Short-term rentals in Prior Lake, explained properly.

Sec. 4-384(5) says no dwelling unit shall be rented for a period of less than 60 days and no dwelling unit shall be rented out under more than one lease at a time. Sec. 4-382 defines a short-term rental as a rental or lease for at least 60 days but no more than 180 days. The article applies to dwelling units in the city's residential use districts (Sec. 4-381); the zoning chapter listing those districts was not read.

Sec. 4-384(1) sets the limit, and the owner is responsible for making sure tenants, occupants and guests comply. For lots of one-half acre or more: under 1,500 square feet, six occupants; 1,500 square feet to less than 2,000 square feet, eight occupants; 2,000 square feet or more, 12 occupants. For lots of less than one-half acre: under 1,500 square feet, four occupants; 1,500 to less than 2,000 square feet, six occupants; 2,000 square feet or more, eight occupants. Children under three years of age are not counted toward the limit. The maximum overnight occupancy must be written on the notice posted at the dwelling unit.

Sec. 4-384(2). For a permit on Twin Island, the requirement is met if the parking requirement in chapter 10 is met for the permitted premises and the number of on-land parking spaces equals the number of bedrooms. An area on a private street or easement may count as an off-street parking space only at the city manager's discretion and only when it is dedicated solely to the permitted premises, is contiguous to it, has signed confirmation of the dedicated parking from a person with authority over the street or easement, and parking there will not interfere with the use of the street or easement. A bedroom is a habitable room within a single-family dwelling used or intended to be used primarily for sleeping, not including a kitchen, dining room or living room.

Sec. 4-383(h). The agent may, but need not, be the owner, and one person may be the agent for several dwelling units. The agent keeps a primary and a secondary phone number and a current address on file with the code enforcement officer and must respond immediately to complaints and contacts relating to the dwelling unit. The code enforcement officer must be notified in writing within two business days of any change of agent. The agent is responsible for the activities of the tenants and the maintenance and upkeep of the dwelling unit, and is authorized to receive service of notices of violation, orders and process. The agent's phone numbers go on the notice posted at the unit.

Sec. 4-383(g). The notice must include the name and address of the person succeeding to ownership or control. Permits expire annually on December 31 unless suspended or revoked earlier (Sec. 4-383(e)), and a renewal application is due at least 60 days before expiry (Sec. 4-383(f)).

Sec. 4-384(3). Any restricted watercraft moored at the permitted premises must be registered and owned by either the property owner or the current tenant. No watercraft may be permanently or temporarily placed or stored within the side yard setback of the permitted premises, as set for the zoning district by chapter 10, article III, division 2. The article defines watercraft as any vessel, boat, canoe, raft, barge, sailboard or similar device used or usable for carrying and transporting persons on public waters.

Sec. 4-384(6). Sec. 4-388(b) adds that if the city has reason to believe the article is not being complied with, it may require the submission of an executed lease or other information needed to establish compliance.

Sec. 4-388(a). The prescribed notice summarizes the article, says no one may rent a dwelling unit without a city permit, that a copy of the lease must be available at the unit, and gives the property lines, the agent's two phone numbers and the maximum overnight occupancy (not counting children under three). It also states the watercraft side yard rule, that disorderly conduct is prohibited, that increased noise regulations apply between 10:00 p.m. and 7:00 a.m., that littering is prohibited, that recreational fires are limited, and that any violation of the article is a misdemeanor. The noise, littering and fire rules themselves are in other parts of the code, which were not read.

Sec. 4-385. The owner must ensure tenants and their guests do not cause the premises to be disorderly, as disorderly conduct is defined in section 7-52. The code enforcement officer decides on the evidence, and criminal charges are not required. After a first determination the officer notifies the owner and agent by certified mail. After a second instance within one year of a notice, the officer sends a certified-mail notice and requires a written report within 15 days of the actions taken and proposed. If a third incident occurs within one year after the second, the permit may be revoked, suspended or not renewed, through the procedure in Sec. 4-386.

