Matt Boys recently bought a dilapidated triplex near Charles and Snelling avenues in St. Paul with the goal of leasing out one apartment the traditional way and listing two others through the short-term rental platform Airbnb.
Given the ongoing construction of a Major League Soccer stadium down the street, the Airbnb opportunity justified the $40,000 renovation, said Boys, noting he might not have taken the chance otherwise.
Likewise, not all the apartments at the Lowry Building on downtown St. Paul’s Wabasha Street are available for lease year-round or even month-to-month.
Building owner Madison Equities rents out at least seven units through Airbnb, and a handful of year-round tenants have taken to doing the same.
As a result, visitors to downtown St. Paul can spend a night or two at the Lowry relaxing in a more residential setting than the typical hotel.
But soon both properties may be out of step with the law in St. Paul.
On Friday, the St. Paul Planning Commission voted 11-2 to support a series of regulations that would add some form and function to the city’s highly unregulated short-term rental market.
The rules would allow no more than half the units in a home or apartment building to become short-term rentals, with a maximum of four units even in larger structures. No more than four unrelated people would be able to rent together, plus their children or other descendants, and hosts would be required to collect city taxes.
The proposed rules make some allowances for owners of large properties who apply for a conditional use permit, as well as for owner-occupied duplexes where the homeowner is present during the rental.
But duplexes and triplexes would be limited to one short-term rental.
For Boys, who has properties throughout the metro and is just beginning to take a chance on St. Paul, that’s a setback.
“Without Airbnb, this building would have remained rundown and very unpleasant,” Boys said of the triplex near Charles and Snelling avenues.
He added that he “completely understands the need to balance affordable housing supply with this new property use — the sharing economy. I think for studios or smaller square foot spaces it would be neat if you could apply for exceptions.”
Members of the St. Paul City Council, who will vote on the rules this fall, say they’re still not committed to the idea of capping Airbnb at four units per apartment building.
“If you just do four per building, four people basically get a monopoly on it. To be honest, I’m not actually sure what the right compromise is,” said Chris Tolbert, the city council member who asked the city to study short-term rentals in 2016. “In a low-number unit building, that makes sense. In a downtown building, is that the right balance?”
The St. Paul City Council will vote on the new zoning rules within weeks, with the goal of implementing them before the Super Bowl brings thousands of visitors to the Twin Cities next February.
The St. Paul Department of Safety and Inspections is working on related recommendations around licensing, which will be voted upon at the same time.
While short-term rentals are technically unlicensed and therefore illegal in both Minneapolis and St. Paul, city officials on both sides of the river have no illusions. There’s no way that local hotels will able to absorb all of the Minnesotans and out-of-towners coming into the area to be near the big game, and short-term rentals are clearly about to proliferate, even in highly residential neighborhoods.
The Super Bowl will be held at US Bank Stadium in Minneapolis, but the partying will take place everywhere.
City officials say the 2016 Ryder Cup, which was held in the southwestern metro suburb of Chaska, brought more than 3,400 guests to the Twin Cities, including at least 500 to Ramsey County.
A NATIONAL TREND
A study conducted by the city a year ago found more than 250 short-term rental listings already online through sites such as Airbnb and Expedia.
Whether that represents basic commerce or crisis is tough to tell, but more and more properties in St. Paul, Minneapolis and elsewhere throughout the country are moving in the same direction. Given the national rental crunch, the prospect of an entire floor of apartments — if not an entire building — leaving the traditional market has raised eyebrows with neighbors, municipal leaders and housing advocates from coast to coast. The trend has even inspired Airbnb to openly discourage full building conversions into short-term rental properties.
On Aug. 3, the St. Paul Planning Commission’s Neighborhood Planning Committee issued a 23-page memo highlighting ongoing areas of discussion and concern. Based on the work of New Orleans and other cities, the memo highlights the opportunity to benefit from the sharing and tourism economy, rather than losing out to neighboring communities. The downside includes the loss of affordable housing and potential quality-of-life issues, such as disturbances or “party houses.”
The memo notes, however, that “the negative impacts on neighborhood quality of life and affordable housing are overstated as most operators are good managers.”
Among the rules recommended by the Planning Commission:
- Single-family homes, duplexes and triplexes would be limited to one short-term rental unit. If a duplex is owner-occupied, two short-term rental units would be permitted.
- In a four-unit building, two short-term rental units would be permitted.
- In a six-unit building, three short-term rental units would be permitted.
- In an eight-unit building, as well as larger apartment buildings and condos, four short-term rental units would be permitted. More than four units would require applying for a conditional use permit.
In some cases, property owners see short-term rentals as a bridge to allow them to take in revenue while they prepare to redevelop. Madison Equities principal James Crockarell said he plans to return the entire Lowry Building to its historic roots.
“We’re in the process of turning the entire building back into a hotel, so we expect there’s going to be 150 hotel units within the next two years, so we’re doing it gradually,” said Crockarell, who recently installed a popular restaurant and bar, the Gray Duck Tavern. “It’s probably short-sighted to discriminate against a registration system (like Airbnb), which is serving no more than as a vehicle for people to find their way to St. Paul.”
Minneapolis’s regulatory plan is still being developed. City Council member Jacob Frey believes Minneapolis should embrace short-term rentals.
“The sharing economy is coming to town, and we are going to need to figure out how to regulate to ensure safety and just parity with other industries,” said Frey, a mayoral candidate. “But this is a new entrepreneurial and innovative model, and I want to make sure that we have it in Minneapolis.”
This story contains information from the Associated Press.
