More options Up North? Duluth looks to nearly triple number of vacation home permits

DULUTH – Those looking for places to stay during a vacation Up North in the near future may have some extra options outside of the city's typical tourist areas.

Duluth is looking at nearly tripling the cap on the number of permits it issues for vacation dwelling units. Currently, the city uses a lottery system to dole out 60 licenses to those wishing to rent their homes or apartments for two- to 29-night stretches.

Local governments across the state have wrestled with how to regulate short-term rentals over the past decade, which saw the rise of Airbnb, VRBO and other online rental sites. Duluth first introduced a permitting process in 2013 and has been tweaking its rules ever since to adapt to the so-called sharing economy.

These days, there are non-hotel options and price points for all sorts of folks visiting Duluth, from a $49 one-night stay in a Hillside apartment to a four-bedroom house downtown with views of Lake Superior that's listed for $500 a night.

Those with properties in Duluth's "form" districts — the parts of the city zoned for more commercial uses, like Canal Park and downtown — are not counted under the cap, but there's still a 25-person waiting list of those seeking to rent their properties to visitors in other parts of town, from Morgan Park to Park Point.

"What this ordinance is really crafted to do is make sure we don't have a proliferation of these vacation units in residential areas where we don't want to have an excess," said Adam Fulton, Duluth's deputy director of planning and economic development.

"There's also a recognition that we have a lot of tourism in our community," he added. "We have an economy that's focused on tourism, and it hasn't historically been in our residential neighborhoods."

The regulations, and similar ordinances in other cities and counties, are designed to ensure that rental units are safe, up to code and collecting taxes, Fulton said. They also include clauses such as the number of parking spots each unit is required to provide.

St. Louis County announced Tuesday that it will be discussing the need for a permitting process for vacation rentals at the board's Feb. 25 meeting in Hibbing. Proposed ordinance changes would not cap the number of permits the county could issue.

Two members of the public expressed concerns that raising the cap would only exacerbate Duluth's affordable housing shortage, but multiple commissioners said they thought the market for rental units is at a different price point than what low-income residents would generally be seeking.

The planning commission is also recommending that the city let accessory home-share permits — which allow property owners to rent out spaces like a spare bedroom or a basement while they're living at home — be issued to duplex owners.

The City Council would have to sign off on any changes, which members could do as early as March.