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July 19 2021

Pending Short-Term Rental Legislation

By: Alexander P. Henderson

Over the past several years, the popularity of short-term rentals has exploded, due in no small part to apps and websites such as AirBNB and VRBO, which provide a relatively effortless way for people to book short-term rentals. The quick increase in short-term rental units and the influx of their guests has presented unique challenges for municipalities to balance the interests of residents who wish to preserve the residential character of their neighborhoods on one hand, and the interests of local businesses that benefit from economic activity brought from out-of-town visitors on the other. As short-term rentals have become more and more prevalent, municipalities across Michigan have been crafting, debating, and revising their own policies to address the relevant issues on the local level. Many municipalities have amended their zoning ordinances to regulate short-term rentals in various ways, such as by prohibiting short-term rentals in certain residential districts, restricting the density or maximum number of short-term rentals that may operate in a given area, or requiring short-term rental owners to obtain special land use permits. However, two bills currently pending in the state legislature could nullify those regulations and require municipalities to treat short-term rentals no differently from other residential dwellings in the same zone.

House Bill 4722 and Senate Bill 446 share identical language that would establish short-term rentals as a permitted use in all residential zones in every municipality throughout the state. The bills define “short-term rental” as “the rental of a single-family residence, a dwelling unit in a 1-to-4-family house, or any unit or group of units in a condominium, for terms of not more than 30 consecutive days.” The House Committee on Commerce and Tourism voted to recommend adoption of House Bill 4722 on May 25, 2021, and two days later the Senate Committee on Regulatory Reform voted to recommend adoption of Senate Bill 446. The two bills now await second readings in the respective legislative bodies. It is unknown when a vote before the full House or Senate will occur for either bill.

Although the bills would effectively require municipalities to allow short-term rentals in all residential zones, municipalities would still be able to abate some of the common problems associated with short-term rentals through consistent enforcement of regulations that are applicable to residential dwellings. Examples of such regulations may include maximum occupancy limits, street parking rules, noise restrictions, junk ordinances, and other nuisance prevention requirements. However, regulations could not be selectively enforced in order to target short-term rentals, as the bills would require that any regulations enforced against short-term rentals be “applied on a consistent basis to rental and owner-occupied residences.”

In apparent response to House Bill 4722 and Senate Bill 446, a new bill was recently introduced that would allow municipal zoning ordinances to establish regulations for short-term rentals that are rented out for more than 14 days a year, but would recognize short-term rentals that are rented out for 14 days or less as a permitted residential use in all residential zones. Designated as House Bill 4985, the bill was referred to the House Committee on Commerce and Tourism on June 10, 2021. The Michigan Municipal League, which advocates for municipal governments, reports that other state legislation pertaining to short-term rentals is in development.

We, at Mika Meyers, will continue to monitor legislative developments regarding short-term rentals. If you are a municipal government official who has questions or concerns about the potential impacts of pending legislation on this subject, please feel free to contact us for assistance.