St. Paul officials aren’t sure how many rooms and homes across the city are being rented out to visitors through online companies like Airbnb or VRBO — but they want to find out and may add regulations to ensure property owners are keeping visitors and residents safe, and paying taxes.
The City Council voted Wednesday to create a work group of rental property hosts, city staff and other members of the hospitality industry. The group will spend the next four months developing standards and rules for the short-term rentals and working with the rental companies to create a mechanism to ensure taxes are collected.
Council Member Chris Tolbert prompted the city’s dive into the issue. Tolbert, who has used Airbnb, said the rental properties are a “great asset” to the city, but they need to be safe and owners should be required to play by the same rules as classic bed-and-breakfasts. Technically, he added, the short-term rentals are not permitted under the city’s existing zoning rules, and this would change that.
Other council members said they were hesitant to dedicate staff time and money to the topic, and noted that Minneapolis is not adding regulations.
Minneapolis is aware that homes and buildings throughout the city are being rented out but does not plan to add new rules because the rentals do not seem to be causing problems, according to a St. Paul staff report. St. Paul has also not experienced many complaints from residents or visitors about the rentals already operating in the city, staff found.
“I’m not really sure there is a crying need right now for this,” Council Member Rebecca Noecker said. She was the lone vote against moving forward with the work group.
The City Council will consider the topic again after it receives the group’s recommendations.
Cities from Duluth to New Orleans have looked at regulating online property rental companies. In the St. Paul report, staff said cities that have seen the most success categorized rentals, imposed safety standards, added fees and fines to ensure compliance and re-examined their rules after they were put in place, updating them as needed.
“We’re not looking to come down hard. We’re looking to work with the industry to come up with the right recommendations that suit St. Paul,” said Ricardo Cervantes, director of the Department of Safety and Inspections.
City staff has been talking with Airbnb, and Cervantes said the company’s goals align with the city’s — neither wants bad operators.
“They’re really interested in hosting safe and healthy environments,” he said. “They have a brand to protect.”
New rental regulations could also increase city tax revenue.
The tax revenue collected in 2015 is less than it should have been, given the number of short-term rentals advertised online, according to city staff members.
Staff estimated about 250 short-term rental properties exist in St. Paul.
But the revenue the city could collect from that number of rentals would be minimal, Tolbert said, adding, “My goal is not about the tax, it’s more about the public safety.”
However, city officials said they expect the number of short-term rentals to increase, particularly around the Super Bowl. The city’s 3 percent lodging tax and half-cent sales tax should apply to the rentals, Cervantes said, as should the state sales tax.
In a review of several dozen short-term rental properties, the city found people offering housing for rent through the Vacation Rentals by Owner (VRBO) company often referenced taxes as part of their nightly rates. Airbnb property owners did not.
Airbnb, however, has a “community compact” that includes a pledge to help efficiently collect hotel or tourist taxes.
“In those places that respect the right of people to share their home, we will work to ensure that the Airbnb community pays its fair share of taxes while honoring our commitment to protect our hosts’ and guests’ privacy,” the document on the company’s website states.