 501( c) ( 10), or 501( c) (19)

of the Internal Revenue Code of 1986, or organizations related to or

affiliated with such fraternal or patriotic organizations. Such

organizations may organize events at which home - prepared food isdonated by organization members for sale at the events, provided:

i) the event is not a circus, carnival, or fair;

ii) the organization controls the admission of persons to the event,

the event agenda, or both; and

iii) the organization's licensed kitchen is not used in any manner forthe event;

Such tax exempt organizations listed above may accept donations

from private property owners at cabins or homes in recreationalareas for weekend stays or periods of a week or less for fund

raising efforts. Neither the property owner nor the tax exemptorganization will be required to obtain a vacation home rental

license or other lodging license for that donated period of timewhen limited to one donation annualhL

8) food not prepared at an establishment and brought in byindividuals attending a potluck event for consumption at the potluckevent. An organization sponsoring a potluck event under this clausemay advertise the potluck event to the public through any means.




Individuals who are not members of an organization sponsoring apotluck event under this clause may attend the potluck event andconsume the food at the event. Licensed food establishments other

than schools cannot be sponsors of potluck events. A school maysponsor and hold potluck events in areas of the school other than the

school' s kitchen, provided that the school' s kitchen is not used in anymanner for the potluck event. For purposes of this clause, " school"

means a public school as defined in section 120A.05, subdivisions 9,

11, 13, and 17, or a nonpublic school, church, or religious

organization at which a child is provided with instruction in

compliance with sections 120A.22 and 120A.24. Potluck event food

shall not be brought into a licensed food establishment kitchen; and

9) a home school in which a child is provided instruction at home.

History:

1995 c 207 a1-t 9 s 48; 2000 c 378 s 1; 2001 c 65 s 1; 1Sp2001 c 9 art 1 s 55; 2002

c 379 art 1 s 113157.16

LICENSES REQUIRED; FEES.

Subdivision 1. License required annually.

A license is required annually for every person, firm, or corporationengaged in the business of conducting a food and beverage serviceestablishment, hotel, motel, lodging establishment, public pool, vacation home rental or resort. Any person wishing to operate aplace of business licensed in this section shall first make application,

pay the required fee specified in this section, and receive approval foroperation, including plan review approval. Seasonal and temporaryfood stands and special event food stands are not required to submit

plans. Nonprofit organizations operating a special event food standwith multiple locations at an annual one -day event shall be issuedonly one license. Application shall be made on forms provided by thecommissioner and shall require the applicant to state the full name

and address of the owner of the building, structure, or enclosure, thelessee and manager of the food and beverage service establishment,

hotel, motel, lodging establishment, public pool, vacation homerental or resort; the name under which the business is to be

conducted; and any other information as may be required by thecommissioner to complete the application for license.



Subd. 2. License renewal.

Initial and renewal licenses for all food and beverage service

establishments, hotels, motels, lodging establishments, public pools, vacation home rentals and resorts shall be issued for the calendar

year for which application is made and shall expire on December 31

of such year. Any person who operates a place of business after theexpiration date of a license or without having submitted anapplication and paid the fee shall be deemed to have violated the

provisions of this chapter and shall be subject to enforcement action,

as provided in the Health Enforcement Consolidation Act, sections

144.989 to 144.993. In addition, a penalty of $50 shall be added to thetotal of the license fee for any food and beverage serviceestablishment operating without a license as a mobile food unit, aseasonal temporary or seasonal permanent food stand, or a special

event food stand, and a penalty of $100 shall be added to the total ofthe license fee for all restaurants, food carts, hotels, motels, lodgingestablishments, public pools, vacation home rentals and resorts

operating without a license for a period of up to 30 days. A late fee of300 shall be added to the license fee for establishments operating

more than 30 days without a license.

Subd. 2a. Food manager certification.

An applicant for certification or certification renewal as a food

manager must submit to the commissioner a $ 28 nonrefundable

certification fee payable to the Department of Health.

