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1 <br />STAFF REPORT <br />DATE: 12/08/2025 <br />Regular Agenda <br />Item # 5a <br />TO: Lake Elmo Planning Commission <br />FROM: Miranda Moulis, Planning Assistant <br />AGENDA ITEM: Short-Term Rentals Discussion <br />REVIEWED BY: Jason Stopa, Community Development Director <br />CORE STRATEGIES: <br />☐Vibrant, inclusive, connected community ☐Efficient, reliable, innovative services <br />☒Responsive, transparent, adaptive governance ☐Balanced Finances now and future <br />☒Managed Growth ☐Resilient Infrastructure <br />BACKGROUND: <br />Current city code prohibits the use of short-term rentals (30 days or less) which are not owner- <br />occupied residences. As part of city code housekeeping earlier this year, staff proposed removing <br />the requirement that Bed and Breakfasts (short-term rentals) be owner-occupied. The amendment <br />went before the Planning Commission on January 27, 2025, and was not recommended for <br />approval. The item was removed from the housekeeping amendment to be further researched by <br />staff. <br />Staff presented their findings to the City Council at their November 12, 2025, Workshop and <br />requested feedback from the Council on next steps. Councilors were 3-1 in favor of permitting <br />short-term rentals with some restrictions. Councilors agreed that there should be guardrails in <br />place to protect neighbors from nuisances such as noise and large gatherings. There were some <br />concerns that enforcing regulations could be difficult and cost staff time. Other restrictions <br />discussed included limiting the number of lodging rooms, the number of guests, and the total <br />number of short-term rentals within the City. <br />ISSUE BEFORE THE PLANNING COMMISSION: <br />How does the Planning Commission want staff to proceed with an ordinance proposal amending <br />the zoning code to include short-term rentals? <br />Where should they be located? <br />Should there be a limit? <br />Should they be regulated as a R-1 or R-3 occupancy? <br />PROPOSAL DETAILS/ANALYSIS: <br />City staff contacted Washington County, the licensing jurisdiction for lodging establishments, <br />about their licensing requirements. Short-term rentals meet the definition of a hotel/motel under