Cook County in northern Minnesota looks to license short-term rentals

Officials in northern Minnesota's Cook County have seen more properties advertised for short-term rental on the internet in recent years: grand vacation houses along the rocky North Shore of Lake Superior, cottages in the piney woods along the Gunflint Trail, log cabins nestled near inland lakes.

As a result, county administrators are proposing a new license to keep track of them and make sure they are operating on a level playing field with hotels and resorts, paying the proper lodging tax and complying with noise ordinances and other rules.

Private vacation rental homes "appear to provide a benefit" to the county by expanding and diversifying tourism lodging, creating jobs and adding revenue, according to language in a draft ordinance that could go before the county planning commission this spring. "However, the use of residential properties for short-term rental can have potential adverse impacts on neighboring properties, with traffic, parking, noise and trespass issues."

So the county is considering hiring an outside company to identify properties and possibly make sure they are in compliance, said County Administrator Jeff Cadwell.

The licensing requirement for unincorporated areas would not apply to properties managed and regulated as part of a hotel or resort, according to the draft. It would give the county a good window on rentals overall, Cadwell explained.

"One of the largest questions in the community is, it seems like all of the housing stock is being converted into short-term rentals and there's not enough housing stock for people to live in," Cadwell said. "I don't know if that's true … but if we contract with somebody … then we'll be able to watch trends."

It's a license that many vacation rental owners might see as additional bureaucracy, though, as the state Department of Health already inspects and licenses properties rented out for less than a week at a time. The state looks at everything from fire extinguishers to septic requirements, making sure the properties are safe for renters and the environment.

"I understand why the county feels they need to have some type of tracking mechanism for tracking vacation rentals. … It's a growing industry, and it's global and it's worldwide. It's not going away," Larson said. "On the other hand, I would say that the vast majority of properties are already in compliance with state rules."

The proposed ordinance comes as Todd Smith, the county property tax assessor, is in the midst of changing classifications on family cabins that are now rented out. While there was no clear tax category for rented-out vacation homes, the classification work was to ensure that the tax burden is fairly distributed, officials said.

Properties rented short-term for more than 250 days will be classified as commercial. Those rented short-term between 30 and 250 days will be classified as residential non-homestead, unless they are a seasonal resort.

A timeline hasn't been established for considering the licensing ordinance, though Cadwell said action will likely be taken this year.

The draft ordinance will go before the county planning commission, which must hold a public hearing on the issue. If the commission approves, it would go to a vote before the full County Board of commissioners.