Last week, the Hubbard County Board discussed the possibility of addressing Vacation Rental By Owner (VRBOs) in the county’s shoreland management ordinance (SMO).
County Coordinator Eric Nerness reported that two counties in northeastern Minnesota recently adopted ordinances concerning VRBOs.
“But everybody acknowledges the difficulty in enforcement and the difficulty in applying that uniformly,” he said. “It was brought about largely by the resort owners, saying ‘I’m paying commercial property, fees, licenses. These people are doing the same thing I am and pocketing the cash.’”
County commissioner David De La Hunt estimated that 80 percent of VBROs in Hubbard County are on water.
“I’ve had resort owners and neighboring property owners talk to me about this quite steadily,” he said.
In his research, De La Hunt said he likes Aitkin County’s model of interim use permit applications. “I think it’s something we have to explore, and just do within our shoreland ordinance to start. That’s going to cover most of them, seeing how we don’t have countywide zoning.”
County commissioner Char Christenson recalled that the Environmental Service Office would have to hire one additional staff member to handle the workload. “So this would cost the county money because we couldn’t charge enough in permits, I don’t believe.”
Environmental Services Director Eric Buitenwerf said interim use permits would increase staff time to process them.
“Do you get out in front of the problem or do you try to catch up to the problem?” asked De La Hunt. “Because it’s the wave. It’s the way it’s going.”
Both De La Hunt and Christenson said they regularly use VBROs.
De La Hunt said the county needs to make sure VBROs are meeting certain minimum standards, “and not overloading their house with 25 guests in only a three-bedroom house.”
County Assessor Ginger Woodrum reported Douglas County is experiencing a low compliance rate with its ordinance.
If Hubbard County adopts an ordinance, she recommended keeping the permitting process easy and inexpensive to encourage VBROs to be compliant.
She reiterated that the Minnesota Department of Revenue (DOR) has directed county assessors to classify short-term residential rentals as commercial property for the 2020 assessment.
Woodrum said the assessor’s office is aware of 120 VRBOs in Hubbard County, but there could be more.
“We’ll be sending out a letter this fall and a survey,” she said. Property owners will have 30 to 45 days to return the survey or automatically be classified as commercial property. She estimated that commercial tax rates will likely be three times higher than the residential rate, depending on the lake.
“We’re not the only county dealing with this,” Nerness said, recommending partnering with the Association of Minnesota Counties for geo-locating VBROs. “Every county is trying to deal with this on its own, but we have a common issue and a common interest.”
AirBnB can be data aggregators, he added, identifying properties that are actively renting out throughout the year.
De La Hunt concluded, “At some point, we need to look seriously at it a work session.”
In related business, the board authorized the county planning commission to review and make a recommendation on a proposed amendment to the SMO.
If approved, the amendment would eliminate the requirement that “sanitary facilities for guest cottages utilize the same treatment system as the primary residence, except in cases where topographic features would result in practical difficulties during installation, as determined by the Environmental Services Director.”
Buitenwerf said that language is specifically in the county ordinance, so it is not a minimum state requirement.
“It’s removal would allow us to have a lot more flexibility for property owners. It would save them a lot of money, as adding an extra bedroom can sometimes lead to the need for a larger tank and, in addition, more drainfield space. Tank costs can get significant. It would also eliminate some administrative time in trying to ascertain whether a property meets the topographic constraint criteria or not,” Buitenwerf said. “There really isn’t any particular benefit to requiring the same system to be used.”
A safe, sound septic system is the primary concern, he added.