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Groups aim for compromise on short-term rental legislation

BY Sunday, September 15, 2019 04:30pm

After intense debate in recent years, Holland’s short-term rental pilot program has proven to be less eventful than some city leaders had feared.

Holland’s program, which expires in 2020, allows short-term rentals in all areas of the city. Before the pilot program, Holland only allowed short-term rentals in owner-occupied homes and commercial zones. The pilot program, limited to 25 properties, allows owners of non-owner-occupied homes to rent out their properties on a short-term basis.

Currently, 15 properties are participating in the pilot program. The city has received no complaints from neighbors or police calls for these properties, said Tricia Dreier, assistant director of community and neighborhood services for the city.

While the initial pilot program has gone smoothly, Dreier said the city desires to keep local control over the regulation. She added some Holland officials have been in touch with local representatives to voice this concern. 

“All communities have different needs,” Dreier said. “The city would like to continue to make regulations that are desired by our local community.”

Communities in Michigan and around the country have been grappling with the effects of short-term rentals after websites like Airbnb and VRBO gained popularity in recent years. However, state legislation could upend the rules some local communities have in place regarding short-term rentals. 

A bill sponsored by Rep. Jason Sheppard, R-Temperance, seeks to bar local bans on short-term rentals, arguing that they infringe on private property rights and take the Michigan Zoning Enabling Act a step too far. 

A bipartisan group of lawmakers led by Rep. Jim Lilly, R-Park Township, has introduced a separate bill package that would make restrictions on short-term rentals. The proposed legislation includes a statewide short-term rental registry and requirements that operators pay the same excise taxes required of hotels. It would exempt homes from regulations if they are rented fewer than 14 days per year.

When contacted by MiBiz, a spokesperson for Airbnb declined to comment on the legislation because it is still in its early stages.

Local control

Municipalities want to be able to regulate short-term rentals on a local level, said Jennifer Rigterink, legislative associate for the Michigan Municipal League, an Ann Arbor-based policy and lobbying organization for the state’s municipalities.

MML members see the Lilly bill package as a workable compromise to outright lifting local bans.

“We have been very opposed to the (Sheppard bill) because it takes away all local decision making, and we have a lot of communities that aren’t having issues with vacation or short-term rentals,” she said. “But the way that bill is written affects every municipality in the state.”

The Michigan Realtors Association has supported the Sheppard bill, arguing that lifting local bans allows homeowners to “maximize the value of their property” by offering short-term rentals, and provides a uniform treatment of properties in residential zones. 

The association argues that the legislation does not prevent local government enforcement.

“Local governments currently possess the tools, in their nuisance ordinances and housing codes, to protect public safety and address any discourteous behavior — whether from a year-round occupant or a short-term rental,” according to a statement on the association’s website.

The MML has been working on the short-term rental issue for about three years, and expects state-level discussions to pick up again after the state Legislature passes a budget. Rigterink said the MML has been working with the Michigan Realtors Association to find a middle ground, which is shown in the bipartisan bill package.

Addressing concerns

Rigterink said certain cities with heavier tourism-based economies have experienced issues with short-term rentals. Traverse City, for example, is having a “huge issue” with filling jobs in the region, coupled with a shortage of housing, she said. 

Since January, the city allows “low-intensity” tourist homes, which are limited on the number of nights and guests they can have. Homeowners need to be present when guests are. “High-intensity” tourist homes have no limits, but must be separated from others by a 1,000-foot buffer. The city recently declined to consider allowing longer, unhosted rentals in residential neighborhoods, according to a report from the Traverse City Record-Eagle. Those types of rentals are allowed in non-residential districts.

Issues with housing shortages are common in other northern Michigan cities as well, Rigterink said.

A fear from communities has been investors buying up residential properties and using them only for short-term rentals. This was a concern in Grand Rapids, where short-term rental rules have been in place for about a decade. 

Suzanne Schulz, who recently left her position as the director of design, development and community engagement for the city of Grand Rapids, estimated about 200 units of housing in Grand Rapids are being used as short-term rentals. The City Commission put the limits in place as a way to protect property values and long-term tenants.

“We recognized it as a potential issue in our neighborhoods,” Schulz said. “There’s a lot more data and information out there now, which only reinforces the position we took.”

Schulz echoed the need to tailor regulations for short-term rentals to the needs of local communities. She said non-owner-occupied short-term rentals should be treated as commercial enterprises, which is what the bipartisan bill package aims to do.

“No matter what it is, we are going to advocate for local control,” she said. 

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