City revisits regulations for Airbnbs after Lake Mitchell resident warned for renting out home

MITCHELL — After discovering a local property owner has been opening up his Lake Mitchell home for Airbnb stays in a zoning district where it's prohibited, city officials are revisiting the way it regulates the trendy online rentals.

While the city permits Airbnb-style rentals in certain areas of Mitchell, City Planner Mark Jenniges said Lake Mitchell isn’t one of them. The recent incident with Boyd Reimnitz’s Lake Mitchell property being used as an Airbnb is what prompted Jenniges and city leaders to discuss the city’s ordinance and mull over potential changes.

“We’ve had a couple people call and send letters about their concerns with their (Reimnitz’s) lake house being used for Airbnb. But it’s a growing trend, so we felt it’s time to have a more in depth discussion on it,” Jenniges said.

Airbnb and VRBO are among the online marketplaces that people can use to rent a home or property area for short-term stays. Over the past few months, the Airbnb market has begun taking off for Reimnitz’s Mid-Dakota Properties. But the company now has to look at which properties they can open up for renters to comply with the city’s ordinance after learning of the city’s regulations two weeks ago.

The city of Mitchell issued a warning letter to Mid-Dakota Properties about the use of the home. Reimnitz and his daughter, Destiny, who helps run the business, each declined to comment on the matter.

In a recent interview with the Mitchell Republic, Destiny Reimnitz said opening up some of the rental properties in Mitchell that she manages has also provided an avenue to monetize vacant rental units and help allow temporary workers to stay in Mitchell.

The city’s ordinance for Airbnb-type lodging prohibits any home in Residential Lake (R-L), Residential 1 (R-1) and Residential 5 (R-5) zoning districts from being utilized for rentals.

However, the city’s ordinance allows Airbnb and VRBO type lodging in Residential 2 (R-2) and Residential 3 (R-3) single-family and two-family zoning districts, if the property owners secures a conditional use permit from the Mitchell City Council.

The lone zoning district that the city allows for Airbnb and VRBO type lodging is an Residential 4 district (R-4), which consists of multi-family dwellings that can house up to 24 units such as an apartment complex.

During the May 9 city Planning and Zoning Commission meeting, Jenniges presented the panel with an opportunity to discuss the city’s ordinance on regulating such properties. Jenniges pointed to the way several other cities in the state regulate the Airbnb and VRBO industry for the Planning Commission to get a comparison of how Mitchell’s ordinance differs from other municipalities.

“Every city is a little bit different with the way they regulate Airbnbs. In Sioux Falls, they allow them anywhere from what I can see,” Jenniges said.

While the city of Sioux Falls has much less regulations on Airbnb type lodging, Chamberlain recently moved in an opposite direction by adopting an ordinance that prohibits Airbnb lodging in any residential area for guests that plan to stay there fewer than 30 days.

The Chamberlain City Commission’s recent decision to put a ban on Airbnb and VRBO lodging in residential areas was a response to a recent influx of people buying up properties in the small Missouri River town solely for the purpose of utilizing them for Airbnb and VRBO stays.

With a lack of housing options available in Chamberlain, Chamberlain Mayor Chad Mutziger said people buying residential homes with the sole intent to use them for Airbnb and VRBO lodging has worsened the community’s “housing crunch.”

To avoid a similar problem that Chamberlain has experienced, Jenniges said the Mitchell City Council could require any property intended for Airbnb use to be owner-occupied.

“There could also be tweaks to the ordinance that require any property intended to be used for Airbnbs to be owner-occupied. That would mean someone can’t just come in and buy all these properties in residential areas and not live there and use them for Airbnb and VRBO,” Jenniges said.

Matt Doerr, a local accountant and entrepreneur, encouraged the Planning and Zoning Commission to “look at the bigger picture” around the Airbnb and VRBO industry.

Doerr said the emerging Airbnb industry has helped some vacant, aging homes become habitable again.

“I understand these restrictions and zoning are in place for good reason, but I think a lot of times we don’t think about the full ramifications of some of these regulations," Doerr said, speaking to the commission. "For example, in Chamberlain, let’s say an investor looking to do Airbnbs comes in and improves the house and prevents it from not being vacant. As long as it’s being managed well and maintained, that should be a win-win for the house and community."

Doerr pointed to placing more restrictions on the Airbnb industry in Mitchell as a decision that could impact sales tax revenue.

“These families who stay at Airbnbs almost always, eat and shop at our local stores. Those sales tax dollars could be gone if we deter Airbnbs,” he said.