PETOSKEY — State legislators representing Northern Michigan say many people, including Petoskey city officials, have strong opinions about two proposed bills relating to short-term residential rentals.
Senate Bill 329 and House Bill 4503, which would amend the Michigan Zoning Enabling Act, would not allow municipalities to define a property renting for less than 28 days as a commercial use and would prohibit them from restricting short-term rentals in residential districts. The Michigan Municipal League has urged local governments to oppose the legislation.
“This legislation puts in place a preemption upsetting the delicate balance between a healthy tourism economy, property rights and established, transparent process for zoning driven by public input through an open process,” said the association of municipalities in a statement.
Petoskey City Council members passed a resolution at their July 17 meeting to oppose the bills after the Michigan Municipal League urged local communities across the state to voice disapproval for the legislation.
Michigan Municipal League and Petoskey city officials oppose the proposed legislation because they believe all communities have different challenges and the bills diminish local governments’ decision-making ability.
“That to me is probably the most important point of this,” said Petoskey City Manager Rob Straebel. “This is a local decision that should be made based upon the policy desires of the city council, and we should not have the state government intruding upon local affairs.”
State Rep. Jason Sheppard, R-Temperance, the sponsor of the House bill, said the proposed legislation means municipalities could not ban short-term rentals in a community.
“There is nothing in there (the bill) that prohibits them (communities) from having some sort of regulation,” Sheppard said. “The bills are very simple; it just does not allow a community to ban them (short-term) outright.”
Michigan Municipal League officials say the proposed legislation would allow people to buy a house for the sole purpose of short-term rentals as a permitted residential use instead of treating it as a commercial lodging property. Officials say not only does that create a disadvantage for the traditional lodging industry, but there would be no opportunity for health or safety oversight.
“Short-term rentals are causing problems in many communities around the state by creating commercial activity in residential areas,” the organization said in a statement. “Residential zoning exists to preserve the character of neighborhoods and protect property values for every home. This legislation preempts that process and silences the voices of the residents.”
Sheppard said short-term rentals are not a commercial practice. He said it’s rare for people to own multiple homes just for short-term rentals and not be set up as a commercial practice. Many people who do short-term rentals have one vacation home they don’t live in full time, Sheppard said.
“(People with vacation homes) are paying the full tax on the home, they don’t get a homestead tax exemption. I think that’s something that is left out of this argument,” Sheppard said. “Communities that are trying to call this a major commercial practice are kind of misrepresenting what the intentions are of this bill.”
Petoskey officials began regulating vacation rentals in 2014 after websites such as Airbnb gained popularity. City officials grandfathered existing vacation rentals, but new rentals are limited to business districts and must be licensed annually.
Sheppard said he understands local government because he served as a Monroe County commissioner before becoming a state representative.
“This is not something that completely takes away their (communities’) rights. It’s not like this bill says you have to allow as many of them (short-term rentals) how ever they want to operate. It just says a community cannot outright ban the practice,” Sheppard said.
State Rep. Triston Cole, R-Mancelona, said many constituents have talked to him about the legislation. Some residents are concerned about excessive noise, overcrowding and renters disregarding neighbors, he said. But Cole said some people feel they should be able to do what they want with their property.
Cole said he is going to continue listening to residents to help shape his views of the legislation moving forward, but he understands the arguments on both sides of the issue.
“I am generally a private property rights guy,” Cole said. “At the same time, groups of property owners and concerned residents have a very, very strong argument as well.”
Sheppard said the bills are meant to protect personal property rights. He said communities are starting to ban short-term rentals, which prevents people from renting out their vacation home and being able to pay for the expenses.
“I think some of the concerns we hear about short-term rentals are a little alarmist because there are ordinances in all of these communities that speak about occupancy and noise,” Sheppard said. “A lot of these (property owners) have been using this type of practice long before the internet.”
State Sen. Wayne Schmidt, R-Traverse City, said he has heard from local government officials across his district who oppose the bills.
“I do know the municipalities that have a reasonable and well-thought-out approach to short-term rentals, in general, are not seeing the problems,” Schmidt said.
Schmidt said he is not in favor of the proposed legislation in its current form, but he “knows” the bills are not going to move quickly. He thinks with time, legislators and groups throughout the state may be able to find a compromise and “make sure when people choose to live in a residential area that it is primarily residential and if it’s currently a commercial neighborhood that it remains commercial.”
“Bottom line: There is no easy answer, but we know as technology has changed and as the rental market has changed, we need to adapt to it too,” Schmidt said. “Renters, people who own the property, local units of government, the state, we all need to change with the times.”
Cole said some local governments had created strategies to deal with short-term rentals. For example, some communities require a minimum of a week for short-term rentals or have someone serve as a local contact person if there are concerns about a property. He also thinks maybe people who stay at the property, but also provide short-term rentals at the same place should be exempt from regulations.
“Oftentimes, there is room for a compromise to protect both interests,” Cole said.
Sheppard said state representatives are trying to see if compromises can be made to the bills. He said groups who oppose the legislation hadn’t presented any ideas for a compromise, but some lawmakers are discussing middle-ground solutions.
“I always say good legislation comes when both sides are leaving a little angry,” Sheppard said. “Sometimes not everyone gets everything they want, I think it’s something I could see being worked on in this fall and I would hope before the year ends, we have a piece of legislation that passes both chambers and goes to the governor for his signature.”
Staff for state Rep. Lee Chatfield, R-Levering, said the representative was not available for an interview.