McGregor Council discusses short-term vacation rentals

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Ordinance would make practice OK, but require permit, hotel/motel tax collection

By Audrey Posten, North Iowa Times Editor

With the inception, in the past decade, of Airbnb and similar vacation rental booking websites, people have found an online marketplace to rent out their homes, apartments and other spaces, when they’re not in use, on a short-term basis. The practice has boomed, with Airbnb alone boasting over 3 million listings worldwide and over 160 million total guests.

It’s no surprise, then, that the short-term vacation rental trend has caught on in the area. Several people, said McGregor City Administrator Lynette Sander, have inquired if the city would permit them to do the same with properties in McGregor, during the weeks or weekends they are not in town.

There was just one problem: “The city code doesn’t address the issue,” stated city attorney Mike Schuster. “It’s the case with a lot of cities around the country.”

The council discussed the topic May 31, during a special meeting that addressed several potential ordinance changes, including one that would amend the city’s zoning regulations pertaining to short-term rentals.

The ordinance, Schuster explained, would define a short-term rental in the code as “the rental of any legally permitted dwelling unit, or any portion thereof, for occupancy for dwelling, lodging, or sleeping purposes for a period of less than 31 consecutive calendar days, whether with or without meals.”

Another key part of the ordinance would require the owner of the short-term rental to obtain a one-time permit from the city of McGregor, at a cost of $25, before renting the unit. The person would also need to supply a sales tax identification number, so hotel/motel tax could be collected.

“The primary purpose [of the ordinance],” Schuster said, “is to make clear that ‘Yes, it’s OK, but you’re also required to get a permit and collect hotel/motel tax.’”

With the loss of some bed and breakfasts and the Holiday Shores Motel, councilwoman Rogeta Halvorson said the ordinance would be helpful in encouraging people to provide the community with additional lodging.

Since the city, when it receives hotel/motel tax, is not told which entities provided the funds, the permit system will also help track who’s offering short-term rentals, Halvorson added.

“We get a lump sum,” she explained. “We don’t know who’s in it. There’s no way to look.”

As a result, Halvorson wondered who’s going to enforce the ordinance?

Schuster admitted the city won’t always know who’s offering short-term rentals.

“It’s not perfect,” he said. “It’s going to be word of mouth.”

The council tossed around the idea of having the owners of already-established short-term rentals, like bed and breakfasts, get a permit, simply for tracking purposes; those who already have a business would also not have to pay a fee. However, the ordinance’s first reading was passed as-is, without adding that stipulation.

Councilman Charlie Carroll, who along with Jason Echard voted “no” in approving the first reading of the ordinance, was unsure about charging people for the permit.

“I just hope we’re not being overzealous,” he said. “We’re already making revenue off this [through hotel/motel tax], so we want to make it easier.”

“What if someone just wants to do it a few times, but decides it’s not for them?” he questioned. “Are we going to go and tell them ‘You violated our ordinance’?”

According to Charlene and Richard Palucci, who run the Old Jail and Firehouse Guest Suite, and were in attendance at the meeting, there is no cost to obtain a permit from the state.

Additional readings of the ordinance will be considered at the council’s next regular meeting, on Wednesday, June 21.

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