Sec. 4-386. The code enforcement officer may recommend suspension or revocation to the city manager, who reviews the reasons and gives written notice to the owner and agent, including the right to appeal to the city council. An aggrieved applicant files a written request for a hearing with the city manager within ten days after the date of issuance of the written notice, and a hearing is held within 30 days of receipt of the request. While a permit is suspended or revoked, it is unlawful for anyone to allow new short-term rental occupancies of the dwelling until a valid permit is restored. No person whose permit was revoked may be issued a short-term rental permit for one year from the date of revocation. Sec. 4-387 allows a council decision to deny, suspend or revoke a permit to be appealed by petitioning the state court of appeals by a writ of certiorari.

Sec. 4-388(c): any person who undertakes or allows a violation of the article is guilty of a misdemeanor and, on conviction, is punished by a fine or by imprisonment, or both, in accordance with state law. The code's adopting ordinance also provides that, unless another penalty is expressly provided, each act of violation and each day a violation continues is a separate offense, and the city council may pursue other remedies such as abatement of nuisances, injunctive relief and revocation of licenses or permits. The dollar amount of the fine is set by state law and is not stated in the article.

The Department of Revenue guide says residential short-term rentals (a home, a portion of a home, or any other property used as a temporary place to stay or live) are a form of lodging and related services, and that charges for them are subject to the general rate sales tax and any applicable local and lodging taxes. Revenue Notice 17-06 (published in the State Register on September 25, 2017) says state and local taxes are due on lodging if the lease or rental is for less than 30 days, or for 30 days or more if there is no enforceable written lease agreement that requires the customer to give prior notice of their intention to terminate the lease. The lodging guide's table for tips and service charges lists the state general rate sales tax as 6.875%. Sales of lodging that are isolated and occasional and not made in the normal course of business are exempt from sales tax under Minnesota Statutes section 297A.67, subdivision 23, as the notice states, and the guide adds that the income tax rule for renting out a home for 14 days or less does not carry over to sales tax. The guide says some cities administer their own lodging taxes and the state rate calculator leaves out special local taxes, so city taxes are shown on each place's page and this page does not total state and local taxes. The guide was last updated May 15, 2024.

Revenue Notice 17-06 says that if the residential property is in Minnesota, the owner must register as a retailer to collect, report and remit sales tax and applicable local taxes when both of these apply: the owner regularly furnishes lodging directly to a customer in the normal course of business (for the purpose of profit or producing income), and the customer makes the reservation with and pays the owner. The owner is not required to register or collect when the owner uses an accommodations intermediary to facilitate all sales of lodging at the property, or when the owner's rental is an isolated incident not made in the normal course of business. When an owner who regularly rents directly also uses an intermediary, both have liabilities: the owner collects on sales made without an intermediary, and the intermediary collects on the sales it facilitated. The guide says the owner must keep documentation of who facilitated each sale and was responsible for remitting the tax. It describes an isolated sale as one that happens once and an occasional sale as infrequent and not recurring with some degree of regularity.

Revenue Notice 17-06 says an accommodations intermediary that facilitates the sale of the short-term rental of residential property located in Minnesota must register as a retailer to collect, report and remit the taxes on the full sales price of lodging and related services, whether the intermediary or the renter is in Minnesota or not. Facilitating the sale includes collecting receipts from the customer and transmitting them to the owner, directly or through third parties, whether or not the intermediary deducts fees from those receipts. It does not include mere advertising that directs the customer to contact the owner to reserve and purchase. The full sales price includes all amounts the intermediary charges the customer. Statute section 297A.61, subdivision 47 defines the term accommodations intermediary, as the notice cites. The notice is dated September 2017 and the guide May 15, 2024.

Section 157.16, subdivision 1 says a license is required annually for every person, firm or corporation engaged in the business of conducting a food and beverage service establishment, youth camp, hotel, motel, lodging establishment, public pool or resort. Section 157.15 defines a hotel or motel as a building, structure, enclosure or any part of one used as, maintained as, advertised as or held out to be a place where sleeping accommodations are furnished to the public for periods of less than one week; a lodging establishment as sleeping accommodations furnished to the public as regular roomers for periods of one week or more with five or more beds to let to the public (or the health-care lodging described in the definition); and a resort as a place on or near a lake, stream, skiing or hunting area or other recreational area, held out to the public for recreation stays and having for rent five or more cottages, rooms or enclosures. The Department of Health's rules and guidance were not read, so whether a particular rental needs a state license should be confirmed with the Minnesota Department of Health. City licensing and registration are separate and are shown on each place's page.