The Michigan Municipal League (MML) and local government leaders recently held a virtual conference to call attention to compromise legislation being developed that will balance the needs of short-term rental owners, permanent local residents and vacationers.
The conference was moderated by Dan Gilmartin, MML CEO, and featured Grand Rapids City Manager Mark Washington, as well as Bridget Smith, Frankenmuth city manager; Derek Lemanski, short-term rental owner in Frankenmuth; and Jenn Hill, mayor pro tem in Marquette.
Gilmartin said the local leaders represented municipalities that have short-term rental regulations in place designed to best meet the needs of their respective communities.
Newly introduced legislation like HB 4985 and others soon-to-be introduced make clear short-term rentals are allowed in Michigan while also giving local communities the right to implement reasonable regulations that suit their unique housing needs.
“If the current bills pass, all of this work for reasonable regulation will be tossed, and the floodgates to short-term rentals will be open,” Gilmartin said. “It would be like adding lighter fluid to an already blazing-hot housing market, making the demand for attainable housing even more dire here in the state of Michigan.”
Both SB 445 and HB 4722 define short-term rental as the rental of a single-family residence, a dwelling unit in a one-to-four–family house, or any unit or group of units in a condominium, for terms of not more than 30 consecutive days.
Both bills state short-term rentals are a residential use of property and a permitted use in all residential zones and are not subject to a special use or conditional use permit or procedure different from those required for other dwellings in the same zone. Short-term rentals also are not considered commercial use of a property.
Short-term rentals have grown in popularity across the state, providing a boost in vacation options for visitors, but Gilmartin said they’ve also brought a reduction in available housing, increased noise and nuisance complaints and unequal competition with traditional hotels. Additionally, the blanket legislation can open the door for commercial operators looking for a growth market in residential homes turned into hotels.
“Any legislator with their name on these bills, or considering voting for them, needs to be able to answer these very important questions: are you concerned about the skyrocketing cost of home purchasing in your community? What’s the wisdom of reducing housing supply for Michigan residents who live in our communities year-round and pay taxes year-round during the worst attainable housing crisis our state has seen? What percentage of a neighborhood’s housing stock should be short-term rentals? And what provisions in this bill keep a neighborhood from becoming 100% short-term rentals?” Gilmartin said.
Grand Rapids allows short-term rentals, but the city is very intentional about using its current zoning laws to regulate them, Washington said. It is important for the city to consider other factors like parking, traffic noise and other nuisances.
“It’s important that short-term rentals be regulated with local control based on how each community and each city and township and village responds to its own residents,” Washington said.
Grand Rapids does not allow the entirety of a residence to be used as a short-term rental, again based on local constituency when developing the zoning laws, but SB 445 and HB 4722 do not consider local preferences, Washington said.
“These bills ignore the reality of how short-term rentals operate, and many of them are not home sharing … but it is actually renting the entire home for extra income for a few short periods of time, while the homeowners are away,” Washington said. “Not only have we seen that attempt in Grand Rapids, but also in other cities that I’ve had the privilege of working for.”
Washington added the city already has seen upticks in some parts of the community in complaints derived from short-term rental use.
“It’s not unreasonable to expect people have the ability to acquire additional income through the use of their property, and we feel we’ve responsibly done that by enabling it to occur, but within the context of our zoning regulations to make sure that the quality of life for all of our residents will be protected,” Washington said. “We urge all lawmakers to reject any legislation that ignores the work local communities have done to set fair and local regulations to uplift their local needs. What works in Grand Rapids may not work in other communities across the state, and what works in other communities may not work in Grand Rapids.”
Washington estimated Grand Rapids needs over 9,000 new housing units over the next four years, and the need for attainable housing far outreaches the need for short-term lodging. In order to maintain an acceptable quality of life, the city needs additional housing supply, and Washington said he feared the proposed legislation would lead to a further erosion of housing supply as people outside the community take advantage of available stock.
Frankenmuth, a popular vacation destination which has a mix of short-term rentals, hotels and bed and breakfasts, amended its ordinance in 2019 with input from hotels, short-term rental property owners and residents.
“I think this is really how regulation is supposed to work,” said Smith. “It protects personal property rights and still respects neighboring properties … what’s most disheartening is the short-term rental bills on the floor ignore this careful, collaborative work that we’ve done.”
Lemanski, who along with his wife owns short-term rental properties in Frankenmuth, echoed Smith’s sentiment and called on lawmakers not to erase local short-term rental ordinances with the bills on the floor.
“We’re not just renting here. We actually own our home here as well, so we live in this community,” Lemanski said. “We comply with all the local tax collection requirements and ensure our guests know the local rules in place for noise. We’ve kept all our properties up to a T, and by doing these things, we feel like we’re protecting the historic nature of our community.”
Up in the U.P., Marquette’s Hill said, like in Grand Rapids, housing is the No. 1 issue in her community.
“I’ve seen posts on our community pages from folks who have gotten jobs in Marquette, or are coming here to go to school, and they are not able to find housing,” Hill said. “I personally received for the first time a letter offering to buy my house for cash — no appraisal, no one seeing the house — buying the house as is in as quickly as 24 hours. We need to slow down and think about how to balance housing, tourism and community.”
The city of Marquette has been working on its own short-term rental policy since the beginning of 2017. The ordinance has a block-by-block approach that protects neighborhoods and residents, while welcoming visitors to explore neighborhoods as an option to traditional hotels, Hill said. The city again revisited its ordinance in 2018 and expanded it so owners of multi-unit properties could rent out all of those units.
In 2020, the city instituted an ad hoc housing community to address the current housing crisis and will soon release a report regarding the lack of available inventory in Marquette, Hill added.
“We’re not the only community in the U.P. that has short-term rental policies. Other communities do as well,” Hill said. “We’re all taking a thoughtful approach and we encourage the legislature to do the same.”