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‘Ban the ban’: As apps increase access to short-term rental properties, Lansing tries to catch up
By Andy Balaskovitz for the MiBiz
A proposal to prohibit local units of government from banning short-term rental properties like those found through Airbnb has attracted lobbyists from both sides to the state capital in recent weeks.
The Republican bill sponsors and the Michigan Association of Realtors say homeowners’ property rights are being violated in some cities with regulations that limit their ability to rent.
However, the tourism and lodging industry, as well as local-government advocacy groups, contend municipalities are best equipped to regulate these properties as opposed to what they see as a heavy-handed effort by the state to control local zoning.
The Michigan Municipal League, which advocates on behalf of local governments, is “very opposed” to the bills as written because they “silence locals.”
“It’s removing that local decision-making ability and removes the community context of what’s going on there,” said Jennifer Rigterink, legislative associate with MML. She added that the Municipal League is open to compromise on the bills.
In tourism-dependent West Michigan, short-term rentals have existed for decades, particularly in lakeshore communities. But the advent of rental services like Airbnb and VRBO — in which homeowners list their properties online for rental — have cast the issue into a new light. Bill critics argue it has caused the proliferation of residential properties to be used for commercial enterprises — and those properties therefore should be treated as such.
H.B. 4503 and S.B. 329 — sponsored by Rep. Jason Sheppard, R-Temperance, and Sen. Joe Hune, R-Fowlerville, respectively — define short-term rentals as residential properties rented for up to 28 days at a time. These properties include single-family and one- to four-family homes, as well as “any unit or group of units in a condominium.”
The bills, which would amend the state’s zoning enabling act, do not prohibit local regulations on “noise, advertising, traffic, or other conditions.”
The bills were introduced in April and are in committee, although advocates on both sides of the issue report a recent uptick in lobbying activity. Senate Majority Leader Arlan Meekhof, R-West Olive, has reportedly come out in favor of the bills.
PATH TO REASONABLE LOCAL REGS
Attempts to reach the bill sponsors were unsuccessful, but Sheppard has reportedly said the effort is about creating uniformity while still giving municipalities leverage in enforcing local ordinances.
“My colleagues and I have been going to every Senate and every House office to sit down and talk about what we’re intending to do and, quite frankly, what (the bills) don’t do,” said Brian Westrin, public policy and legal affairs director for Michigan Realtors. “In our view, there has been quite a bit of misinformation about what the bills would create.”
Westrin said the bills simply “ban the ban” of short-term rentals and allow local governments to “reasonably regulate” these properties through code enforcement and existing ordinances.
“These short-term and vacation rentals have a unique historical place and tradition in Michigan,” he said, adding that his group sees an ongoing trend in some communities — such as Acme Township near Torch Lake, Holland and Spring Lake Township — to limit them or treat them as commercial properties.
In Westrin’s view, programs like Airbnb and VRBO — which openly list all of these properties online — give local governments an opportunity to ensure properties “are actually up to code, treated soundly and aren’t violating things like occupancy and noise” ordinances.
In cities across Michigan and the U.S., stakeholders commonly allege these properties change the character of some residential neighborhoods, with neighbors complaining about party scenes that arise as more homeowners opt to rent their properties.
A PROPERTY RIGHT?
Mark Wyckoff, interim director of the Land Policy Institute at Michigan State University, says it’s unclear whether homeowners have wide property rights for these rental purposes. Depending on how and where some properties are rented, “you literally have a commercial use next door to a residential use,” he said.
“If you pass a law that more or less allows people to have commercial use of property — which is arguable whether they do have that as a property right — then you’re creating an entirely new property right in the sense that the Legislature has now recognized it,” Wyckoff said. “It would significantly limit local governments to regulate it and, in the eyes of many, further erode the sanctity of single-family residential districts.”
Westrin argues the bills don’t limit local control, but rather give other regulatory options.
“When some argue these bills preempt local control, we argue that local control preempts property rights in this instance,” Westrin said, adding that the bills “refocus the regulatory approach on code enforcement, nuisance claims and parking — things that make good sense.”
The MML’s Rigterink said she ultimately doesn’t consider this a property-rights issue.
“The (Michigan) Zoning Enabling Act is very clear,” she said. “It’s hard to pit one property owner against the other on who has the right to do what. All houses have property rights, the distinction is when you have a homeowner renting out a room for possibly a few times a year versus more commercial investment. The way the bill is written, it doesn’t make any distinction. It states all short-term rentals are permitted residential use in all residential districts.”
The growth of services like Airbnb has brought the “expansion of secondary impacts” that short-term rentals have on communities, Wyckoff said, “which are overwhelmingly negative from a municipal land-use perspective.”
Most commonly, these are noise, parking and excessive-partying complaints, Wyckoff said.
“Then there is the fiscal perspectives where you have legitimate hotel/motel businesses that have a lot higher operating costs” and are subject to more rules for operating, he added.
Wyckoff criticizes the bills for being overarching and not tackling the nuances of the situation.
“With all of these dimensions (short-term rentals bring), you then have this issue of legislation that doesn’t address all of those issues by any stretch of the imagination, so local governments are real upset,” he said.
Wyckoff said the approach that makes most sense is to “do nothing on this legislation. Let it fail, because local governments have been heating up their own regulatory approaches anyway. There are like 100 different experiments going on right now. When that happens, think of it as the free market sorting through things. Local government regulation can do the same thing if you give it a chance to work.”
ADAPTING TO TECHNOLOGY
Indeed, short-term rentals have been part of the fabric of West Michigan’s tourism economy for decades.
“Communities that have a tourism economy are trying to find that healthy balance of the year-round economy they need and their important tourism economy,” Rigterink said.
West Michigan Tourism Association CEO Dan Sippel said the group is neutral on the legislation, but added that “we believe it’s a bit more of a local-control issue.”
Additionally, Sippel said short-term rentals don’t contribute to local marketing efforts done through local convention and visitors bureaus, which are often funded by local hotel bed taxes, and they aren’t held to the same safety standards as the hotel/motel industry.
Sippel doesn’t see companies like Airbnb having an overall negative impact on the region, “I just think they have to be brought under the same rules and regulations that make it a level playing field for everyone,” he said.
Joy Gaasch, president of the chamber of commerce representing Grand Haven, Ferrysburg and Spring Lake, is opposed to the bill, citing local control issues.
“Like anything when it comes to local zoning, one size does not fit all,” she said. “Unfortunately, that’s what this legislation is.”
Some local officials, particularly in cities like Grand Rapids, have also raised concerns about the impact these properties have on affordable housing availability.
“Taking long-term leased properties off the market and turning them into short-term rentals can have an effect on the number of units available,” Rigterink said.
ALLOW FOR DISCOURSE
Michigan Realtors’ Westrin countered that evidence on this issue is largely anecdotal around the country.
“The platforms are sound innovations,” Westrin said. “There’s never been a better time for local governments to understand the universe of short-term rentals.”
Bill opponents say there may still be a role for the state to play in regulating short-term rentals. Rigterink said the state could be clearer in distinguishing what counts as home-sharing, or ensuring that short-term rentals follow health and safety inspections.
Wyckoff agrees there may ultimately be a role for the state, such as enabling municipalities to recognize different property rights, “but I’m not at all convinced it’s this role” created under the bills.
“There hasn’t been the kind of public discourse there should be on an emerging issue like this,” he said. “Which means it’s premature for the Legislature to have a knee-jerk adoption of new regulations when local governments are struggling to figure it out.”