Tension mounts over Duluth vacation rentals

DULUTH – Sarah Lawrence and her husband were sitting one afternoon on the patio of their Duluth hillside bungalow with stunning views when strangers passed by and offered to buy their home for double what she was worth.

“We said, ‘would you like to live here?’ They said ‘no,'” she said.

For her, it was the latest example of a changing tide in Duluth, where full-time vacation rentals are spilling over into the quaint town, and some locals are jittery.

Last fall, the city made sweeping changes to its rental rules and allowed up to 10 new full-time permits in residential neighborhoods each year, as long as 10 new residential units are added, capped at 120. Fifty-five Duluth homes in residential areas are now full-time vacation rentals; about half are in Park Point, a mile-long residential sandbar with homes, beaches, and a small airport.

Duluth is among a number of in-demand tourist communities under pressure across the country as residential vacation rentals grow in popularity, especially in places like the Carolinas, Arizona and California.

The bloom in Duluth has some residents worried about the repercussions, despite restrictions put in place by city officials. Neighbors have attended city government hearings to express concerns about the lack of on-site landlords, the impact of outside investors on an already tight housing market, and noisy visitors who they say threaten the appeal of quiet neighborhoods. The problem is expected to resurface on Monday when a group of neighbors plan to attend a city council meeting to appeal a vacation rental permit the city has granted.

Beth Storaasli filed the $407 appeal against a home in her east Duluth neighborhood. She said her daughter is a recent example of the many potential buyers in Duluth who can’t find homes in their price range.

“The city council has come up with what looks like a great compromise, and they’ve put their heads down and won’t look at what it does to the community,” Storaasli said.

Council member Roz Randorf said residents’ concerns were thoroughly discussed before council approved new rules last fall, including concerns about the city’s housing crisis and density issues. .

“We peeled the onion deep,” she said.

As part of the deal, Randorf said, they made many concessions to ease neighborhood concerns. The city requires screens or fences and a maximum number of rooms. The city has imposed parking requirements and requires a property manager living within 25 miles. Permits last for six years and must then be renewed.

“We’ve given the order a lot of thought and made thoughtful changes that everyone is complying with,” she said. “Hopefully we don’t unbox this thing and start over.”

“Not a NIMBY response”

Andrea Kuzel said her family has lived in Park Point for about a decade, relishing the coveted beach community with longtime residents who borrow sugar from each other and share baked goods. But the sheer number of vacation rentals on the Pointe is “destroying” its fabric, she said, adding that property taxes are “skyrocketing.”

“It’s the neighbors who live in homes that give it value,” Kuzel said, and many rentals don’t have on-site landlords or are owned by businesses. “We’re some of the youngest in Park Point – there aren’t many kids now. It’s slowly fading away.”

Limiting the number of vacation rentals in a neighborhood isn’t likely, said Adam Fulton, assistant director of planning and development for Duluth.

“It’s complex to administer and it’s basically a change in the market that sometimes has unintended consequences,” he said.

The town of about 36,000 households has about 100 vacation rentals in total. Some areas, such as downtown and other business districts, have no cap on permits. Complaints about tenants are rare, Fulton said, and because of the timeline for permits, officials say they don’t believe these types of properties will become permanent fixtures.

“It’s an emerging business,” he said, and cities are approaching it in different ways — from no restrictions to capping numbers or outright banning them.

“The political imperative here is to ensure that we provide an adequate level of housing and to ensure that we do not experience a loss of available housing of all types in our community,” Fulton said.

Hundreds of apartments in Duluth are expected to be built and open over the next few years. There is, however, a shortage of available single-family homes.

The city is experiencing “the strongest growth in the number of housing units created in our city in a generation or more,” said council member Gary Anderson.

Lise Lunge-Larsen sees it differently. She lives opposite the house at the heart of the appeal that the city council will consider on Monday.

“Every home that’s turned into a VRBO (vacation rental by owner) is an off-the-market home,” Lunge-Larsen said. “Looks like the left hand doesn’t know what the right hand is doing.”

As for Lawrence, she said she’s worried about the growing number of vacation rentals that dot Observation Hill and are empty between visitors, lending a lonely vibe to a place that was once teeming with children.

“That’s not a NIMBY response,” she said, using the acronym for the phrase “not in my backyard.” “It’s the absence of what might be there that bothers me.”

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