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Short Term Rentals Under Debate in Lansing w/Local Control at Risk

Short Term Rentals Under Debate in Lansing w/Local Control at Risk

(Crystal A. Proxmire, May 24, 2021)

Lansing, MI – When the city of Ferndale was going through the process of implementing regulations for short term rentals, commonly known as Airbnb ‘s and vacation rentals, Ferndale Mayor Melanie Piana and other city leaders had a lot of things to think about.

Short Term Rentals (STRs) bring visitors to a city that doesn’t have other quality hotel options, and they can be a good source of revenue for property owners.  During discussions in Ferndale, one proprietor explained the economics, saying that property owners make more money in the three months of renting at $100-$500 per night in the busy travel season, than in an entire year renting to a person or family to live there year-round.

Yet there are also downsides, like parties that disturb neighbors or get out of hand, parking problems, property maintenance issues, trash, and even the potential for criminal activity.  Ferndale and neighboring Royal Oak are among the cities that have had gunshots fired at STR-based parties.  Additionally, when houses are bought up for STRs, it reduces the available housing for families and people to live and be part of the community.

And there’s also the impact on the neighbors.

“They didn’t sign up to live next to a hotel when they bought their house,” Mayor Piana said during the discussions leading up to the March 2021 ordinance.  “So there’s a balance here that we’re trying to achieve.”

Regulations put in place by Ferndale and other cities across the state aim to limit the number of homes that are being rented out transiently, as well as the number of guests that can be there.  Regulations also require inspection, to make sure that the home is in safe condition for those who stay as guests.

Ferndale’s ordinance passed in March. But now state legislators are working on a bill that would remove local governments’ rights to regulate these businesses within their city using zoning, including deeming areas where businesses would be permitted or not permitted, or limiting the number of them.

Senate Bill 446 would amend 2006 PA 110, entitled “Michigan zoning enabling act,”(MCL 125.3101 to 125.3702) by adding section 206b to say:

“Sec. 206b. (1) For the purposes of zoning, all of the following apply to the rental of a dwelling, including, but not limited to, short-term rental:

(a) It is a residential use of property and a permitted use in all residential zones.

(b) It is not subject to a special use or conditional use permit or procedure different from those required for other dwellings in the same zone.

(c) It is not a commercial use of property.

(2) This section does not prohibit regulation applied on a consistent basis to rental and owner-occupied residences for any of the following:

(a) Noise, advertising, traffic, or other conditions, for the prevention of nuisances.

(b) The number of persons that may occupy a dwelling.

(c) Inspections and inspection fees.

(d) Taxes otherwise permitted by law.

(3) As used in this section, “short-term rental” means the rental of a single-family residence, a dwelling unit in a 1-to-4–family house, or any unit or group of units in a condominium, for terms of not more than 30 consecutive days.”

Senator Aric Nesbitt, a Republican from the 26th District as well as Chair of the Committee, introduced the bill.  “I introduced it last year and again this year.  It’s good to see a hearing this year. [The bill is] sort of working to balance community interest with private property rights. We’ve seen many local governments seek to completely ban short term rentals and zoning them out of existence. This is what I believe is a significant infringement on private property rights and individual rights.”

He liked the regulation to the way municipalities tried to regulate transportation services like Uber and Lyft.   “We saw municipalities trying to ban those at one time, and [we’re] allowing for a consistent definition, and allowing for meaningful uses, and saying ‘Michigan’s open for business.”

He said currently in some places, “zoning is being used to pick winners and losers,” saying every property owner should have the same access to use their property as an STR if they chose, and letting the free market determine saturation.  He and other proponents said often that the bill would still allow communities to respond to things like noise complaints, litter, and crime.

Local officials like Piana are pushing back though, saying that each community has their own needs, and decisions should be made at the local level.

The Michigan Municipal League held a press conference Monday Morning that included Boyne City Manager Michael Cain.

Boyne City is currently in the process of developing its own regulations for short-term rentals. The popular northern Lower Peninsula tourist destination of about 3,700 full-time residents estimates there are about 230 short-term rentals operating within its borders.

“As a lakefront community, our economy thrives on visitors. Many of them prefer short-term rentals when staying here and we welcome and support that. At the same time, we need the ability to balance the needs of vacationers with those who live and work here year-round,” Cain said.  “Our concern is that when these ‘mini-hotels’ are allowed to operate uncapped and unregulated, the permanent housing stock of a community can become hollowed out and diminished, which drives up housing costs for everyone.”

Cain also clarified that regulations do exist in terms of what businesses people can operate in neighborhoods.

“Short-term rentals essentially operate as mini-hotels, which are a commercial activity. We do not allow home daycares to operate unregulated, and we do not allow people to operate auto maintenance shops or barber shops out of their homes. Just like those reasonable limits on commercial land use designed to protect neighborhoods, local governments need to have the ability to set reasonable regulations on short-term rentals, too,” Cain said.

Last week Mayor Piana went to Lansing to testify to the House Committee on Commerce and Tourism and the Senate Regulatory Reform Committee.  There she said “This current bill is a one-size-fits-all approach. It ignores home rules for cities.  Cities need the ability to develop tailor-made responses to the conditions and circumstances created by short-term rentals.”

She shared about the problems with crime, violence, and other unneighborly things, as well as what impact the STRs were having on the housing market in the city.  “In the past five years, Ferndale has lost 22% of our naturally occurring affordable rental stock with average rents at $750 a month. We are navigating a crazy housing market right now with limited supply. Our new ordinance sets a 5% cap on non-residentially owned STR’s per block.”

House Bill 4722 is scheduled for a hearing on Tuesday, May 25, with Senate Bill 446 also expected to receive a hearing the same week. The Senate Hearing can be viewed here.  Michigan Municipal League also has information on STRs here.

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