Over the course of time, more and more cabin and second-home owners have been renting out their homes to vacationers, but not all of them are paying sales tax or seeking licenses required by the Minnesota Department of Health. On July 9, 2013, the county board discussed what some consider a growing problem.
On June 25, Auditor- Treasurer Braidy Powers told the board that the government has some regulatory authority over this but it’s hard to enforce and the regulations don’t have many “teeth.”
At that meeting, Commissioner Sue Hakes said some property owners are charging less because they are not paying taxes on their rentals. “It’s not an even playing field,” she said. Commissioner Garry Gamble hoped for county ordinances that would “reflect that we’re being fair.”
On July 9, the board discussed how it could level the playing field and ensure safety for vacationers. Planning & Zoning Director Tim Nelson said the state has estimated that about 100 Cook County home and cabin owners rent their dwellings out.
Commissioner Garry Gamble recommended that the county come up with a policy that covers homes and cabins that people rent out. Looking out for people’s health and safety is their job, he said.
“I think the rules are out there; I just think they aren’t following them,” Commissioner Sue Hakes said. “It’s an enforcement issue, I think. …We need to figure out how we can enforce it.”
Regulating rentals of private homes and cabins through Interim Use Permits, which would not automatically be transferred from one owner to the next, would require a lot of staff time in processing applications, making environmental health inspections, and enforcing regulations, Nelson said. He said the staff used to go through the newspaper looking for vacation rental ads.
The Minnesota Department of Health requires homes and cabins with five or more beds rented out to the general public for at least one week at a time to be licensed as lodging facilities. “Below that, technically the state defines anyone who rents out to the general public for less than a week at a time to be a hotel/ motel, but that’s a difficult category to target and regulate for them,” Director Nelson told the Cook County News-Herald. “Our zoning ordinance defines vacation rentals as cabins or homes that are rented out for periods of less than 30 days, so our definition is more broad than the state’s. Bed and breakfasts are defined separately.”
Long-term rentals, such as rentals with leases of 6-12 months, do not require a permit from the county or a license from the state. If the county required an Interim Use Permit for house and cabin rentals, those renting for at least a week at a time could require a state license and a county permit, Nelson said.
Commissioner Garry Gamble said he would rather see a local requirement that covered what the state licensing requirement does not cover rather than adding another layer of compliance. Director Nelson agreed, saying he would not want to add another layer of regulatory authority for people already in compliance with an existing law.
Revolving loan fund
The board granted Birch Terrace Restaurant and Lounge a reduction in its revolving loan interest rate from 4.9 percent to 3.12 percent. The reduction is contingent on the owners of the business, the Larsen brothers, working with representatives of the Cook County Chamber of Commerce and the Northeast Minnesota Small Business Development Center to create an action plan to improve profits.
The interest rate being offered to new revolving fund applicants is 3.12 percent.
County administrator position
The board had an Internet video meeting with consultant David Unmacht of Springsted Inc. regarding the county administrator position the county will soon be advertising. Unmacht thought they might be ready to post the position by July 17.
Auditor-Treasurer Braidy Powers wondered how the county would handle human resources (HR) issues that come up between the time Personnel Director Janet Simonen retires at the beginning of August and the hiring of an administrator, who will handle HR.
“Normally, the county attorney would back up the HR director,” Simonen said. She and Commissioner Sue Hakes indicated that the situation in the county attorney’s office was not good right now – Assistant County Attorney Molly Hicken is out on family leave and the board has hired outside counsel to deal with threatened litigation from County Attorney Tim Scannell in regard to the December 2011 courthouse shooting.
The county could consult with outside HR professionals as needed while waiting for the new administrator to come on board.
The county will pay Springsted up to $14,000 plus $2,500 in expenses.
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