Executive Overview: Are Short-Term Rentals Allowed?

YES – Short-term rentals are permitted in Stillwater, MN, but with significant restrictions and requirements.

Short-term rentals (defined as rentals of 30 days or less) are allowed in Stillwater under Ordinance 1093, passed in 2017 and most recently updated in 2024. However, the city has implemented a cap of 50 licenses outside of the Central Business District, with only one (1) license currently available outside of downtown at the time of this guide. Properties within the Central Business District have separate licensing allowances.

Both the City of Stillwater and Stillwater Township (the surrounding unincorporated area) have established comprehensive regulatory frameworks for short-term rentals, with distinct requirements and limitations between the two jurisdictions.

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Starting a Short-Term Rental Business in Stillwater

Step 1: Determine Your Jurisdiction

City of Stillwater:

• Incorporated city limits with more restrictive regulations
• Requires city licensing and compliance with municipal ordinances
• Central Business District has different rules than residential areas

Stillwater Township:

• Unincorporated Washington County areas surrounding the city
• Separate township ordinance with different requirements
• Maximum of 10 licenses total, with waiting list system

Step 2: Property Suitability Assessment

For City Properties:

• R-3 Occupancy (Owner-Primary Residence): If property serves as year-round residence
• R-1 Occupancy (Transient Use): If no year-round resident; requires certified architectural plans showing compliance with MN State Building Code
• Properties over 4,500 sq. ft. or non-owner occupied must meet accessibility requirements
• All properties must pass Fire and Building inspections

For Township Properties:

• Single-family residences only
• Must provide minimum two off-street parking spaces
• Adequate trash collection capacity required

Step 3: Application Process Timeline

Typical processing time: 2-3 months, including:

• Application review (1-2 weeks)
• Initial home inspection and any required corrections
• City Council approval process
• Final licensing issuance

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Required Documents, Permits, and Licenses

City of Stillwater Requirements

Core Application Documents:

1. Short Term Rental Application - Official city form
2. Background Check Packet - Required for all owners/operators with property keys
3. Inspection Checklist - Property preparation verification
4. Lodging Tax Registration - 3% tax on all lodging income
5. Building Code Classifications - Compliance documentation

Additional Requirements for Non-Owner Occupied Properties:

• Certified architectural plans showing MN State Building Code compliance
• MN Department of Labor and Industry Building Code Summary
• Accessibility ANSI 117.1 Technical Criteria documentation
• Accessibility Scoping Criteria compliance

Financial Requirements:

• $300 non-refundable application fee
• $15 check to MNBCA for each owner/operator with keys
• $150 per reinspection fee if required
• $1,000+ liability insurance policy
• Quarterly 3% lodging tax remittance

Stillwater Township Requirements

Application Package:

1. STR License Application - Township form
2. Notice to Neighbors - 1,320 feet or 10 nearest properties
3. Site Plan - Rooms being rented, smoke detector and fire extinguisher locations
4. Insurance Documentation - Valid liability policy copy
5. Parking Plan - On-site parking spaces identification

Annual Renewal Requirements:

• Guest rental log with days/weekends rented
• Total days rented documentation (maximum 75 annually)
• Updated insurance and contact information

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Specific Regulations by Jurisdiction

City of Stillwater Regulations

Operational Limits:

• License cap: 50 licenses outside Central Business District
• Stay duration: Maximum 30 consecutive days
• License validity: 3 years (licensee's responsibility for renewal timing)
• Transferability: Non-transferable; new license required with ownership change

Property Standards:

• Parking: No street parking allowed; all parking must be on-site
• Occupancy management: Owner/operator must be within 60 minutes during rentals
• Event restrictions: No parties or events permitted
• Building compliance: Must meet MN State Building Code requirements

Enforcement and Penalties:

• Operating without license: Compliance Notice followed by Administrative Citations starting at $250 (or current Fee Schedule amount), doubling with each violation
• Complaint policy: Three strikes policy - third substantiated complaint within 12 months may result in license suspension, revocation, or conversion to provisional license
• License denial rights: City Council may deny applications for previous unlicensed operation

