Duluth Minnesota Weighs Ban on New STRs in Single-Family Homes

Key Takeaways

Duluth officials are considering banning new short-term rental licenses in single-family homes
The city estimates more than 400 unlicensed vacation rentals are operating alongside roughly 200 permitted properties
A formal ordinance could reach the City Council as Duluth’s one-year moratorium on new STR licenses nears its end

A city in Minnesota could soon stop issuing new short-term rental licenses for single-family homes as city officials rethink where they want to allow vacation rentals.

The Lake Superior port city of Deluth, located about 150 miles north of Minneapolis, is home to a sizable tourism industry and roughly 200 permitted vacation rentals, with city officials estimating hundreds more are operating without licenses.

Duluth Fire Department Deputy Chief Jon Otis told the City Council earlier this month that many of the city’s older single-family homes were not designed for transient lodging and raised concerns about converting more of them into vacation rentals, according to the Duluth News Tribune.

The discussion comes as Duluth works through a one-year moratorium on new short-term rental licenses that began last November, giving city staff time to study the market and develop possible new rules.

Under the proposal being discussed, existing licensed single-family rentals could continue operating until the property is sold or its use changes, but the city would stop approving new licenses in that category.

Accessory dwelling units smaller than 800 square feet could still qualify, while owner-occupied homes would be allowed to rent a single room under a home-share permit.

“We’re trying to protect our housing stock,” Otis said. “And our most vulnerable are those single-family homes.”

Duluth estimates more than 400 STRs are operating without licenses

The debate isn’t only about where new STRs should be allowed. Duluth is also trying to get a better handle on how many short-term rentals are already operating.

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Planning director Ben Van Tassel said the city has about 200 permitted vacation rental licenses on the books, but estimates suggest more than 400 additional properties are operating without one.

That gap has city leaders looking at stronger enforcement tools, including a proposed 24/7 complaint hotline and a public website showing ownership information for registered rentals.

Duluth already caps certain short-term rental licenses at 110 citywide, although that limit does not apply in some commercial districts, including downtown, Lincoln Park and Spirit Valley.

City Council President Lynn Marie Nephew said she would like to see the number of short-term rentals in single-family homes decline over time. Neighborhoods such as Park Point saw some of the city’s fastest rental growth before the moratorium took effect.

The discussion mirrors debates playing out in other tourism-heavy communities over how many short-term rentals neighborhoods can support. In South Carolina, for example, Folly Beach is studying whether its STR cap is affecting tourism and home values.

Van Tassel said he expects to bring a formal ordinance to the Duluth City Council as the moratorium’s expiration approaches, giving local hosts and property owners a clearer picture of what the next set of rules could look like.