Subd. 3. Establishment fees; definitions.

a) The following fees are required for food and beverage serviceestablishments, hotels, motels, lodging establishments, public pools, vacation home rentals and resorts licensed under this chapter. Food

and beverage service establishments must pay the highest applicablefee under paragraph (d), clause ( 1), ( 2), ( 3), or (4), and establishments

serving alcohol must pay the highest applicable fee under paragraphd), clause ( 6) or ( 7). The license fee for new operators previously

licensed under this chapter for the same calendar year is one -half of

the appropriate annual license fee, plus any penalty that may berequired. The license fee for operators opening on or after October 1is one -half of the appropriate annual license fee, plus any penalty thatmay be required.




b) All food and beverage service establishments, except special event

food stands, and all hotels, motels, lodging establishments, publicpools, vacation home rentals and resorts shall pay an annual base feeof $150.

c) A special event food stand shall pay a flat fee of $40 annually. Special event food stand" means a fee category where food is

prepared or served in conjunction with celebrations, county fairs, orspecial events from a special event food stand as defined in section

157.15.

d) In addition to the base fee in paragraph (b), each food and

beverage service establishment, other than a special event food stand,

and each hotel, motel, lodging establishment, public pool, vacationhome rental and resort shall pay an additional annual fee for each feecategory, additional food service, or required additional inspectionspecified in this paragraph:

1) Limited food menu selection, $50. " Limited food menu selection"

means a fee category that provides one or more of the following:

i) prepackaged food that receives heat treatment and is served in the

package;

ii) frozen pizza that is heated and served;

iii) a continental breakfast such as rolls, coffee, juice, milk, and cold

cereal;

iv) soft drinks, coffee, or nonalcoholic beverages; or

v) cleaning for eating, drinking, or cooking utensils, when the onlyfood served is prepared off site.

2) Small establishment, including boarding establishments, $100.

Small establishment" means a fee category that has no salad bar andmeets one or more of the following:

i) possesses food service equipment that consists of no more than a

deep fat fryer, a grill, two hot holding containers, and one or moremicrowave ovens;

ii) serves dipped ice cream or soft serve frozen desserts;

iii) serves breakfast in an owner - occupied bed and breakfast

establishment;

iv) is a boarding establishment; or



v) meets the equipment criteria in clause ( 3), item (i) or ( ii), and has a

maximum patron seating capacity of not more than 50.

3) Medium establishment, $260. " Medium establishment" means a fee

category that meets one or more of the following: i) possesses food service equipment that includes a range, oven,

steam table, salad bar, or salad preparation area;

ii) possesses food service equipment that includes more than one

deep fat fryer, one grill, or two hot holding containers; or

iii) is an establishment where food is prepared at one location and

served at one or more separate locations.

Establishments meeting criteria in clause ( 2), item (v), are not

included in this fee category.

4) Large establishment, $460. " Large establishment" means either:

i) a fee category that (A) meets the criteria in clause ( 3), items (i) or

ii), for a medium establishment, (B) seats more than 175 people, and

C) offers the full menu selection an average of five or more days a

week during the weeks of operation; or

ii) a fee category that (A) meets the criteria in clause ( 3), item (iii), for

a medium establishment, and (B) prepares and serves 500 or more

meals per day.

5) Other food and beverage service, including food carts, mobilefood units, seasonal temporary food stands, and seasonal permanentfood stands, $50.

6) Beer or wine table service, $50. " Beer or wine table service" means

a fee category where the only alcoholic beverage service is beer orwine, served to customers seated at tables.

7) Alcoholic beverage service, other than beer or wine table service,

135. " Alcohol beverage service, other than beer or wine table service"

means a fee category where alcoholic mixed drinks are served orwhere beer or wine are served from a bar.

8) Lodging per sleeping accommodation unit, $8, including hotels, motels, lodging establishments, vacation home rentals and resorts, up to a maximumof $800. " Lodging per sleeping accommodation unit" means a fee categoryincluding the number of guest rooms, cottages, or other rental units of a hotel, motel, lodging establishment, vacation home rental or resort; or the number ofbeds in a dormitory. 32



9) First public pool, $180; each additional public pool, $100. " Public

pool" means a fee category that has the meaning given in section144. 1222, subdivision 4.

10) First spa, $110; each additional spa, $50. " Spa pool" means a fee

category that has the meaning given in Minnesota Rules, part4717.0250, subpart 9.

