Michigan vacation towns could face downturn if short-term rentals not legalized statewide
Local bans could affect homeowners’ property rights; Lansing must step in
Local battles are brewing across the state between residential property owners and local townships over short-term rentals. Unless the Michigan Senate passes and Gov. Gretchen Whitmer signs House Bill 4722, some families could lose their livelihoods. The bill has already passed the Michigan House of Representatives, and if it doesn’t become law, communities that have endured economic hardships because of pandemic-related shutdowns could continue to struggle.
“A local unit of government shall not adopt or enforce zoning ordinance provisions that have the effect of prohibiting short-term rentals,” reads the three-page bill.
Several townships and cities have clamped down on homeowners who wish to rent out their personal property to tourists and out-of-town visitors. Residents who favor increased restrictions and even bans on the practice say it increases noise in otherwise quiet neighborhoods.
House Bill 4722 is not an anything-goes measure. It strikes a balance by allowing for restrictions such as noise ordinances and inspection requirements. This maintains the property rights of the owner and addresses the concerns of the community.
Local townships that ban short-term rentals put homeowners in a precarious financial position.
Park Township, in Ottawa County, is the most recent example. The Board of Trustees voted on Nov. 10 to enforce, for the first time, a 1974 zoning ordinance that does not permit short-term rentals. The board also approved a grace period until Oct. 1, 2023, to give homeowners time to sell or figure out their next steps.
The housing market is already in a downturn because of staggering increases in interest rates, which will hinder owners’ ability to sell without taking a loss. Many bought their homes at a premium price because the market was hot.
Others sank money into fixing up their property to make it more appealing to renters. With a now-cooling market and no ability to use rental income as a selling point, they could face financial ruin.
Jeremy Allen and his wife moved to Seattle from Michigan in 2011, but they also bought a home in Park Township so they could have a place to stay when they return for family visits. The home they purchased had been a vacation rental since it had been built, and they continued the practice. Allen says that when they finished the lower level of the home in 2017, the permitting office and building inspector said there were no restrictions on rentals.
Allen says 70% of the homes in their area are rental properties. He has talked with many other rental owners who say they were also told by local officials that rentals were allowed.
When asked for a copy of the 1974 ordinance banning short-term rentals, Meika Weiss, the township’s community development director, said:
The way zoning codes work is that the only uses that are permitted in a zoning district are spelled out specifically in the ordinance. Short-term rentals have never been added to the code as a permitted use, therefore they are not permitted. Our current zoning code went into effect in 1974, so that’s where that date comes from.
There is no ordinance spelling out that short-term rentals are not allowed. They’re just not explicitly allowed.
Many people say they were told, when they purchased property in Park Township, that renting was permitted. There are now hundreds of rentals in the vacation town, with an ordinance that does not spell out a ban and a history of nonenforcement. It is easy to see why so many people are angry over the new approach to enforcement.
A few township officials decided by themselves to no longer allow any short-term rentals, which could leave could leave hundreds of homeowners in a precarious situation.
The Senate and governor have until Dec. 31 to pass and sign legislation that will protect homeowners who’ve invested in short-term rentals.
If the legislation does not pass, a new legislative term starts Jan. 1, and the process will have to start over, with a new bill in either the Senate or House.
Jamie A. Hope is assistant managing editor of Michigan Capitol Confidential. Email her at email@example.com.
Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.