Senate steps into dispute over the rental of lake homes

So you own a luxury home on Gull Lake, or perhaps just a log cabin on a rural backwater. The kids have grown and moved away, and you don't use it so much anymore. Yet the taxes keep rising, the mortgage is still due and you decide to place an ad with one of those online sites such as Vacation Rentals By Owner (VRBO) in the hope of renting the place to some nice family to earn a little cash.

That's your business, right?

A proposed amendment to state law that passed a Minnesota Senate hearing Monday basically says yes. It would mandate that communities zone such properties as single or multifamily residences, "except that a county may license that use as rental housing."

The bill seems built on a simple, common-sense notion that you can do what you want with your property.

Except, critics say, when that use bumps up against community responsibility, health and safety issues and the notion of a fair playing field.

The issue has been brewing for a few years, as the economy slumped and more people started looking for ways to keep their second homes. The number of cabins now used at least part-time for rentals has grown to at least 1,000 in Minnesota, and along with the growth comes increasing and more complicated problems.

Michele McPherson, Mille Lacs County land services director, said people who rent out their vacation homes seem to want to have it both ways, calling their places private homes while treating them like businesses. One lake home near where she lives is owned by a limited liability corporation, which the owner created as a tax shelter, she said.

"If the Department of Health comes in and starts to regulate these private homes, it's going to do a lot of harm to local communities, local trades and tourism," he said. Chamberlain said local laws already govern many of the issues, and state oversight would be duplicative.

John Swenson, a representative of rental owners who is a broker and resort owner, estimated that private rentals account for nearly 20 percent of lodging in Ely, where he lives. Swenson called for "reasonable licensing."

McPherson, however, said the association of property owners behind the bill knows that rural counties "don't have the people or money to do licensing and inspections."

"And there is nothing in the bill that would prohibit a corporation from buying up lake homes, running them as a business, but calling them single-family homes," said McPherson.

That doesn't sit well with Brian Thuringer, president of Madden's on Gull Lake, who thinks the estimate of 1,000 rentals is "very conservative." "It's very expensive to run a resort like Madden's," said Thuringer. Resorts and hotels face a matrix of health and safety regulations and inspections that rentals escape. "We just want a level playing field. These are businesses."

When I wrote about this issue last year, I was flooded by complaints from lake property owners, who told stories of rowdy crowds of renters partying all night, ignoring lake laws and polluting. I also heard numerous tales of people responsibly renting their homes without incident.

"If I have calls for four days of people dancing naked around the fire because they imbibed too many adult beverages, I can call authorities," said McPherson. "But we have three deputies covering 35 miles, so that's all they'd be doing."

Property rights proponents correctly say no regulations will stop rude behavior. Perhaps holding rental owners responsible through more organized licensing would help.

Consider the consequences

In the past few years, I have used agencies such as VRBO to book vacations from northern Wisconsin to South America. The rentals can be great deals, such the penthouse efficiency apartment I got in Buenos Aires for $450 a week. But I never considered the consequences to the guy next door of having new neighbors every four days, some of whom lack my exquisite social graces. Eh-hem.