11) Private sewer or water, $50. " Individual private water" means a

fee category with a water supply other than a community publicwater supply as defined in Minnesota Rules, chapter 4720. Individual private sewer" means a fee category with an individual

sewage treatment system which uses subsurface treatment and

disposal.

12) Additional food service, $130. " Additional food service" means a

location at a food service establishment, other than the primary foodpreparation and service area, used to prepare or serve food to the

public.

13) Additional inspection fee, $300. " Additional inspection fee"

means a fee to conduct the second inspection each year for

elementary and secondary education facility school lunch programswhen required by the Richard B. Russell National School Lunch Act.

e) A fee of $350 for review of the construction plans must accompanythe initial license application for restaurants, hotels, motels, lodgingestablishments, vacation home rentals or resorts with five or more

sleeping units.

f) When existing food and beverage service establishments, hotels, motels, lodging establishments, vacation home rentals or resorts areextensively remodeled, a fee of $250 must be submitted with theremodeling plans. A fee of $250 must be submitted for newconstruction or remodeling for a restaurant with a limited food menuselection, a seasonal permanent food stand, a mobile food unit, or a

food cart, or for a hotel, motel, resort, vacation home rental or

lodging establishment addition of less than five sleeping units.

g) Seasonal temporary food stands and special event food stands arenot required to submit construction or remodeling plans for review.

Subd. 3a. Statewide hospitality fee.

Every person, firm, or corporation that operates a licensed boardingestablishment, food and beverage service establishment, seasonal

33




temporary or permanent food stand, special event food stand, mobilefood unit, food cart, resort, hotel, motel, vacation home rental or

lodging establishment in Minnesota must submit to the commissionera $ 35 annual statewide hospitality fee for each licensed activity. Thefee for establishments licensed by the Department of Health isrequired at the same time the licensure fee is due. For establishments

licensed by local governments, the fee is due by July 1 of each year.

Subd. 4. Posting requirements.

Every food and beverage service establishment, hotel, motel, lodgingestablishment, public pool, vacation home rental or resort must have

the license posted in a conspicuous place at the establishment.

History:

1995 c 207 art 9 s 42; 1996 c 451 art 4 s 56; 1997 c 203 art 2 s 22; 1998 c

397 art 11 s 3; 1998 c 407 art 2 s 92; 1Sp2001 c 9 art 1 s 54; 2002 c 379 art

1 s 113; 1Sp2005 c 4 art 6 s 44 -47; 2007 c 147 art 9 s 34; 2008 c 328 s 8

Copyright © 2008 by the Office of the Revisor of Statutes, State ofMinnesota. All rights reserved.




APPENDIX G: Minnesota Department of Revenue StatutoryLanguage Recommendations

Minnesota Statutes 2008, section 297A.67, subdivision 23 is amended to read:

Subd. 23. Occasional sales. Isolated and occasional sales in Minnesota not

made in the normal course of business of selling that kind of property or serviceare exempt. The storage, use, or consumption of property or services acquired asa result of such a sale is exempt. This exemption does not apply to sales oftangible personal property primarily used in a trade or business.

The rental or lease, for a consideration in money or by exchange or barter, of aresidential dwelling, including4 anv home, cabin, condominium or similarbuildi business of selling that kindof property or service as defined in subdivision 21. as a place for sleepingaccommodations and which is not licensed. or required to be licensed as a bed

and breakfast, hotel, motel, resort or caprotnd, is exempt as an occasional

sale provided the dwelling is leased or rented for 14 or Less days in a calendarfir.

EFFECTIVE DATE.] This section is effective for rentals and leases after Tune30, 2009.



APPENDIX H: Minnesota Seasonal Recreational PropertiesOwners Coalition Concerns

To the Members of the Vacation Home Rental Task Force:

Colleen has asked us all to weigh in on the Draft Report to the Legislature. MSRPO

spent much time working on this committee, and we supported the concept of

determining if there were a lot of people who were renting out cabins as a business, but not paying the related taxes, fees or obtaining appropriate permits. This TaskForce, we believe, has moved far beyond that original goal.

As an organization we concur with the resort community that like businesses shouldbe treated similarly in state law.

