St. Paul joins in new rules for Airbnb and other short-term rentals

Hundreds of St. Paul residents who rent out their home or spare rooms through companies like Airbnb or VRBO must get a city license, collect taxes and comply with new limits on how many visitors they can host.

St. Paul joined Minneapolis and other cities across the country Wednesday in regulating online home rental companies and the people who use them, a move city leaders said is critical to protect visitors and residents ahead of the Super Bowl.

"With the True North Super Bowl, it's important to get that done. But more than anything it's an important thing to get done because it's the modern way a lot of people travel," Council Member Chris Tolbert said. "This is our first regulation of this new industry and I suspect there's going to be changes that are needed over time."

City Council members approved rules, which take effect next month, that are slightly more stringent than those Minneapolis leaders signed off on last week. Critics on both sides of the issue have aired concerns about the regulations.

Some residents said the city didn't go far enough to protect neighborhoods, while others believe such rules could stymie economic growth from the sharing economy.

Airbnb, meanwhile, has warned it could take legal action against both St. Paul and Minneapolis.

"On behalf of our St. Paul hosts, we are disappointed the city is moving forward with an ordinance that will lead to low compliance and imposes platform requirements in violation of federal law. We will consider all legal options to protect innovation and the privacy of our Twin Cities host community," Airbnb spokesman Ben Breit said in a statement.

Online hosting platforms like Airbnb will have to pay a $10,000 licensing fee to operate in St. Paul — the fee is $5,000 for big platforms in Minneapolis — and are supposed to remove hosts' listings if they do not comply with city regulations, or risk losing their license.

"I think we're well within the law," Tolbert said. "We have rights within the law to protect the public safety of people in the city of St. Paul."

Tess Galati rents out a room and an accessory dwelling unit at her Cathedral Hill home through Airbnb. She said the company "brings the whole world" to St. Paul and helps subsidize residents' income.

"With our property taxes going up this becomes even more important," she said.

Galati is one of the many hosts who are wary that city leaders are going too far in restricting the rentals.

The city is capping the number of adults who can stay in a unit to four, adding parking requirements and limiting how many units can be rented out in multiunit buildings. It is also requiring all hosts to pay a $40 annual licensing fee, whether they rent out a whole property or live in the home and rent out part of the space.

Minneapolis requires a $46 annual license fee, except when a homeowner lives and stays at a property.

St. Paul officials said they intend to generate enough money from licensing fees to cover the cost of having a St. Paul staff member inspect the properties.

While Airbnb users and supporters asked for leniency, other residents said the city is not going far enough. People who own classic bed-and-breakfasts in St. Paul have long been frustrated by the lack of regulations on property owners who use online services to rent out homes.

"It's tantamount to tax evasion," Liz Miller, the innkeeper at Covington Inn, told the City Council earlier this month.

Crocus Hill resident Susan Foote warned city leaders that they should take heed of what's happened in cities like San Francisco, where the online companies created a "huge disruption of their rental market and a huge disruption of their neighborhoods."

City Council President Russ Stark said St. Paul differs from San Francisco, New York or New Orleans, where there are concerns that Airbnb and other companies are making tight rental markets worse.

"We are not that tremendous tourist destination town at this point," Stark said. "So I don't think the scope and scale in St. Paul is going to be so dramatic as to have huge ripple effects throughout our rental economy."

Jessie Van Berkel • 612-673-4649