13 October 2023
DULUTH Four residents on Osage Avenue continue to unsuccessfully press the city to grant them licenses to offer up their homes as vacation rental properties in the wake of a City Council decision to allow a four-story, 100-room hotel to be constructed next door to their properties.
“It’s not just about the diminished value of our home,” Ben Fye, one of the affected residents, told members of the planning commission Tuesday. “It’s about the diminished privacy. That’s a huge thing. We all have families, and that is a significant impact.”
Fye’s property is zoned rural-residential. However, it abuts the hotel site, which is zoned mixed use-commercial. He referred to the incongruous juxtaposition of the high- and low-intensity land uses as “bad zoning.”
City staff were asked to consider whether residents could be offered some relief, in the form of an exemption from a cap Duluth has placed on the number of homes that can be converted into vacation dwelling units, or VDUs. The restrictions on VDUs were adopted in an effort to preserve Duluth’s stock of permanent housing for residents and protect it from excessive erosion in a market where tourist lodging continues to offer property owners higher returns.
There has consistently been greater demand for VDU permits than Duluth allows, and the city conducts periodic lotteries to determine in what order available permits are offered to property owners eagerly awaiting permission to convert their homes for tourist use.
City planning staff were asked to weigh in on a proposal that would exclude people who live in homes located in low-density rural residential areas from the VDU cap if their property is located within 300 feet of a mixed-use commercial development.
Staff did not endorse the idea.
“Making a change like this is fine. And Ben came here tonight, because what he’s requesting is totally reasonable. But making changes on a single issue like this four vacation dwelling units is of very high risk to the city, because then we open the floodgates for this type of request for every situation, of which there are an infinity,” warned Adam Fulton, deputy director of Duluth’s planning and economic development division.
“If you have a cap and you start messing with things to exempt stuff from the cap, that makes the cap a lot less relevant,” he said.
Planning commission members were asked on Tuesday to affirm staff’s findings and their recommendation that an exemption to the VDU cap not be granted.
But Gary Eckenberg bristled at the idea of allowing the Duluth City Council to use the planning commission’s action as justification to deny VDUs to the hotel’s neighbors.
“I believe this is only the City Council’s decision,” he said. “This organization, this planning commission, had a belief that we were the local government unit to make a decision on one aspect of this hotel project an EAW (environmental assessment worksheet) and we made a decision on it. Then it was taken out of our hands by the City Council, who decided, no, they wanted to make the decision. So, I say tonight that our fourth option is to remove this item from our agenda.”
Earlier this year, the planning commission had agreed that the project be required to undergo additional review, in the form of an environmental assessment worksheet, before it was allowed to proceed. The developer appealed that decision to the City Council, which then overturned that decision, allowing the hotel to go forward.
The hotel, to be called Towneplace Suites by Marriott, is currently under construction, even as residents continue to battle the development in court, citing the impact it could have on wetlands and Miller Creek, a nearby designated trout stream that’s already considered to be environmentally impaired.
“I do not want this organization to provide some kind of strange cover for the City Council so they can go ahead and do something that this gentleman and his neighbors find to be reprehensible to their lives and their future,” Eckenberg said, gesturing toward Fye. “The City Council has the power to do it. They took that power.”
Andrea Wedul advised against the planning commission turning city councilors into adversaries. “I don’t want to make war with the City Council,” she said.
Jason Crawford asked if there wasn’t something he and fellow members of the planning commission could do “to help the neighbors out.”
“Because, right now, to me, it does not seem that there is an option to do that,” he said. “Either we approve the memo to deny, or we send it back, or we modify it. So, right now, there is no way to help with this situation,” he said.
“I think Commissioner Crawford is correct,” Wedul said. “We’re being given an impossible choice right now. So, if we want to help them, which I think it seems like we’re trying to figure out a way to do, I think we’re going to have to say ‘no’ to the memo.”
Ultimately, the planning commission voted to send the memo back to planning staff because it disagreed with its findings and requested that other options be explored further.
Commissioner Brian Hammond said he objects to the way the city continues to handle VDU permits altogether.
“I’m actually opposed to the cap,” he said. “I have personally used rentals as a way to get out of a house when I couldn’t get out of a house myself. I couldn’t sell the house because the value had dropped, and I used a rental to buy myself time, so I didn’t have to empty my bank account to pay somebody to take my house.”
“That’s a situation I’ve been in personally, and I feel for them,” Hammond said. “This is why I hate caps … because you’re telling someone what they can and cannot do with their property.”
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