Vacation rental bans under state scrutiny

Jonathan Oosting
Detroit News Lansing Bureau

Lansing — A battle is brewing at the Michigan Capitol over Airbnb and other short-term rental properties, pitting the rights of owners against local restrictions inspired by neighbors’ nuisance complaints.

Separate bills introduced in the state House and Senate would prohibit local governments from enacting zoning ordinances that ban or restrict owners from renting out homes or condominiums for less than 28 days at a time.

Allison Hurd stands in her house in Traverse City, that she lives in and rents as an Airbnb. In Traverse City, short-term rental homes are regulated like bed and breakfasts.

Short-term rentals, traditionally popular in vacation and tourism areas, have gained traction across the state and country through websites like Airbnb, VRBO and HomeAway, which collect fees for connecting owners with paid renters.

While Detroit Mayor Mike Duggan has praised “home sharing” as a way to help residents afford their properties, some communities like Spring Lake Township in west Michigan have begun to crack down on full-home Airbnb rentals.

A new ordinance there limits owners in two residential zones, primarily along the waterfront, to one or two short-term rental periods of up to 14 days a year. It was enacted after residents complained of a steady stream of noisy, disruptive renters at four specific properties.

“It’s like living next to a state park by day and a fraternity house by night,” said Lucy Welch of Spring Lake, who helped lead the push for local regulations after three years of disruptions from a short-term rental property next door.

“What it really comes down to is a total loss of privacy and a loss of security,” Welch said.

But zoning regulations like the Spring Lake ordinance inappropriately curtail the right of owners to maximize the value of their property through short-term rentals, according to the Michigan Realtors association, which is running ads promoting the pre-emptive legislation.

“Many Michigan citizens either own a second home or have a tradition to go out and rent a vacation property in the summer months,” said Brian Westrin of Michigan Realtors. “If this trend continues, that property right will either be limited or eliminated. Our folks really do see this as a private property rights issue and a value issue.”

A coalition of hotel owners, local officials and homeowners is mobilizing to fight the legislation. They argue the bills could give short-term rentals an unfair advantage over existing hotels, allow unregulated rentals to clog residential neighborhoods and prohibit local governments from enacting zoning rules that meet their unique needs.

“Residential zoning exists to preserve the character of neighborhoods and protect property values for every home,” they wrote in a recent letter to lawmakers. “This legislation pre-empts that process and silences the voices of residents and locally elected leaders by allowing commercial activity in residential areas.”

Short-term rentals are not required to pay hotel and motel taxes or undergo health and safety inspections like licensed businesses, according to the letter.

But Airbnb has begun voluntarily collecting occupancy taxes in Michigan. The company finalized an agreement with the state this summer to automatically collect and remit taxes to the Michigan Treasury Department, a move state policy director Will Burns said will “unlock a brand new tax revenue stream” for the state.

Holland is considering allowing non-owner occupied Airbnbs.

Airbnb said it has 4,900 active “hosts” in Michigan that earned $25.2 million combined in supplemental income renting to 188,000 guests in 2016. More than 33 percent of Airbnb listings are extra, unused rooms within a host’s home, according to the company, and the typical listing is rented out less than three days per month.

“We will continue advocating for our thousands of middle class Michigan hosts who count on supplemental income from home sharing to make ends meet,” Airbnb said in a company statement.

Neighbor disputes

When Kelli Fickel and her family moved from Holland to Grand Haven four and a half years ago, they weren’t ready to sell the historic district home they’d fully renovated and hoped to give to one of their kids someday.

After reading about Airbnb, they decided to give it a try, keeping the house while earning some extra cash. Two years later, Fickel says, they got the first in a series of citations from the city of Holland, which threatened legal action against them for not registering their property as a rental.

What followed was a lengthy battle that saw the local government initially allow only owner-occupied short-term rentals, precluding participation by Fickel and others who do not live in the properties they rent.

The Holland Planning Commission later approved a plan to allow non-owner-occupied Airbnbs in some parts of the city, and the full council is now considering the measure.

At one public hearing, Fickel said neighbors came to support her and other Airbnb hosts, some of whom had continued to rent their properties despite the restrictive rules.

“Our homes are the best kept homes in the neighborhood,” Fickel said, noting she visits her property multiple times a week, including in between renters. “We’re not the same problem as absentee landlords, which will happen a lot in long-term rentals. It doesn’t happen in short term, because you have such a high standard you’re kept to.”

Residents in some other parts of the state say short-term rental owners have not been nearly as attentive, causing headaches in what had been quiet neighborhoods.

Pauline Smith of White Lake Charter Township in Oakland County lives on property that has been in her family since 1925. She said her street changed two years ago when someone she does not know and rarely sees purchased a home two doors down and began to fill it with a continual stream of short-term renters.

“Some people just come for vacation, some nice couples, but that’s rare,” Smith said. “Mostly it’s people that do not want to trash their own house for a party, or they’ve got a bazillion guests coming in from out of town and it’s cheaper to put up 10 people in a house than a hotel.”

Renters occasionally fill the street with parked cars, she said. Drunk young men have hit on her, Smith said, despite her old age and “white hair.”

“This is a party house,” she said, arguing it is more of a commercial venture than a residential property. “They know it, and they treat it like that.”

A local concern

Local governments have a variety of other ways to crack down on unruly renters without infringing on private property rights, said Jarrett Skorup of the free-market Mackinac Center for Public Policy, which supports the new bills.

The legislation specifies that it would not prohibit local regulations governing noise, advertising, traffic or other conditions.

“You shouldn’t be allowed to disturb other people because they have property rights, too, but the legislation doesn’t affect that,” Skorup said.

But communities like Spring Lake do not have enough resources to enforce all existing ordinances, said township Supervisor John Nash, who said zoning regulations were a more practical way to address the issue.

Spring Lake spent months developing its zoning ordinance and held two special hearings to gather resident input, Nash said. The board unanimously approved the ordinance, but it has prompted at least one lawsuit from a local couple prohibited from doing short-term rentals.

The zoning rules were inspired by four specific houses that were continually filled with short-term renters, he said. Three of the properties were owned by divorced couples who decided to simply rent out the home rather than live there, he said.

“We didn’t have a Herculean problem,” Nash said, “but on the other hand, it was obvious that it could grow into a Herculean problem, so we said, ‘Hey, let’s nip this thing in the bud.’ ”

Other cities and townships — primarily vacation hotspots near water — have enacted short-term rental ordinances, including Grand Haven and Ferrysburg. In Traverse City, short-term rental homes are regulated like bed and breakfasts. Owners must be present when renters are there. They must be licensed and cannot be within 1,000 feet of one another.

“It is only happening in communities where there have been problems locally,” said Judy Allen of the Michigan Townships Association, which opposes the legislation.

“Zoning has always been determined to be a local responsibility. It’s not a one-size-fits-all, and this bill tends to treat it as a one-size-fits-all solution.”

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