Minneapolis approves regulations for Airbnb, short-term rentals

Minneapolis will begin regulating Airbnb properties and other short-term rentals in December, just in time for the deluge of visitors expected for the 2018 Super Bowl.

The new rules approved by the City Council on Friday require rental "hosts" and the online platforms that advertise properties to apply for municipal licenses and renew them each year. That will give the city the ability to inspect properties and prohibit rentals if they spot problems — but may prompt legal challenges.

"This is a business that we want in our city," said Minneapolis Council Member Jacob Frey, who authored the two new ordinances. "Our goal was to provide the very baseline of safety and allow a new and innovative business to function."

Cities in Minnesota and around the country have been grappling with how to keep tabs on short-term rentals, which have boomed in popularity with the rise of online platforms like Airbnb, Expedia and HomeAway, which connect renters with property owners. Many of the places for to rent — ranging from just a bedroom to an entire house — are in residential areas, and sometimes prompt concerns from neighbors.

San Francisco; Portland; Austin, Tex., and Duluth already regulate the properties, as do a number of Twin Cities-area suburbs, including Stillwater, Lakeville and Eagan. St. Paul is considering an ordinance governing short-term rentals, but has yet to approve it.

Airbnb issued a statement Friday raising concerns about the Minneapolis ordinance, specifically its requirement that short-term rental platforms prohibit unlicensed hosts from listing their units online or risk losing their license.

"We're appreciative to Councilman Frey and his colleagues for their efforts throughout the legislative process," the statement said.

The Internet Association, a group that represents online companies including Airbnb, Expedia and HomeAway, released a statement Friday that said Minneapolis' ordinance violates federal law.

The group cited the Communications Decency Act, which protects online platforms from being held liable for content posted by third-party users.

"Minneapolis's new ordinance is in clear violation of federal law and limits choice for the city's residents and visitors," Vice President Dustin Brighton said in the statement. "Short term rentals offer badly needed income for the citizens of Minneapolis and this rule would harm their ability to make ends meet."

Council Member Andrew Johnson, the only one to vote against the ordinance, said he's concerned about the consequences of regulating websites like Airbnb.

"I think we need to be careful regulating these technology platforms at a local level, because they operate in a fundamentally different way than most traditional businesses do," he said. "And if we're not careful, it can stifle innovation."

"I think the spirit of this ordinance is really clear, and it really fits people's needs," said Sonja Blackstone, who rents out part of her house in the Longfellow neighborhood through Airbnb.

Under the ordinance, hosts who rent out a property where they do not live will have to get a standard rental license, and will be subject to inspections as other landlords are.

People who live at the property they're renting but move out while guests are there will have to get a $46 annual license, and may be subject to some inspections. Hosts who always live at the property will not be regulated or have to pay a license fee.

There are an estimated 1,600 short-term rental properties in Minneapolis, according to the city.

Carol Liege started renting out a room in her northeast Minneapolis home two years ago, and said she's loved having regular company and bringing in a little extra income. She's kept an eye on the new ordinances — though they wouldn't apply to her — and said she thinks they seem more fair than regulations in other cities.

Minneapolis is scheduled to begin accepting license applications Dec. 1.

From now on, the city will be able to inspect properties and revoke licenses if violations occur. Properties that offer short-term rentals without a license would lose their ability to operate.

Rental platforms will also have to be licensed through the city. At a public hearing Oct. 10, a few people who own local short-term rental businesses raised concerns about having to pay the same amount for a license as big corporations.

In response, Frey introduced an amendment Friday that will charge small hosting platforms — those that post 150 dwellings or less — a $630 annual licensing fee. Larger hosting platforms will pay $5,000.

Staff writer Jessie Van Berkel contributed to this report.