Short-Term Rental Bills :

In Michigan, the debate over short-term rental (STR) regulation has taken a puzzling turn, with some legislators introducing or supporting bills that would erode local control. Despite the fact that most local governments in the state are against these bills, it seems that campaign contributions and business interests are the driving force behind them.

Recent data reveals that over 70% of Michigan legislators received campaign contributions from the real estate lobby in the past year. Realtors, who profit handsomely from both the sale and management of STRs, have a vested interest in seeing these bills passed. Additionally, local businesses stand to benefit from vacation renters who spend money at shops and other establishments, bolstering their earnings.

Legal Precedent:

But there is another, more pertinent reason for the recent push to seize control from local governments. In June 2020, the Michigan Supreme Court ruled that an STR could be classified as a commercial use under certain zoning ordinances, which could then prohibit its use in residential neighborhoods. This decision sent shockwaves throughout the state and gave townships a legal precedent for sensible regulations to separate residential and commercial uses.

While the Supreme Court decision freed townships from legal constraints, it also alarmed those who stood to lose their STR cash cow. Lawmakers were left with no choice but to change the law if they wanted to circumvent the new precedent. The resulting language of the most popular bill that attempted this power grab is confusing and clumsily worded and flys in the face of the legal definition of a commercial use: "The carriage of persons or property for any fare, fee, rate, charge, or other consideration, or directly or indirectly in connection with any business, or other undertaking intended for profit."

In a brazen attempt to sidestep the Supreme Court ruling, Michigan lawmakers have stated in the language of the bills that STRs cannot be considered a commercial use. This absurd clause, unsupported by any legal underpinning or case law in Michigan, was somehow allowed to pass the House with a majority vote. The question that arises is what lengths a legislative body will go to support loyal campaign contributors.

Michigan Zoning Acts:

TIn order to unravel the perplexing nature of this fiasco, it’s crucial to delve into the history of Michigan’s zoning laws.

Back in 1948, the Township Zoning Act was introduced by Michigan legislators, and over time, it underwent a series of revisions, eventually becoming the Michigan Zoning Enabling Act in 2006. Two years later, in 2008, the Planning Enabling Act was also enacted.

The Zoning Enabling Act grants local units of government the power to oversee land uses within their respective jurisdictions. Meanwhile, the Planning Enabling Act empowers townships to establish a Planning Commission (PC) comprised of community members who are responsible for scrutinizing requests for zoning changes to ensure they are in compliance with the law. Once the PC has thoroughly assessed the proposed zoning changes, it sends its report to the township board of trustees for a final decision. The notion behind appointing rather than electing members to the commission is to minimize political influence and enable the commission to function autonomously. Essentially, the PC is a technical advisor that assesses zoning changes objectively without any political interference.

 Master Plan & Zoning Ordinance:

For a Planning Commission (PC) to operate effectively in Michigan, it must establish a Master Plan (MP) and Zoning Ordinance that serve as legal guides for the community’s initial development and potential for future changes.

The MP is a long-term document that outlines the district’s vision for the next two decades, shaped by input from the community, attorneys, and professional planners. Essentially, it’s a blueprint for community development by the people of a Michigan township.

Complementing the MP is the zoning ordinance, which establishes rules and standards for handling requested zoning changes within the district. If a proposal meets the ordinance’s criteria and falls within the MP’s outlook, it’s typically approved by the PC.

Each Michigan community defines its own blueprint and set of rules based on its unique characteristics and preferences, making no two communities alike. In the time since the Township Zoning Act and Planning Enabling Act were enacted, local governments and their planning commissions have invested significant resources in meeting these laws’ requirements.

Citizens moving into a particular district rely on the MP and zoning ordinance to ensure that the neighborhood meets their living standards before investing in a home. They expect these established zoning standards to protect their investments and quality of life.

Pay the Piper :

However, after years of work by local authorities and their communities, some Lansing legislators have appeared on the scene who feel obligated to "pay the piper" (the real estate lobby) for its 70% campaign contributions. They wrap themselves in a property rights flag, make claims that the local economy trumps all other concerns, and then schedule a meeting in Michigan's House that kept its members present until well after 3:00 am to coerce them into voting "yes" on the STR bill before they could go home. Fortunately, both bills (HB 4722 and SB 446) failed to pass the Senate.

School Revenue:

The bottom line is that short-term rentals (STRs) are adversely affecting residential neighborhoods across the country. They are disrupting housing supplies and frustrating family-oriented communities. In Michigan, every short-term vacation rental that displaces a home that could house school-age children results in the local school district losing the per-pupil amount of revenue the state pays for their education, which is currently $9,150 per child. If a school district loses 10 pupils to short-term vacation rentals, the loss of revenue to the school system will be approximately $100,000 per year, multiplied by the number of years those children would have attended. As a result, losing school systems may have to ask citizens in their districts for additional mills (taxes) to offset the losses.

While property management firms and realtors may tout property rights and the economy as reasons why we should open the floodgates to STRs, they conveniently leave out the part about the collateral damage being done to our residential neighborhoods, communities, and schools.

It is crucial that our state representatives understand that a "one-size-fits-all" law concerning STRs is not only short-sighted but irresponsible. Local governments are best equipped to plan and implement land uses in their districts, not Lansing politicians. STRs are a commercial use by every legal definition, and attempting to put lipstick on a pig and claim it is no longer a pig is absurd.