MSRPO does not represent vacation home rental owners - we represent cabin

owners and hunting land owners. From time to time some of these owners rent outtheir places to friends, family or acquaintances. This legitimate use of theirproperty, based on our conversations with our 6, 000 members is very infrequent andrare. We had hoped that this task force would illuminate the issues involved in theseoccasional rentals, and that we could pass this valuable information on to those who

own cabins and hunting lands in the state.

That being said, here are our thoughts on the report in its current format:

1) We have no idea if there is a problem or if there is, how widespread it might be.

At every single meeting we have raised the issue of how big a problem are wetalking about. This report does not answer that question. Instead it goes ahead andproposes a legislative change to solve a problem that we do not even know forcertain exists.

2) The Task force was to look at those involved in vacation home rental as a

business, recognizing that some property owners may, from time to time, rent outtheir place to friends, family or acquaintances. This is not vacation home rental as abusiness, but a legal and perfectly fine use of a property by an owner. Yet theproposed regulations do little to differentiate between those who are in the business

of renting vacation homes, and those owners who occasionally rent out their placesto help make ends meet.

3) Definition suggestion in M.S. 157.15 - We strongly believe that this definition is fartoo narrow and encroaches on private property rights. Property Owners whooccasionally rent out their properties did not buy their properties as a businessinvestment; they are not depending on these properties for their income.

W.




In conclusion, the changes suggested in this report do not "level the playing field" between cabin or hunting land owners who occasionally rent out their places andresort owners, who are in the full time business of renting out access to the greatoutdoors. These changes harm cabin and hunting land owners unfairly - they didnot buy their properties as businesses and are not using them as a business andshould not be treated as such.

We believe the recommendations made in this report to be an unfair targeting ofALL seasonal property owners and a taking of property rights from them. We cannot support the recommendations as they are currently presented in thisreport. However we stand ready work with interested parties at the legislature tocorrect these and other issues.

Sincerely,

Jeff Forester

Executive Director, Minnesota Seasonal Recreational Property Owners, MSRPO


1

Nickolas Olson

From: Betsy Funderburk <[email protected]>Sent: Monday, March 26, 2018 8:40 AMTo: Nickolas OlsonSubject: Short term rentals

Good morning Mr. Olson, I support a ban on existing and new short term rentals in Minnetrista. It is wrong to allow short term rentals in our neighborhoods. My long term neighbor passed away and their home was purchased to two realtors. These guys listed this house in VRBO and other short term rental agency's. They are homesteading the house, but neither live there at all. This has greatly affected us in many ways. Never, would I think Minnetrista would allow people to run a resort in neighborhoods. So far we have endured a great invasion of our privacy and feeling of safety. It’s loud, people let trash blow around, people have been smoking marijuana in the driveway, groups of guys have made lewd comments to my 13 year old daughter while she was playing with our dog in our yard. Every night is a party. Every week there will be 26 or more new people next door who we or the city know nothing about. There are background checks that are done.This greatly affects our property values. It will also burden our police force because people are not going to accept these behaviors in their neighborhoods. We now have two on our block. There is no upside to allowing this. Would you want this next door to your family? The mayor and every member of the City Council supports a ban on existing and short terms rentals. Please support this for the homeowners and residents of Minnetrista. Thank you, Betsy Kennedy Funderburk 5345 Cedar Point Road Minnetrista Sent from my iPhone

1

Nickolas Olson

From: Darin Hargreaves <[email protected]>Sent: Monday, March 26, 2018 6:04 PMTo: Nickolas OlsonSubject: Short Term Lease Agreements

Dear Mayor, Council members, and planning commission, I am adamantly opposed to the use of short term rental agreements within the City of Minnetrista. There are many reasons for this, however none more important than the safety our neighbors. I support any ordnance preventing existing and new short term rentals within our community and the City of Minnetrista. I would consider anything less than 60 days, short term. Respectfully, Darin Hargreaves 6190 Pine Circle Minnetrista

1

Nickolas Olson

From: Eric Funderburk <[email protected]>Sent: Sunday, March 25, 2018 9:54 PMTo: Nickolas OlsonSubject: Short term rentals in Minnetrista (Please pass to Planning Commission)

Planning Commission Members,

Last year, our longstanding neighbor passed away and his house was sold to two realtors from outside of our community. They bought this house with the sole purpose of renting on such sites as Airbnb and VBRO (link: https://www.vrbo.com/1172452). They started renting in late summer of 2017. There listing advertises that they can sleep at least 26 people at this property with the attached illegal apartment. Although I am generally a believer in property owner’s rights, I believe that their rights end as soon as there is a negative impact on the surrounding property owners. Strangers come and go. Dogs run through yards and harass our pets. They have smoked pot on their deck. Renters/strangers have leered at my 13 year old daughter while in her own back yard. Trash is blowing through yards. While they are renting, every night is a party. They diminish the surrounding owner’s property values, sense of neighborhood, safety and livability.

