Municipalities dismayed, property owners pleased as short-term rental bill advances

Michigan

HOLLAND, Mich. (WOOD) — Local government officials say they’re disappointed after the state House passed a bill that allows homeowners to set up short term rentals where ever they own property.

House Bill 4722, along with its companion Senate Bill 446, has been making its way through the Legislature for several months. The bills remove local governments’ ability to outright ban short-term rentals like Airbnb’s or weekly vacation rentals based on zoning ordinances. Early Wednesday, H.B. 4722 passed in a 55-47 vote. The Senate bill still remains in committee.

“Instead of just having the local governments be able to ban short-term rentals by trying to zone them out of existence, which I believe is a significant infringement on property owner rights, (the legislation) provides a right to rent for individual homeowners,” state Sen. Aric Nesbitt, R-Lawton, who sponsored the Senate bill, said.

He said his bill and the House bill are about fighting for a homeowner’s right to use their property as they see fit.

“Some folks, to be able to afford their second home or multigenerational family home, to be able to afford the taxes, them being able to rent it out for a few weeks or few months out of the year helps that,” Nesbitt said.

City officials in Holland say the legislation virtually guts all existing local regulation of short-term rentals.

“I’m not aware of a single local unit in Michigan that is not against this legislation. Foundationally, it’s an attack on local control, where we certainly believe that residents in their local community and the local elected officials are the best ones to determine what is right for their community,” Holland City Manager Keith Van Beek said.

Van Beek says the city spent a little more than two years developing local ordinances based on feedback from the community. Currently, short-term rentals are only allowed in commercial use areas and some mixed-use areas like downtown Holland. The city also instituted a cap of 25 short-term rentals in residential neighborhoods and a 500-foot buffer between each rental property.

“Our community really spoke up and said, ‘We want to retain those as residential neighborhoods.’ And an outside commercial use, which we fundamentally disagree with, of basically having a rotating hotel in the middle of neighborhoods … we do not believe is good for neighborhoods,” Van Beek said. “One person’s property rights is another person’s nuisance and I’m just as concerned, if not more concerned, about the property rights of people that live around what now could be a commercial use in the middle of a residential neighborhood.”

Lawmakers say local officials will still have some control over short-term rentals noise level, advertising and traffic. They also will be able to limit the number of units under common ownership, which would help prevent large corporations from coming into local towns and buying up property to convert into rentals.

“If somebody is bothering the peace and security of other neighbors, absolutely the local governments and police should have the authority to intercede to have good neighborhoods, but I think just zoning short-term rentals out of existence is not the proper solution,” Nesbitt said.

While state and local lawmakers continue to disagree, some short-term rental property owners say this is good news.

“We’ve been trying really hard to spread the word about the goodness of vacation rentals and how much positive impact it can have on a community: the economic impact, the tourism industry and we bring in taxes. We charge that 6% Michigan use tax, which does trickle down to the school districts,” said Cara Middleton with Freshwater Vacation rentals.

Middleton started her company in 2005 after she and her husband bought a small private island in the Upper Peninsula. Middleton says she was a teacher and her husband was a steel worker at the time. She said they converted the property into a vacation rental and hoped money from renters would help pay for it. Today, Middleton owns five rental properties and says she manages about 75 more, including several in West Michigan.

She says she believes the pushback from neighbors stems from misconceptions about short-term rentals.

“There’s a misconception about it being a party house and most of our guests are just families, small families, going to visit other family in the neighborhood and they would prefer just to stay down the street from their family instead of in a hotel. A lot of the areas we service don’t even have hotels, so there’s nowhere else to stay,” Middleton said.

The House Bill still has to make it through the Senate. From there, it will head to the governor’s desk.

Lawmakers say they’re now in discussions regarding next steps on Senate Bill 446, which is still in committee. Nesbitt says because the bills are not dependent on one another, lawmakers may just focus their efforts on getting H.B. 4722 signed into law.

Van Beek says he hopes homeowners who spent two years discussing local regulation of Airbnb’s make their opinions known to their state representatives.

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