A new city ordinance would limit short-term rentals, primarily Airbnbs, in Minneapolis. 

Following resident concerns and city pushback against short-term rentals in a downtown Minneapolis apartment, Ward 3 City Council member Steve Fletcher is looking to change city requirements for property owners. Fletcher said short-term rentals can take housing off the market and drive up rental costs, among other issues. 

The Vicinity apartments in downtown Minneapolis, owned by Sherman Associates, originally planned to lease 94 units to short-term renters through a company called Sonder. Sonder would act as the long-term tenant and facilitate short-term leasing through Airbnb. The Vicinity is currently under construction with completion set for the fall. Sherman Associates could not be reached for comment.

The plan upset residents who were concerned with the aspect of too many short-term residents in the neighborhood, Fletcher said. 

“The neighbors felt like it might lead to living around a lot of people who didn’t care as much about the health of the neighborhood,” Fletcher said.

Residents were also concerned with how the plan would affect the low-income families who would live in the apartment, where 20 percent of units will be affordable to residents.

“They were keeping all of the affordable units, and then they were going to surround the low-income families that move into those units with short-term rentals,” Fletcher said. “Then that didn’t feel fair to them.”

In response to the concerns, Sherman Associates and Sonder reached an agreement to decrease the number of units used for short-term rentals to 25. But Fletcher said The Vicinity is not the only reason he wants to address short-term rentals in Minneapolis. He said he knows of at least a dozen more buildings downtown renting their units out in a similar way.

When housing is taken off the market, negotiating becomes more difficult for renters, Fletcher said. 

“I think when you’re seeing apartment buildings put a lot on there, I’m going to have the same concern that I have with Vicinity, which is that, if you take student housing off the market, that makes it a tighter market, and that props rents up and I don’t want to see that happen,” Fletcher said.

The city ordinance, spearheaded by Fletcher, would increase regulation for short-term rentals. This could include imposing new fees and regulating where short-term rentals can exist. 

Airbnb declined to comment because the ordinance is not yet finalized.

While conversations around short-term rentals are centered in the downtown area, Marcy-Holmes Neighborhood Association executive director Chris Lautenschlager said the neighborhood supports ordinances like Fletcher’s. 

“Marcy-Holmes would be in favor of any sort of ordinances that would disallow new developments to be used purely for the sake of Airbnb,” Lautenschlager said.

Prospect Park Association president Eric Amel said there’s a need in the neighborhood for diverse housing models, including short-term rentals. There are currently 10 listings on Airbnb at the Arrow apartments in Prospect Park, listed by the apartment’s property manager.

“I think the neighborhood benefits from a variety of housing types and styles,” Amel said. “So whether you’re an owner or leasing by the year or a more short-term thing or a hotel thing, this is all of value to our neighborhood to have these different modes.”

Fletcher said the city will seek public feedback to get a better idea of the ways, good and bad, that short-term rentals are being used. He expects to introduce the ordinance to the city in the fall.