The following email was sent to MBBA Thursday, Dec. 2, from Jennifer Rigterink of the Michigan Municipal League, which has been a leader in the effort to either kill the STRs-anywhere bills in Lansing OR to modify the legislation to make it fair to all interests.

The Michigan Senate still has a few sessions left in 2021. It wouldn’t hurt to call your state senator.

Bad bill is still on the move in Lansing

I’m reaching out with a quick short-term rental update, and wanted to share an op-ed that appeared in the Detroit News earlier this week. It is a warning that we need to pay attention to. The state of Arizona passed essentially the same bill as House Bill 4722 that sits with our state Senate awaiting action. The fear of escalating an already struggling housing market in our state is real. Businesses are struggling to fill positions because employees can’t find housing. Schools in some areas are seeing a decline because families, to teachers and bus drivers, inability to live in the community. This is not just a problem in our tourist destination areas. We should listen and learn from AZ’s mistake, not repeat it!

As for legislative action, the legislature returned this week. As of hitting send on this email, there has been no movement on HB 4722 that currently sits in the Senate regulatory reform committee. We remain on HIGH alert, and anticipate this bill will be discharged from committee to the Senate floor if the minimum number of votes needed are secured to pass it. As we saw in the House, “negotiating/exchanging” is being done to try and lock down support.

Proponents of the bill continue to push that HB 4722 is only intended to stop municipalities from prohibiting short-term vacation rentals. We agree with the premise, STRs should not be prohibited, but if this is indeed the goal of the bill sponsor/supporters then the bill language must reflect that and it doesn’t. It’s so much more than making sure STRs are allowed in all communities.

We continue to offer alternative approaches like HB 5465 & 5466 and SB 547, but the other side continues unwilling to negotiate. As a reminder, technical issues with HB 4722 include:

It’s opening up rentals to any commercial activity as a permitted use not subject to a special or conditional use permit that can’t be subject to any procedure that’s not required for all other dwellings (ie owner-occupied) in the residential zone.
“For the purposes of zoning, all of the following apply to the rental of a dwelling, including, but not limited to, short-term rental”
There is no distinction between a property owner who lives (has belongings at, receives mail at) and real estate investor (transient accommodations only) short-term vacation rental.

Language stating a municipality can limit the number of units under “common ownership” does not actually limit because the definition is inadequate. It allows for real estate investors conducting commercial activity in residential neighborhoods to set up an unlimited number of limited liability corporations (LLCs).

Language mandates a minimum of 30% of a communities housing stock must be available/able to be turned in to STRs. That’s approximately 1 in 3 homes. We can look to quotes in the op-ed below on what this will look like in the future.

  • “We didn’t expect that real estate investors, LLCs and commercial operators were going to buy houses for the sole purpose of operating them as vacation rentals. We didn’t envision that houses rented exclusively for parties, weddings and large events would pop up in formerly quiet neighborhoods.”
  • “We didn’t anticipate that a tourist destination like Sedona would see a third of its available rooms coming from short-term rentals, creating an affordable housing crisis that has forced out families.”

Bed and breakfast establishments fit the definition of short-term rental and will no longer need to be licensed nor pay state sales tax. They will not be required to seek local special use permits. (MBBA says: This may or may not be true. It has not yet been proven.)

I said this would be quick, so I’ll wrap up with this… HB 4722 is a bad piece of policy, on so many levels for so many reasons. If the goal is to clarify municipalities can’t effectively prohibit short-term rentals, then let’s have a bill that actual does that. Currently what’s before the state Senate is a bill that picks winners and losers. The winners –- real estate investors, the losers -– housing seekers, residents, neighborhoods, quality of life!

Op-ed piece in the Detroit News

This was attached to Ms. Rigterink’s letter:

“Michigan shouldn’t give away option to regulate short term rentals”

By Arizona State Representative John Kavanagh (R)

As the Michigan Legislature considers a state preemption bill this session that would take away authority from local governments to regulate short-term vacation rentals, I offer a unique perspective as an Arizona legislator who watched his state legislature enact essentially the same bill.

In 2016, Arizona passed a vacation rental law almost identical to the legislation being considered in Michigan. I’ve seen firsthand the consequences this legislation had on communities and what could be in store for the Great Lakes State.

Both Arizona and Michigan have seen a growing number of short-term rentals like Airbnb infiltrate their neighborhoods.

Since the passage of Arizona’s bill, my colleagues have been struggling for several sessions to undo the damage caused by this legislation.

If Michigan’s legislators pass HB 4722, they would be opening the door to the unintended consequences that have burdened Arizona, as this legislation will give real estate investors free rein to replace residential homes in residential neighborhoods with short-term rental operations.

We didn’t expect that real estate investors, LLCs and commercial operators were going to buy houses for the sole purpose of operating them as vacation rentals. We didn’t envision that houses rented exclusively for parties, weddings and large events would pop up in formerly quiet neighborhoods.

We didn’t anticipate that a tourist destination like Sedona would see a third of its available rooms coming from short-term rentals, creating an affordable housing crisis that has forced out families.

