Lakeshore owners who rent their places for part of year are becoming important to the tourism economy; Otter Tail takes steps to maintain lodging standards through county

V.R.B.O. - Vacation Rental Homes by Owner
“In a county that is losing resorts at a pace faster than almost any county in the state, we need to be thoughtful
about slowing the decline of resorts, preserve existing resorts, but also offer additional lodging opportunities.”
Nick Leonard, director Otter Tail County tourism and economic development

There is a “cottage industry” all around the lake country–literally.

Modest cottages, cabins: and in some cases, larger year-round lake homes; are being rented as vacation properties.

Around Lake Lida, Pelican Lake, Lizzie and about 1,000 other bodies of water in Otter Tail County, are more than 8,000 cabins and homes.

The number of these properties available for short-term rental is difficult to measure, but about 500 have been tracked by Otter Tail County.

Imagine if all 8,000 were occupied–all the time. This will never happen, of course, because most property owners aren’t interested in being landlords or resort operators.

But the Vacation Rental Homes by Owner (VRBOs) trend could hypothecially expand the resort-traveltourism “industry” around every lake.

A “Lodging Ordinance” and a policy for licensing VRBOs and private home room rentals was formalized last year in Otter Tail County. Regulations over this “cottage industry” have been on the books statewide for many years, but only sporadically enforced by the state health officials.

The initiative in Otter Tail County basically “localizes” inspection and enforcement. What this means for folks who rent their lake places out a few times a year is that there will be more consistent oversight. Conforming septic systems, safe drinking water, adequate fire exits and other standards for lodging facilities must be met.

“The history of this is important, because from a statutory standpoint, nothing has really changed,” said Nick Leonard, Otter Tail tourism and economic development director. “The county adopted the state statute as it is written. The main difference is that the county is now administering it, instead of the state…The rules haven’t changed at all, only the agency responsible for regulating the rules has.”

Basic license fee for vacation rentals is $150 

Vacation rentals must pay a base license fee of $150 a year. A walkthrough inspection, at $250, is also required, under the Otter Tail ordinance.

Property owners who are renting to vacationers have been notified by the Otter Tail County Public Health office, which is administering the inspection and licensing program.

Otter Tail County has so far identified 500 rental properties, mostly uncovered from specialized VRBO advertising websites, according to Diane Thorson, Otter Tail Public Health director. To further connect property owners who rent, there will be notices on the county website, and included in annual Otter Tail property tax statements.

Vacation rentals offer tourism opportunities 

County officials are viewing the new inspection and permit process, at least in part, as a way to bolster tourism in an area where traditional vacation lodging is in short supply.

“This is an economic development tool,” said Thorson. “If we bring people in to rent places, it has a trickle effect to other businesses in the county. These visitors go out to eat, they want entertainment.”

The flipside, is that the county wants to do its part to ensure that–when people come to Otter Tail County, “they are getting what they’re expecting…and they meet certain standards.”

When state health officials had jurisdiction, VRBO regulation was inconsistent– mostly because of lack of staff and resources.

Unless there was a complaint from neighbors, often about rowdy temporary lodgers partying into the night, the state didn’t enforce VRBO statutes, said Leonard.

“…Any home, cabin, condominium, or similar building that is advertised…as a place where sleeping accommodations are furnished,” is how the Otter Tail lodging ordinance defines a Vacation Home Rental.

The short term rental policies do not directly affect resorts, hotels, motels or bed and breakfast facilities–which are already defined commercial businesses of record and already are subject to standards and regulations.

A three page application is necessary for VRBOs, with requirements that include trash pickup, proof of insurance, laundry storage, bed spacing of three feet apart, drinking water tests, fire exit standards, a cleaning-management plan–among others.

The licensing also limits VRBOs to only “one immediate family for duration of stay.”

Leonard believes county government will be more responsive in regulating VRBOs.

Locally enforced regulations around VRBOs tend to “weed out people who are just out to make a quick buck” on their lake places, said Leonard.

Will vacation rentals compete with resorts?

Is there a concern that VRBOs will compete with existing hotels, resorts and bed and breakfast operations?

“There is a perception that resorts are opposed to VRBOs but my observation is that there is more than enough business,” said Leonard, himself a lodging operator, at the family-run East Silent Lake Resort.

“In a county that is losing resorts at a pace faster than almost any county in the state, we need to be thoughtful about slowing the decline of resorts, preserve existing resorts, but also offer additional lodging opportunities,” said Leonard.

VRBOs are “part of the pie” that will accommodate tourists under a new tourism model, he noted.

“I think the resort industry is accepting, as long as visitors can be assured safe, clean alternatives to a traditional resort,” said Leonard. “This is a great thing, as long as we can make those assurances to the public.”

Mainly, said Leonard, resort operators are opposed to the lack of oversight on VRBOs–while conventional lodging businesses must meet stricter, and often costly, standards.

“There are more than enough checks and balances in place, but until now, VRBOs have been somewhat under the radar because the state didn’t have the resources to monitor it,” said Leonard.

Lake property associations have not weighed in on vacation rental topic–yet

The other piece of the VRBO puzzle is the lake property owner associations in the lakes area.

There are approximately 1,000 parcel owners around Pelican Lake alone, for example–many of whom may not be enthused about their neighbor’s operating short term lodging operations next door. Lake associations should endorse VRBOs under county jurisdiction, believes Leonard, because it is in their interest that there is some regulatory oversight.

“In my opinion, I would hope this is a great example of where lake associations and the tourism economy are good bedfellows,” said Leonard. “If a neighbor chooses to rent out their cabin for part of the year, it requires a license, sales taxes are collected, the septic system is environmentally safe, and the cabin is safe for public use.”

Historically, lakeshore associations and the tourism sector have not “always seen eye to eye,” noted Leonard. But local regulation of VRBOs ensures that there is basic management, environmental standards and sound sanitation.

To date, there hasn’t appeared to be an official position on vacation rentals from the Otter Tail Coalition of Lake Associations; or other individual lake groups.

VRBOs are being accepted at the state level as a valid part of the traveltourism economy. In fact, VRBOs can be marketed right on the state’s “Explore Minnesota” websites, noted Leonard–but the state office of tourism expects VRBOs to meet standards to be included in the marketing.

Otter Tail County Commissioner Wayne Johnson noted that county officials are really beginning to “get our arms around this.”

“Basically, we’re saying that–if you’re advertising a vacation rental here, you need to follow our ordinance,” said Johnson. Neighbors will find out soon enough if the neighbor down the shore is renting for part of the summer. If problems arise, and complaints come into Otter Tail County offices, the locally enforced ordinance provides a framework to deal with those issues.

“Basically, we’re not trying to settle neighborhood issues–not cause them,” said Johnson.

And the Otter Tail County Commissioners believe local oversight will help maintain peace along the beaches.