Rentalscape identifies unlicensed short‑term rentals; Q3 lodging tax receipts track below budget but lag expected

Phil Gents, the city’s communications manager, updated the board on the city’s recent transition to Minnesota Department of Revenue lodging‑tax collections and on use of Rentalscape software to identify short‑term rental properties.

Gents said the Department of Revenue began collecting lodging tax for the city in July and staff are monitoring receipts. He reported quarter‑to‑date lodging tax collections of $15,392 and a year‑to‑date total of $62,955; the previously approved budget had projected $18,000 for the quarter. Gents cautioned that collections experience a lag (staff reported other communities typically see about a 40‑day lag from property remittance to city receipt) and said staff expect lagged receipts (for example, September) to arrive later and raise the Q3 total.

On compliance, Gents said Rentalscape (Deckard Technologies) has identified 11 licensed short‑term rental properties in Cottage Grove, 10 unlicensed short‑term rental properties, and 22 total unlicensed properties (which may include long‑term rentals). He said the city’s code compliance officer will send letters to unlicensed properties to bring them into compliance and that not all unlicensed properties necessarily meant the owners were not remitting lodging tax to the state.

Board members requested clarification on the 10 versus 22 counts; staff explained the 10 are specifically unlicensed short‑term rentals (Airbnb/VRBO‑style), while the 22 figure includes all unlicensed properties and could include long‑term rentals. On when a stay is considered short‑term for lodging‑tax purposes, a speaker noted the city code reads 30 days as the cutoff (stays less than 30 days are short‑term). Staff said they will monitor for any collection impacts as compliance letters are issued.