Thinking about listing your spare room, or whole house, in Minneapolis or St. Paul as an Airbnb rental during the Super Bowl?
In order to do it legally, you may have to comply with some new rules. In October, Minneapolis and St. Paul joined a growing list of cities, including San Francisco, Chicago and Seattle, in passing rules that both legalize short-term rentals on web-based platforms like Airbnb and HomeAway and lay ground rules governing them. Passing ordinances also allows cities to collect fees and taxes on the increasingly popular rentals.
In the Twin Cities, the rules are just now taking effect, with the application process for licenses beginning in Minneapolis on Dec. 1 and in St. Paul on Dec. 2. As of last Friday, Minneapolis had 18 applications in hand from would-be hosts, while St. Paul had 32.
That’s a tiny fraction of the estimated 1,800 active short-term rental listings (on 25 platforms) in Minneapolis, and around 500 active listings in St. Paul in October, according to data from HostCompliance, a company that helps cities monitor short-term rentals. Some are renting for thousands of dollars per night during the weekend of the Super Bowl.
The new rules
In Minneapolis, hosts who rent out a room in a house that they are living in while guests are there are not required to register or get a license. If the hosts live there, but leave when guests arrive, they have to pay $46 annually to register their short-term rental. If they do not live in the unit and rent it out — even short-term — they have to obtain a standard rental license, the cost of which varies depending on the property. While hosts have to pay license and registration fees, the city isn’t imposing additional taxes on hosts.
In St. Paul, the annual fee for a short-term rental license is $40 per unit, regardless of the size of the unit or whether the hosts occupy it simultaneously with guests or not. Hosts must get a fire certificate of occupancy, which certifies the property meets safety codes and subjects it to regular inspection, if the rental isn’t owner occupied. Hosts are also required to pay taxes (the lodging tax in St. Paul is 3 percent).
Because of their peer-to-peer nature, and because rental platforms have been reluctant to help cities crack down on scofflaws, short-term rentals are difficult to enforce. But both cities will make efforts to do so.
If hosts operate without a rental license in Minneapolis, they’re subject to a $500 fine, which can double if it’s not resolved by its due date. Minneapolis will initially warn hosts they are out of compliance before issuing violation notices, wrote city spokeswoman Sarah McKenzie in an email.
For the months of December and January, St. Paul is focused on educating hosts, wrote Dan Niziolek, deputy director of St. Paul’s Department of Safety and Inspections, in an email. About 30 people attended a workshop the city held in late November, and St. Paul plans to send mailings with notifications of the new rules to current short-term rental hosts.
After that comes enforcement. Operating a short-term rental in St. Paul without a license is a petty misdemeanor that carries a fine of $300, Niziolek wrote.
Among the first to apply for registration in St. Paul was aspiring short-term rental host Linda Snouffer, who submitted the paperwork last week. She told MinnPost she wants to get the listing to rent a house she owns next to the one she lives in up in time to rent it during the Super Bowl.
So far, so good. She had to do some updates on the electrical work in the house in order to make sure insurance would cover the short-term rental, and she’s waiting for the fire marshal to do an inspection in order to obtain a certificate of occupancy, a requirement for short-term rentals in St. Paul that aren’t owner-occupied.
Once the city gives the go-ahead, she should be licensed and able to legally list the property.
Locals like Snouffer stand to make a good chunk of change. According to Airbnb, a private unit that hosts four guests has a $1,483 per month earning potential in Minneapolis and $1,254 in St. Paul, assuming four guests and that 50 percent of nights are booked.
Airbnb and other platforms aren’t pleased with some of the requirements in the Twin Cities ordinances, and so far, it’s unclear whether they will comply with them. Neither city had received an application from a short-term rental platform early this week. Among the registration requirements is a $10,000 annual fee in St. Paul, or a $5,000 large platform/$630 small platform fee in Minneapolis. Small platforms are defined as those with fewer than 150 active listings.
The Internet Association, a trade group representing Internet companies and short-term rental platforms, including Airbnb, HomeAway and Expedia, put out a statement following Minneapolis’ passage of Airbnb rules that said the new rules violate federal law. In a statement, Airbnb specified it believes some of the requirements of platforms violate the 1996 federal Communications Decency Act, which made platforms not responsible for third-party content on their sites.
Benjamin Breit, a spokesman for Airbnb, declined to comment as to whether the platform will apply for platform licenses, as required by the new ordinances, in either city.
He responded to inquiries from MinnPost via email with a statement from Airbnb that followed the passage of the Airbnb ordinance in October in Minneapolis.
While the company said it’s appreciative of the city council’s efforts, “the ordinance still violates the legal rights of Airbnb and its community. We will consider all legal options to protect innovation and the privacy of Minneapolis residents,” it says.
“Due to the legal situation, unfortunately I can’t really say anything,” he wrote.