Executive Overview: Are Short-Term Rentals Allowed in Two Harbors, MN?

YES, short-term rentals are allowed in Two Harbors, Minnesota, but with significant restrictions. As of 2024, the city has implemented a restrictive zoning policy that prohibits new STR permits in residential zoning districts. New permits are only available for properties located in B1 and B2 commercial zoning districts. Existing permit holders in residential districts may retain their permits but must submit renewal applications by November 1st to continue operations.

This regulatory environment creates a two-tiered market where established residential STRs can continue operating while new entrants must secure commercial-zoned properties, making the commercial real estate aspect crucial for new investors considering the Two Harbors market.

How to Start a Short-Term Rental Business in Two Harbors

Step 1: Determine Property Eligibility

The first critical step is verifying your property's zoning designation. Properties must be located in B1 (Neighborhood Commercial) or B2 (General Commercial) zoning districts to qualify for new STR permits. Residential zoned properties are no longer eligible for new permits, though existing permits may be renewed.

Step 2: Secure Property and Verify Zoning Compliance

• Confirm the exact zoning classification of your target property
• Verify that commercial signage will be compliant with Chapter 4.40 of the City Code
• Ensure the property can accommodate the required minimum of two off-street parking spaces

Step 3: Establish Local Management Structure

City regulations require that a person who lives within thirty (30) miles of the rental unit be named as the local agent. This individual will serve as the primary contact for city officials, neighbors, and guests in case of issues or emergencies.

Step 4: Secure Lake County Lodging License

Before applying for the city STR permit, you must obtain a Lake County Lodging License from the Lake County Environmental Health Department. This is a mandatory prerequisite for all STR operations.

Required Documents, Permits, Licenses, and Guidelines

City of Two Harbors Short-Term Rental Permit

Required Documents:

• Completed Short-Term Rental Permit Application (2024 or 2026 version)
• Minnesota Tax ID Number
• Written consent from property owner (if applicant is different from owner)
• Lake County Lodging License copy
• Application fee payment

Application Components:

1. Type of Application - New or renewal
2. Applicant Information - Including local agent details
3. Property Information - Street address, parcel number, zoning district, parking spaces, unit details
4. Certification Statements - Four required affirmations regarding compliance
5. Fee Payment - $125 for full year, $62.50 for part year (October 1-December 31)

Lake County Lodging License

Contact Information:

• Phone: (218) 834-8356
• Email: john.weidner@co.lake.mn.us
• Hours: Monday-Friday, 8 AM to 4 PM
• Website: www.co.lake.mn.us/health-and-human-services/hhs-documents/

Property Information Requirements

• Complete property address and parcel number
• Zoning district verification
• Number of off-street parking spaces (minimum 2 required)
• Detailed unit information including number of units and bedrooms per unit
• House number visibility verification

Certification Requirements

Applicants must certify and affirm four key statements:

1. STR operations will not interfere with neighbors' quiet use and enjoyment
2. All lodging tax reports and payments will be provided monthly, even during periods of no rental activity
3. Compliance with Section 4.42 of the City Code regulating short-term rentals
4. Awareness and compliance with all Federal, State, and local requirements

Specific Regulations for Short-Term Rentals

Zoning and Location Restrictions

• New Permits: Only allowed in B1 and B2 commercial zoning districts
• Existing Residential Permits: May be renewed but no new permits issued for residential zones
• Cap System: A cap exists for STR permits outside the 7th Avenue corridor, achieved through attrition (no existing permit holders lose permits if they submit applications by November 1st and comply with requirements)

Parking and Occupancy Requirements

• Minimum Parking: Two off-street parking stalls required for all guests
• Vehicle Limit: Maximum number of guest vehicles cannot exceed the number of available off-street parking spaces
• Off-Street Requirement: All parking must be off-street; street parking does not count toward the requirement

Operational Standards

• Local Agent: Must be appointed, living within 30 miles of the rental unit
• Permit Display: City-issued permit must be displayed in a conspicuous place onsite during all rentals
• House Number Visibility: Property house number must be unobstructed and visible from the adjacent street
• Guest Eligibility: Primary overnight and daytime occupant must be an adult (18 years or older) and must provide telephone number to owner

Advertising and Marketing Requirements

• Permit Number: All advertising must include the City-issued permit number
• Commercial Signage: Allowed only for STR units located in B1 or B2 commercial zones, in compliance with Chapter 4.40 of the City Code

Activity Restrictions

• Events: Not allowed to be hosted by non-owners on properties licensed by STR permits
• Garbage Management: Appropriate solid-waste storage bins must be available for guest use and stored out of public view