Currently, the City of Minnetrista has no ordinance regarding short term rentals. At last month’s Minnetrista City workshop, the council unanimously decide this issue should now be addressed by the city and forwarded that recommendation to the Planning Commission. As I am sure that are aware, there was much discussion around enforcement and the definition of “short term” renters. As I understand it, the Planning Commission now has to forward its recommendation back to the City Council after Monday’s public hearing. Many communities around the lake are just now realizing the growing trend and are taking steps to create ordinances to correct this issue. If the neighboring communities adopt rules and Minnetrista does not, more of these rentals will be pushed to Minnetrista; perhaps on your street. It is not just lakeshore, short term rentals are in all neighborhoods. Below is the ordinance adopted by Shorewood. Tonka Bay is working on one too. Clearly, if they can compose an ordinance than Minnetrista should be able too.

1004.06 SHORT-TERM RENTAL PROHIBITED.

Subd. 1. Purpose. The city finds that short-term rentals located in residential zoning districts constitute commercial use of residential property, conflict with the residential character of residential zoning districts, disrupt the residential character of neighborhoods, and have a negative impact on the livability of residential neighborhoods. The city has received complaints from residents regarding short- term rentals, including complaints related to noise, over-occupancy, and illegal parking. Studies have reported that short-term rentals can render a significant number of housing units unavailable for long- term residents and can raise the cost of housing. To ensure adequate housing options for residents, preserve the residential character of the city’s residential districts, preserve property values, and reduce land use conflicts, the city determines, in furtherance of the public health, safety and general welfare, it is necessary to limit short-term rentals to hotels, motels, lodging establishments and similar accommodations which are appropriately zoned and have the appropriate infrastructure and services for short-term use.

Subd. 2. Prohibition. Short-term rental of any dwelling or dwelling unit to a transient for less than 30 consecutive days in a residential zoning district is prohibited. State licensed hotels,

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motels and lodging establishments located outside residential districts or residential planned unit development districts are allowed, pursuant to applicable city codes.

Subd. 3. Enforcement. An owner, operator, tenant or occupant of any building or property in violation of the provisions of this section may be charged and found guilty of a misdemeanor and may be held responsible for the cost of enforcement in addition to penalties.

(Ord. 533, passed 9-26-2016)

Please help pass and ordinance preventing new and existing short term rentals in our community. I apologize for not being present to address the Planning Commission person, but I had a travel planned.

Best regards,

Eric Funderburk

5345 Cedar Point Road

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Nickolas Olson

From: Lynne Robertson <[email protected]>Sent: Monday, March 26, 2018 10:01 AMTo: Nickolas OlsonSubject: Short Term Rental Ban

Nick - Recently short term rentals have become an unwelcome addition to our neighborhood. They have a very negative influence on our quality of life. The renters show disrespect to our properties, our neighbors and our community. Currently there are no ordinances governing this activity. Know that we are opposed to these short term rentals such as VRBO, Airbnb, et al, for the reasons listed above. It is becoming an intolerable situation for the neighborhood, particularly those adjacent to the properties being rented out. One of the rental properties lists that it accommodates 22+ people:

https://www.vrbo.com/1172452 That is practically a resort and would seem in violation of current zoning conditions here. Also, it encourages large parties to inhabit an otherwise single family dwelling. Other communities like Shorewood have effectively put ordinances in place banning this activity. Left unchecked, this property classification will have severely negative impact to the safety. security and atmosphere of all of our neighborhoods. I look forward to seeing a positive outcome in putting in place MInnetrista's version of a ban on short term rentals. Thank you, Lynne Robertson 5430 Cedar Point Road Minnetrista, MN 55364 -- Lynne Robertson CEO/Owner fame* 527 Marquette Ave suite 2400 minneapolis mn 55402 612-746-3259 direct 612-746-3333 fax www.fameretail.com

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Nickolas Olson

From: Patia Hargreaves <[email protected]>Sent: Monday, March 26, 2018 3:03 PMTo: Nickolas OlsonSubject: Short term Rental home zoning.