Stillwater Township Regulations

Operational Limits:

• License cap: Maximum 10 licenses total
• Stay duration: Maximum 30 consecutive days
• Annual rental days: Maximum 75 days per year
• Weekend limit: Maximum 2 weekends per month (exemptions for 20+ acre parcels)

Property Standards:

• Parking: Minimum 2 off-street spaces required
• Emergency contact: Must be within 30 minutes travel distance
• Age requirement: Primary occupant must be 21+ years old
• Visible addressing: House number must be easily visible day and night

Prohibited Uses:

• Events of any kind (weddings, parties, conferences, receptions, etc.)
• RV's, tents, detached structures as rental units
• Disorderly conduct or noise violations (10 PM - 7 AM quiet hours)

Enforcement:

• Misdemeanor charges: Violations constitute misdemeanor under state law
• Civil penalties: $1,000 for renting without license
• License revocation: Minimum penalty for two or more violations within license period
• Daily violations: Each day of violation constitutes separate offense

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Tax and Financial Obligations

City of Stillwater Taxes

Lodging Tax: 3% on all lodging income

• Paid quarterly to City of Stillwater
• Separate from any taxes collected by Airbnb, VRBO, etc.
• Owner responsibility for remittance (no city agreements with platforms)

Property Tax Implications:

• Contact Washington County Assessors Office: (651) 275-7515
• STR operation may affect property classification and tax rates

Township Financial Requirements

Application Fees: Set by Town Board (non-refundable once processed) Insurance: Minimum $1,000 liability coverage required Renewal Fees: Annual renewal with detailed usage reporting

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Contact Information

City of Stillwater - Primary Contacts

Community Development Department (Licensing):

• Phone: (651) 430-8820
• Email: PlanningDept@stillwatermn.gov
• Address: Planning Division, 216 4th St N, Stillwater MN 55082

Police Department (Complaints):

• Non-emergency: (651) 439-9381

City Hall Main:

• Phone: (651) 430-8800
• Address: 216 North Fourth Street, Stillwater, MN 55082

Washington County Assessors:

• Phone: (651) 275-7515

Stillwater Township Contacts

Township Clerk:

• Phone: (651) 439-4120
• Email: clerk@stillwatertownshipmn.gov
• Address: 13636 90th Street North, Stillwater, MN 55082
• Office Hours: Town Hall open only during meetings or by appointment

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Links to Source Documents

City of Stillwater Resources

• Short-Term Home Rental Program Overview
• Business Licenses - General Code
• Short-Term Home Rentals - Specific Code
• Fee Schedule
• Property Uses and Zoning

Stillwater Township Resources

• Short-Term Rentals Homepage
• STR License Application
• Complete Ordinance #196
• Neighbor Notification Template

Additional Resources

• Real Estate Market Analysis - Daniel Graves
• Washington County Assessor (for property tax questions)

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Critical Investment Considerations

Market Reality

• High demand, limited supply: With only one license currently available outside downtown Stillwater, the market is severely supply-constrained
• Competition: Existing licensed operators have significant competitive advantages
• Investment risk: No guarantee of license availability; no waitlist system in place

Due Diligence Requirements

• Property condition assessment: Verify building code compliance and accessibility requirements
• Zoning verification: Confirm property location within appropriate jurisdiction
• Financial modeling: Factor in all compliance costs, taxes, and licensing requirements
• Timeline planning: 2-3 month licensing process requires careful project management

Success Factors

• Location optimization: Downtown properties may have better licensing availability
• Property standards: Newer or recently renovated properties likely to pass inspections more easily
• Owner involvement: Physical proximity requirements may limit remote investment strategies
• Compliance expertise: Understanding and maintaining ongoing regulatory compliance is essential

This comprehensive regulatory framework reflects Stillwater's balance between allowing economic activity through short-term rentals while maintaining neighborhood character and residential quality of life. Investors should approach this market with full awareness of the regulatory constraints and compliance requirements outlined above.