Tax and Reporting Obligations

• Lodging Tax: Responsible for ensuring all lodging taxes are paid as required by the Minnesota Department of Revenue
• Monthly Reporting: Monthly reports required even if no rental activity occurred during the month

Enforcement and Compliance

• Administrative Approval: STR permits are administratively approved by the Zoning Administrator
• Conditions: Zoning Administrator may impose reasonable conditions to protect health, safety, and general welfare
• Revocation: Permits can be revoked for violations of permit conditions or other laws, rules, standards, and regulations
• Penalties: Enforcement procedures include penalties according to Section 4.42 of the City Code and Chapter 11 (zoning regulations)

Contact Information for Local Authorities

City of Two Harbors - Planning & Zoning Department

Primary Contact:

• Phone: (218) 834-5631
• Fax: (218) 834-2674
• Address: 522 First Avenue, Two Harbors, MN 55616
• Email: info@twoharborsmn.gov
• Office Hours: Monday-Friday, 8:00 AM - 4:30 PM (excluding major holidays)

Zoning Administrator:

• Email: jotsea@ardc.org
• Phone: (218) 529-7529
• Alternative City Phone: (218) 834-5631

City Planner:

• Sarah Swedburg, AICP
• Company: Bolton & Menk
• Phone: (320) 470-8551
• Email: sarah.swedburg@bolton-menk.com

Lake County Environmental Health Department

Lodging License Contact:

• Phone: (218) 834-8356
• Email: john.weidner@co.lake.mn.us
• Hours: Monday-Friday, 8 AM to 4 PM
• Website: www.co.lake.mn.us/health-and-human-services/hhs-documents/

Application Process Contact

For questions about application status and to determine if an opening exists before submitting a new application:

• Contact: Zoning Administrator at jotsea@ardc.org or (218) 529-7529
• Alternative: City main line (218) 834-5631

Source Links and Additional Resources

Primary City Resources

• Planning & Zoning Department: www.twoharborsmn.gov/department/planning_zoning/index.php
• City Code: codelibrary.amlegal.com/codes/twoharborsmn/latest/overview
• STR Application 2025: www.twoharborsmn.gov/department/planning_zoning/index.php (Direct link to STR Packet 2025updated.pdf)
• STR Application 2026: www.twoharborsmn.gov/department/planning_zoning/index.php (Direct link to STR 2026/STR Packet 2026.pdf)
• Fillable STR Application 2026: na2.documents.adobe.com/public/esignWidget?wid=CBFCIBAA3AAABLblqZhAJqNyXX6iX8iZIdOm9dfUsqqQmE5qwnDt_7R9-PKKrnxdlXfMsEzvawWFdWQlgi2o*
• STR Ordinance Section 4.42: www.twoharborsmn.gov/department/planning_zoning/index.php (Direct link to STR 2026/STR - Ordinance Section 4.42.pdf)

Lake County Resources

• Health and Human Services Documents: www.co.lake.mn.us/health-and-human-services/hhs-documents/
• Environmental Health Division: Contact via (218) 834-8356

Additional Forms and Applications

• Conditional Use Permit Application: na2.documents.adobe.com/public/esignWidget?wid=CBFCIBAA3AAABLblqZhAkAwEz52RwsGoreo8aTr-t3AaJ1bIQ-9-UeNeVWSOE_KuuIVRGULlktMoYHuLSByI*
• Zoning Certificate Application: na2.documents.adobe.com/public/esignWidget?wid=CBFCIBAA3AAABLblqZhCix1UpmbjFNmA01zOO4qCYD0CnKEjwcysj1O7xvpxejgP8aQ4q9lOTuAZXGunyunY*

Market Analysis Resources

• RedAwning Market Overview: www.redawning.com/pm/market-overview/two-harbors-minnesota

Important Compliance Deadlines and Timing

Annual Renewal Requirements

• Application Deadline: November 1st for existing permit holders to retain permits for the coming year
• Permit Expiration: All permits expire at midnight on December 31st annually
• Application Period: Applications for renewal must be received by the City Clerk by the end of each year

Fee Payment Schedule

• Full Year Applications (January 1 - December 31): $125
• Part Year Applications (October 1 - December 31): $62.50
• Application Timing: Fees vary based on whether application is submitted before or after October 1st

Special Considerations for New Applicants

• Pre-Application Contact Required: Contact the city before submitting a new application to determine if an opening exists
• Complete Applications Only: Only complete applications will be processed
• Zoning Verification Required: Property must be located in correct zoning district (B1 or B2 commercial)

This comprehensive regulatory framework establishes Two Harbors as a maturing STR market with increasingly restrictive access, making successful navigation of the permitting process and ongoing compliance critical for both new and existing operators in this North Shore Minnesota destination market.