Dear Mr. Olson, I wanted to reach out to you about the short term rental regulations that will be discussed to night at the Planning Commission meeting. I am strongly against short term rentals like VRBOs in our community. Neighboring communities are working quickly to establish regulations to prevent short term rentals and if we do not do the same, more rental traffic will be moving into our neighborhoods. Please follow the City Councils recommendation to end any current or future short term home rentals. Thank you, Patia Hargreaves, DVM 6190 Pine Circle Minnetrista 952‐807‐4936 Sent from my iPhone

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Nickolas Olson

From: Patia Hargreaves <[email protected]>Sent: Thursday, April 19, 2018 7:02 PMTo: Nickolas OlsonSubject: VRBO

Good afternoon, I am writing to inform you that I am very concerned about the increasing numbers of VRBOs that are opening in our community. I am not against long term renters, but I do oppose people that see our community as a short vacation or party stop. These people have no interest in preserving our neighborhood atmosphere or the quality of the lake. No one wants to live next to a house that has different people in it every week. This will effect the value of the neighboring homes. VRBOs can greatly effect the traffic and parking in a neighborhood, since some homes will sleep over 20 people! These homes really become week long party houses. Weekly visitors will be loud(we live and work here, but they are on vacation), have loose dogs, can be careless of their surroundings, and bring different strangers every week to our community. This could also increase police calls for disturbances. My neighbors house sold this year and if it had been a VRBO investor that purchased the house I would have sold mine. As a mother of four children, I would not be comfortable having different people in the home next to me every week. I would worry about their safety when they are on our own property. I bought a private home in a nice lake community with other residential homes. I should not have to worry about having a home next door to me that is even less stable then an apartment and driving the price of my home down. I am not an investor who may not even live in our area, I am a resident who helps support our community. I urge you to follow the lead of our neighboring cities to stop VRBOs from commercializing our neighborhoods. A plan could be made to give the investors time to sell the homes or turn them into long term rental properties. I would like to attend the meeting on 4/23 however, I am unable to get off work that evening. Sincerely, Patia Hargreaves, DVM Sent from my iPhone

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Nickolas Olson

From: Pete Hanson <[email protected]>Sent: Sunday, March 25, 2018 2:07 PMTo: Nickolas OlsonSubject: Fwd: City of Minnetrista Short Term home rental policies.

Pete Hanson Begin forwarded message:

From: Pete Hanson <[email protected]> Date: March 25, 2018 at 9:05:00 AM HST To: "[email protected]" <[email protected]> Subject: Fwd: City of Minnetrista Short Term home rental policies.

Subject: City of Minnetrista Short Term home rental policies.

Good morning commissioner Olson, I am emailing you today as a concerned citizen and long time resident of the city of Minnetrista, in regards to short term home rentals in the city. Due to the popular rental sites of VRBO, Airbnb, Expedia travel etc. there seems to be a influx of short term rental homes in Minnetrista. It appears that there is no current ordinance in the city regarding short term rental. If there is a current ordinance, can you tell me where to find it? If there is no ordinance in place is this something that will be addressed in the future? As a home owner in Minnetrista I am opposed to short term rentals of residential properties as I believe it will negatively impact our community. Best regards, Pete Hanson 5335 Cedar Point Rd

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Nickolas Olson

From: Thomas Weltin <[email protected]>Sent: Sunday, March 25, 2018 12:19 PMTo: Nickolas OlsonCc: Shannon Bruce; Lisa WhalenSubject: Short term rentals in Minnetrista

Dear Mayor,Council Members of Minnetrista and Planning Commission members; I am opposed to short term rentals such as VBRO and Airbnb in our community. I would support and ordnance preventing existing and new short term rental to be permitted in our community. Sincerely; Jutta and Thomas Weltin 2511 Maple Lane Minnetrista, MN 55364 Sent from my iPhone-typos are Siri's fault

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