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Cottage Grove to shift lodging-tax collections to Minnesota Department of Revenue; plans software to detect unpermitted short-term rentals
Summary
City staff told the Cottage Grove Convention and Visitors Bureau the city will transfer lodging-tax administration to the Minnesota Department of Revenue effective July 1, 2025, and will trial Rentalscape software to identify short-term rentals not remitting tax.
The Cottage Grove Convention and Visitors Bureau heard on June 3 that the city will hand over lodging-tax collections to the Minnesota Department of Revenue beginning July 1, 2025, and plans to use third-party software to identify unpermitted short-term rentals.
Phil, the CVB communications manager, told the board the city collected $17,449 in fourth quarter 2024 and $16,469 in first quarter 2025 lodging-tax revenue and that fourth-quarter collections were “13.5 over the 2024 total budgeted revenue,” boosted in part by the food truck festival. He said the city is shifting collections to the state to increase enforcement authority and free local staff time.
“The weight and authority that a letter or enforcement actions from the Minnesota Department of Revenue has…is far greater with all due respect to the city of Cottage Grove,” Phil said, adding the change will “save staff a ton of capacity and [increase] efficiency.”
Phil also described Rentalscape, a product from Deckard Technologies, as a tool the city plans to use to scan listing platforms such as Airbnb and VRBO to identify short-term rental (STR) properties that are not permitted or not remitting lodging tax. “This software scans through websites like Airbnb, VRBO…to get us insight into those properties that exist out there in our city,” he said.
Board members did not take a formal vote on either item during the presentation. The change in collection administration and the planned use of Rentalscape were presented as staff initiatives; the board was given an opportunity to ask questions but did not direct specific further action during the meeting.
Background and next steps: Phil said the city council previously authorized the transfer of lodging-tax administration to the Minnesota Department of Revenue and that implementation is scheduled to begin July 1, 2025. The board was told other Minnesota communities, including Woodbury, have used the department’s service and provided positive feedback. Staff said they will continue to report back to the board as implementation proceeds.