In the town of Scottsdale, in my district, one condo complex near downtown was almost exclusively occupied by retired seniors. Now about half of the units operate as short-term rentals.

Proponents of this legislation might be well-intentioned, but by removing local control of short-term rental policy, legislators in Michigan would be stripping their cities and towns of a critical duty that local government is uniquely qualified and best positioned to handle.

With the explosion of Airbnb and VRBO in the past few years, the problems have grown.

As a former police officer, I understand the challenges of enforcing violations on these abuses and preventing them from recurring, particularly when it’s a new group of people coming in every few days. I also know the drain this has on our local law enforcement resources — resources that are funded by local tax-paying residents.

Now each session, my fellow lawmakers and I are working to fix the damage. Returning local control over short-term rentals is one of the only issues that has gathered bipartisan support in the Arizona legislature.

Based on my first-hand experience, I encourage Michigan lawmakers to strongly consider the impacts of this proposed legislation and look to Arizona as a case study and a warning.

I’m a conservative and a strong proponent of people’s property rights. But if I’m living next to one of these houses, I’ve got property rights too. Localities must be able to balance the demand of tourism with the well-being of their own residents.

Preemption bills like the legislation being debated in Lansing would eliminate communities’ ability to protect their neighborhoods from commercial businesses operating in residential neighborhoods.

John Kavanagh is a Republican state representative from Fountain Hills, Arizona.

_______________________

Here are some excerpts from news articles regarding Arizona’s debacle. Feel free to share as you see fit.

MICHIGAN SHOULD LEARN FROM ARIZONA’S MISTAKE

Striking local oversight of vacation rentals created major neighborhood impacts and loss of housing for Arizona residents

“STATE LAWMAKERS CAN’T FIX THE MESS THEY CREATED WITH AIRBNB, VBRO RENTALS”: “It’s unsettling to see new folks coming in and out of the house next door or down the street, many of whom are out-of-towners in a partying or boisterous mood. The home-sharing law envisioned in 2016 has evolved into big business — homes bought by out-of-state investors and converted into vacation rentals are commonplace. Residents feel cheated.” (Arizona Republic, 11/25/19)

REPUBLICAN STATE REPRESENTATIVE: “THEY KILLED OUR CITY”: LOCALS FEEL HELPLESS AS VACATION RENTALS OVERRUN “We never anticipated that somebody would go into a neighborhood, purchase a home and turn it into a mini-hotel.” – State Rep. Bob Thorpe – R (Arizona Republic, 1/25/19)

“UNREGULATED SHORT-TERM RENTALS LEAD TO HOUSING SHORTAGES AND NEIGHBORHOOD DISRUPTION”: “Short-term rentals, listed on sites like Airbnb and VRBO, have exploded in the Valley over the last decade. That’s great for tourists or business travelers, but the unfettered growth of Airbnb homes also exacerbates housing shortages and encourages nuisance-prone party homes. Local regulations could potentially keep such unintended consequences at bay, but Arizona Legislature passed law making that impossible.” (Phoenix News Times, 1/17/20)

REPUBLICAN AZ GOVERNOR DUCEY: “TIME FOR CHANGE IN VACATION RENTAL LAW” “Ducey conceded that the 2016 law may be being used in ways that were not intended and have been ‘disruptive.’ And that, he said, may include the practice of real estate speculators buying up homes in neighborhoods for the sole purpose of turning them into short-term rentals.” (Arizona Capitol Times, 8/23/19)

CHAMBER OF COMMERCE PRESIDENT: AZ BILL DEPLETING WORKFORCE HOUSING FOR SMALL BUSINESS EMPLOYEES: “Affordable housing is already in limited supply and I believe this law virtually eliminates Sedona’s chance to mitigate this issue. Also, with this new legislation, the city of Sedona virtually loses its ability to manage visitor capacity and makes it even harder to balance tourism and quality of life for our residents.” – Sedona Chamber of Commerce President & CEO Jennifer Wesselhof (Wrangler News, 8/7/19)

20% OF SEDONA’S HOUSING INVENTORY IS BEING USED AS VACATION RENTALS: “Airbnb vacation rentals took over one city in Arizona, frustrating its citizens and causing business leaders to speak out…But now, Sedona is learning what happens when short-term rentals are not limited. One state law forces cities to allow Airbnb-type rentals, and limits regulations cities can impose.” (Housingwire, 8/21/19)

TEMPE VICE MAYOR: UNRESTRICTED STRS THREATEN CHARACTER OF NEIGHBORHOODS AND INCREASED RENT: “Cities enact zoning regulations to separate businesses from residential neighborhoods and maintain a high quality of life. Unrestrained vacation rentals lead to conversions of homes to boarding houses, increased rent, and noise issues. All these unintended consequences of state law serve to endanger the sense of community in our neighborhoods.” – Lauren Kuby, Vice Mayor of Tempe, AZ (KTAR News, 9/15/19)
Jennifer Rigterink

Legislative Associate, State & Federal Affairs

Michigan Municipal League

Ph: 517-908-0305

208 N. Capitol Ave., 1st Floor, Lansing MI 48933

www.mml.org

The image atop this page is a screenshot taken from a video produced by the Michigan Municipal League.