By Rep. Paul Anderson
One item sure to be discussed during this year’s legislative session has to do with what’s called “short-term rentals.”
This is the result of a directive sent out last year by the Dept. of Revenue telling county assessors to locate and identify cabins and houses that are rented out for short periods of time, usually during the summer months of June through August. It’s thought by some that these rentals represent unfair competition for traditional resorts and hotels because of different property tax classifications. The directive from Revenue said that once these short-term rentals were located, they were to be re-classified as commercial property. The result of that change would be a huge increase in property taxes assessed against them.
With the growing popularity of online services advertising this type of rental, I would agree that the situation needs a review. However, there are two issues that make this change of policy difficult to administer.
First, is the problem of finding all these rentals. Currently, because there are no state-wide license or permit requirements to rent out one’s cabin; there is no official inventory of them. Assessors are having to scour websites and online advertising in their efforts to locate them. And some of these rentals probably don’t advertise at all, as they rely on simple word-of-mouth to let folks know of their property.
And, secondly, once the task of locating all these short-term rentals is completed, just what should their tax status be? Should they be classified as commercial, the same as a hotel that rents rooms year-round? Yes, they are competing with commercial hospitality operations, and some sort of change is warranted. However, it seems that if a private home or cabin is rented out for short periods during the summer, it’s not quite the same as a year-round business. Two possible options would be to classify these properties as seasonal recreation or residential non-homestead.
This is a big deal for those counties that have lakes and other types of recreation property. The issue was first raised by folks in northern Minnesota where tourism is a major industry. We’ll see where it goes as the Legislature gears up this week and the new session gets underway.
Another issue we’ll work on has to do with ethanol and increasing the level of this renewable fuel source in the gasoline we utilize for transportation. Currently, it’s blended at a rate of 10 percent and is known as “regular” gas with an octane rating of 87. There will be a push to raise the level of ethanol from 10 to 15 percent here in Minnesota. Right now, this higher blend known as E-15 or 88 octane, is available at a limited number of locations. It’s been approved by the EPA for use in all vehicles newer than 2001, which represents about 90 percent of all vehicles on the road today. It’s also cheaper than regular gas by at least five cents per gallon.
It seems like a no-brainer. E-15 is cheaper and has a higher octane than our current regular gas. It would also help our ethanol industry, which is currently struggling in the face of stagnant demand and limited exports, both the result of government policy. The hang-up is being able to provide E-10 for those older cars still on the road, which would require a separate tank and pump for that blend of gasoline. There have been programs in the past, and another is being discussed, that would assist service stations with the installation of equipment to facilitate the use of these different types of fuel.