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Duluth considers changes in new rental ordinance

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Rental housing
The East Hillside and other neighborhoods near UMD are seeing more and more houses turned into rentals for students.
MPR photo/Stephanie Hemphill

The new ordinance language took effect just this past September.

The ordinance spaces rental properties by banning new rental licenses if there is another rental within 300 feet.   It's intended to stop a rapid conversion of single family homes into rental properties - properties that are often rented to groups of college students.  

Blake Shippee
Blake Shippee is a former Duluth college student, and is now a property manager with Shiprock Management. The Duluth company specializes in managing homes for rent.
MPR Photo/Bob Kelleher

Those are some of the kind of properties Blake Shippee rents outs. 

"I think it was designed specifically to address student behaviors and concerns," says Shippee, with the company Shiprock Rental Property Management.  "And I think the consequences that is has outweighs the positives."

The ordinance doesn't reduce the number of licensed rental properties.  They were grandfathered in before the new provision took effect.  But Shippee says it almost stops any new rental licensing.

"I don't know of a place in Duluth that wouldn't be affected by this ordinance," Shippee says.  "It essentially says you can cannot purchase a home and get a license anymore."

It essentially says you can cannot purchase a home and get a license anymore.

And Shippee says the 300 foot restriction makes licensed rental properties more valuable, but hurts the potential sales price for unlicensed homes, particularly in popular student neighborhoods.

For city officials, the ordinance created a major unexpected problem. Property owners facing a September cutoff flooded the city with new rental applications.

"Frankly I think we have a mess," says Roger Reinert, an at-large member of the Duluth City Council.  Reinert is ready to see the zoning ordinance language repealed.  

"You know we had in 30 days, I believe the number was 459, give or take a few, new licenses applied for," Reinert says.  "Most of these were not unlicensed rentals that were trying to apply.  They were people that were living in their homes; had lived in their homes for a number of years, and were running out to save their spot, so that they could get what they perceived to be highest and best value for their property somewhere down the road."

Meanwhile, the rush for licenses exposed some unlicensed rental properties.  The city is cracking down, resulting in evictions, and in some cases forcing students to scramble for new housing in the middle of a cold winter.

Still, not everyone is ready to throw the ordinance away.  Myrna Matheson lives in an East Duluth neighborhood of large old homes.  She says many have become multiple student rentals.

Roger Reinert
Duluth council member Roger Reinert
Image courtesy Duluth City Council

"I've lived here for 43 years," Matheson says.  "And, when I moved here, yes it was rental, but it was all owner occupied.  There were rentals in the house, but the owner was there, which is a considerable difference."

Matheson says the students a few decades ago didn't have cars.  Now they all do, and parking can be a nightmare.  On her block, five homes are owner occupied.  Six are rented to groups of students.   She says it's too soon to toss the ordinance.

"I think we ought to give it more time," Matheson says.  "And certainly there is unfairness to some of the students, but there's been unfairness to some of us in these neighborhoods for nearly 20 years."

The city council's Roger Reinert says there's a better way.   

New zoning could steer student housing to certain neighborhoods, and away from others.  But the work is just getting underway on new zoning codes.  Reinert wants a moratorium on new rental licenses in student congested neighborhoods, but the 300 foot spacing, he says, has to go.

The city's planning commission is reviewing a council member's proposal to drop the 300 foot language from the zoning ordinance.  A vote on the revision could wait until a new council is seated in January.