News Story

Airbnb Agitates Some Local Government Officials

But residents like the extra income, and the short-term rentals may boost local economies too

Short-term rental services that let homeowners make extra money are under siege by cities that want to halt the practice.

Municipal administrators recently issued stark warnings of neighborhoods being dismantled and of strangers moving about when they attended a May 1 hearing at the Michigan House of Representatives. At the hearing, lawmakers considered a bill to prohibit local officials from using zoning ordinances to bar property owners from letting out their property in vacation or short-term rentals, including homeowners who use services like Airbnb. The bill would not restrict local governments from imposing regulations on noise, advertising or traffic.

City administrators warned of dire consequences if the bill becomes law.

“Their neighborhoods [are] being systematically dismantled,” St. Joseph City manager John Hodgson said in his testimony. “When we change to a short-term rental, we no longer have residents. We no longer have children in our schools. We no longer have people who serve on boards and commissions. ... We truly see this as an existential problem for our neighborhoods.”

Marcus Peccia, city manager for Cadillac, said, “The backbone of our civilization is zoning.”

Suzanne Schulz, an official with the city of Grand Rapids, told the committee, “This is wholly a zoning issue. ... It does not provide flexibility for local jurisdictions.”

State Rep. Jason Sheppard, R-Temperance, says property owners should be able to use their homes however they please. He is the sponsor of House Bill 4046, the permissive legislation that drew the startling statements from local officials.

“Many local units of government have shut down [the practice] by zoning out the use of short-term rentals completely,” Sheppard told members of the Local Government and Municipal Finance Committee at a hearing on his bill. “We are looking to reverse those bans today with this bill because I believe that’s a clear violation of a personal property right.”

A short-term rental is defined by the bill as the rental of a single-family residence, or a multifamily building with four dwelling units or less, for 28 days or less.

But some municipalities around the state want to draw the line when it comes to using short-term rental facilitators like Airbnb, which offer a way to market a home to tourists and others when the owner isn’t using it.

Some local officials say that because short-term rentals can be considered a commercial use, they should banned in neighborhoods zoned for residential use and only be allowed in commercial zones. Sheppard’s bill would establish that, “for the purposes of zoning ... short-term rental ... is a residential use of property and a permitted use in all residential zones.”

Short-term rentals have always been permitted in residential zones, Sheppard told the committee. But since the internet has allowed companies like Airbnb to flourish, some local governments have sought to take away rights that property owners have always had.

He contends that companies like Airbnb have made it more convenient for people to visit the state of Michigan, which has increased tourism. He also said that expanding the availability of short-term rentals contributes to the state and local economies by letting owners rent out homes that otherwise are vacant for parts of the year.

A 2018 report by Airbnb said that property owners in Michigan earned $78 million using the service and hosted about 600,000 guests. The Michigan Department of Treasury collected $4.2 million in tax revenue from the company. These figures do not include money spent by visitors on food, entertainment and other purchases.

Airbnb’s expansion has not been profitable for everybody, as shown by hotel industry documents leaked to The New York Times in 2017. According to the newspaper, hotel companies have launched a comprehensive plan to thwart Airbnb by working toward federal, state and local laws that would impose heavier regulations on the short-term rental industry.

Sheppard’s bill does not restrict local governments from establishing regulations covering traffic and other conditions that may become a nuisance, including the number of people who can occupy a short-term rental.

Airbnb spokesman Ben Breit, when asked about the regulatory issues, pointed to a section of the company’s website that discusses the benefits it provides to local communities.

According to the website, Airbnb creates economic opportunity by democratizing travel, and it seeks to promote responsible home sharing.

The Michigan Municipal League, which advocates and lobbies on behalf of cities, said that local governments should have the authority to pass regulations within their own jurisdiction.

“The League believes local governments are best positioned to know the unique needs of a community when discussing the short-term rental issue,” Jennifer Rigterink, a legislative associate for the league, said in a blog post. “Those closest to the people are the most appropriate to determine if something needs to be acted upon to maintain the delicate balance between residential and commercial uses, and between residents and investment property owners.”