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Lawmakers seek to end local bans on vacation rentals

Beth LeBlanc
The Detroit News
This arty house is a short-term rental through Airbnb near Eastern Market in Detroit.

Local bans on short-term rentals in Michigan could be barred themselves under controversial legislation being considered by a Republican-controlled state House committee.

The bill’s sponsor, Rep. Jason Sheppard, R-Temperance, said the local zoning rules created to ban short-term rentals such as those available through Airbnb, Homeaway and VRBO infringe on private property rights and are an abuse of Michigan’s Zoning Enabling Act.

“That’s actually a totally egregious interpretation of zoning,” Sheppard said after a hearing last week before the House Local Government and Municipal Finance Committee. “They’re using the zoning act on purpose because that’s the most expedient way to stop (the rentals).”

The bill banning communities from prohibiting short-term rentals through local zoning rules has raised ire among local leaders who see the legislation as infringing on local control. In some areas, short-term rentals have become a commercial enterprise and have changed the fabric of neighborhoods, officials from several West Michigan communities testified Wednesday.

“This is talking about investment property,” said Suzanne Schultz, director of design, development and community engagement in Grand Rapids. “This is talking about equity firms owning multiple properties and leasing them out at the sake of our neighborhoods.”

But real estate agents and short-term rental owners said the option allows Michiganians to hold onto a second home during economic downturns or earn a supplemental income on a home they don’t use year round. The short-term rentals also boost tourism and out-of-state travel to Michigan.

“In the case of a lost job or a health issue that could drain you financially, your rights as a homeowner should not be held in the hands of others,” said John Natsis, owner of Beachtown Vacation Rentals in southwest Michigan's Harbor Country.

In 2018, Airbnb locations in Michigan were rented out to roughly 640,000 visitors and hosts earned $78 million in supplemental income, said Allison Schraub, deputy policy director at Airbnb. That number is expected to increase this year.

"Each host serves as an ambassador to the state of Michigan ... and guides guests toward the neighborhood attractions, restaurants and small businesses," Schraub told lawmakers. 

Spring Lake Township resident Lucy Welch took a less rosy view of the transient population occupying homes near her. 

"Rentals are not visitors to neighborhoods," Welch said. "They’re strangers. They’re people we don’t know."

Sheppard’s bill would define a short-term rental in the state Zoning Enabling Act as a one-family to four-family home occupied for less than 28 days at a time. The rental would be considered a “residential use of property,” one not subject to special use permit requirements or standards separate from other houses in a residential zone.

The bill doesn’t stop communities from regulating short-term rentals through registration programs, fees or caps on the number of people in a rental so long as those rules exist outside the zoning rules, Sheppard said.

Communities and lawmakers questioned the language of the bill that allowed for the regulations, specifically language that required the rules to be “applied on a consistent basis to rental and owner-occupied residences.”

“Does that mean that now we can’t inspect single-family rentals because we don’t consistently inspect owner-occupied single family?” asked Don Gilmet, a building official for the city of Alpena.

Sheppard questioned arguments by critics who complained about the changes to neighborhood homes, such as a South Haven official who said a home there was converted from a three-bedroom, one-bath unit to a seven-bedroom, seven-bath unit that could fit 30 people to accommodate renters.

A Detroit area Airbnb property.

“Who in the world approved the building permits inside of these homes?” the lawmaker said. “Why is that a zoning issue? Shouldn’t that be their local building code issue?”

The issue of short-term rentals is an “existential problem” in places like St. Joseph, where the practice has become more prevalent in recent years, said City Manager John Hodgson.

“What our residents recognized was that their neighborhoods were being systematically dismantled,” Hodgson said. "The character of those neighborhoods is changing.”

Some Democratic committee members, while not supporting the specific bill, noted the hot button issue needs to be addressed in some form.

“Our office has gotten more opposition to this than to the gas tax,” said Rep. Padma Kuppa, D-Troy. The freshman legislator noted during committee that she uses Airbnb occasionally when attending sessions in Lansing.

The legislation struck a “reasonable balance of state and local control” and an individual’s own property rights, said Heather Gradowski, a real estate agent in New Buffalo and a rental property owner.

“Renters become owners; owners ultimately invest in the community,” Gradowski said. “Ultimately, this is a feeder system into a stronger community for us.”

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