A 10-bill package introduced in the Michigan House of Representatives, part of which is sponsored by 101st Dist. Rep. Jack O’Malley, attempts to address concerns regarding short-term rental establishments — such as those that use the vacation websites like Airbnb, VRBO and HomeAway.
These online hosting platforms collect fees for connecting property owners with vacationers who want to short-term rent their room, house or apartment rather than stay in a traditional rental unit, such as a hotel.
“Fifty years ago, we had short-term rentals, but we called them ‘summer rentals.’ People would rent out a home, they’d open it up, and there were a few of them in every community, and now it’s changing,” O’Malley told Shoreline Media. “The whole summer rental issue has really exploded with the internet and Airbnbs.”
Short-term renting residences blurs the line between homes and vacation properties, and people in many communities are concerned about factors such as the potential impact on traditional vacation rentals, the availability of long-term housing and the effects of having a greater transient population.
“It can change the face of a neighborhood,” O’Malley said. “When I was campaigning, I talked to a gal who said, ‘I’m the last one left in my neighborhood. Everybody else’s are summer rentals.’ So when the season’s over, she’s all by herself because the neighborhood has changed.”
The proposed legislation, which includes House Bills 4554 through 4563, was introduced in May and has since been referred to the house’s Committee on Commerce and Tourism for review. The 10-bill package has bipartisan support.
The anchoring piece in the package is House Bill 4554, which would create the Michigan Short-term Rental Promotion Act.
If passed, the legislation would require short-term rental establishments — defined as rentals of terms of 30 consecutive days or less, not including hotels or motels — to become registered in a database created and operated by the Michigan Department of Licensing and Regulatory Affairs (LARA). A short-term rental also would not include a property that is rented for 14 days or less in a calendar year.
The proposed act would also require short-term rental owners to certify that they’ve paid use taxes, local excise taxes and assessments for the preceding tax year, and to have liability insurance of at least $1 million, or equivalent insurance through their hosting platform, such as Airbnb. If a rental owner violates the act, the owner would be ordered to pay a fine of up to $15,000 per violation.
The act would allow local municipalities to continue to create their own zoning rules to regulate short-term rentals in their jurisdictions, however, municipalities would be prohibited from completely banning short-term rentals. The act would also have LARA create an advisory group to develop model short-term rental zoning ordinances for municipalities to emulate. In Oceana County, Pentwater Village and Golden Township already have short-term rental laws on the books.
Proposed House Bill 4563, the Michigan Zoning Enabling Act, includes that if a short-term rental is used for 14 days or less in a calendar year, it is a permitted residential use in all residential zones of municipalities.
House Bills 4555 through 4562 address more of the details of the act, such as imposing the state’s use and excise taxes on short-term rentals. In proposed House Bill 4561, short-term rentals would be charged an assessment, like hotels are — on top of their room fees — to pay for local tourism promotion. The bill, which is sponsored by O’Malley, would amend Michigan’s Regional Convention and Tourism Promotion Act to include short-term rentals in its programs.
“If you’re going to step into the arena of renting rooms,” O’Malley said, “then everybody has got to play by the same rules.”
A different piece of proposed legislation, House Bill 4046, which was introduced in January, has riled up local municipalities throughout the state because, if approved, it would allow short-term rentals in all residential zones and prevent municipalities from imposing special zoning conditions to ban or regulate short-term rentals.
The bill has since been referred to the Committee on Local Government and Municipal Finance. The bill is nearly identical to proposed bills first introduced in 2017, which stalled out at the committee level. Many municipal officials throughout Michigan publicly objected to the proposed bills because they would usurp local control of zoning.
O’Malley said the 10-bill package he’s backing is intended to find the middle-of-the-road solution to the issue.
“We have to have that balance of local control, but yet there’s property rights,” O’Malley said. “I believe that we need to find some regulation (for) across the state, so that there’s some equity for everybody. And this is probably one of those things that will always be getting tweaked — every few years there will be another issue. So I think this is just a good place to start, to say, ‘Alright, this is a whole new level of renting that we’ve never really experienced, and we need to get some boundaries.’ Then we’ll go from there.”
O’Malley noted that short-term rentals can also be a big money-maker for property owners who want to rent out their property, many of whom feel that it’s their right to do so.
“We’ve got to try to find some way to make this equitable for everybody. Not everybody’s going to like it, and some people are going to love it, and so we’re trying to do the right thing,” O’Malley said. “I have nothing against short-term rentals, but yet I can understand where in some areas and in some ways they can be a problem, so let’s try to figure out a way to make it work for everybody.”
O’Malley represents the 101st District in the Michigan House of Representatives. The district includes Leelanau, Benzie, Manistee and Mason counties. Scott VanSingel represents the 100th District, which includes Oceana, Lake and Newaygo counties.