Traverse City News and Events

Residents Push For City To Allow Airbnb, Other Vacation Rentals

By Beth Milligan | Feb. 1, 2018

Debate over whether to allow short-term rentals is not a new topic in Traverse City, but it’s one officials could finally address head-on as a new group petitions the city to make Airbnb and other types of vacation rentals legal.

Traverse City resident Dave Durbin recently launched a Facebook page called Traverse City For Airbnb/VRBO aimed at “seeking a viable solution” to the city’s short-term rental ban. Durbin says he was inspired after receiving a cease-and-desist letter last summer ordering him to stop listing his city residence on vacation rental sites.

“I’ve used Airbnb and VRBO as both a guest and a host, and I’ve had nothing but excellent experiences,” Durbin says. “They have safeguards on both ends to prevent unwanted outcomes. To me, it was a great way to make extra money in a tourist town. It had been such a good experience that I thought maybe it’s time we have an open discussion about it, and the Facebook page was a direct result of that.”

Nearly 300 members have already joined the group, with users swapping stories on their short-term rental experiences, debating the merits of personal property rights and city ordinances, and exchanging tips for reaching out to local officials. On Tuesday, Feb. 6, Durbin will host the group’s first public event at The Parlor at 6pm. “I'll share the info I have on where the city is currently at on this issue, and we'll hopefully have some good, positive dialogue as we start to organize and strategize,” Durbin wrote in the event invitation. “This will be a fast-paced meeting that may last 60-90 minutes…this is not a city government meeting, this is a group of citizens mobilizing.”

The group’s formation comes on the heels of statewide debate and review by Traverse City commissioners of other types of rental units. Controversial legislation recently proposed in the state legislature that would prevent communities from banning short-term rentals has drawn the ire of officials throughout Michigan – even those supportive of short-term rentals – who have said the law would impede on communities’ rights to set their own zoning rules.

Still, exactly what those zoning rules should look like has proven an ongoing headache. In Traverse City, renting out your entire home or apartment as a short-term vacation rental – such as those typically listed on Airbnb or VRBO – is illegal, except in the city’s commercial districts. The city does offer a tourist home policy that allows residents to obtain a license to rent out individual rooms in their homes; however, the rules limit rentals to no more than three rooms and for no longer than seven-night stays. The entire premises cannot be rented out and longer stays are prohibited – both sticking points with many vacationers.

Traverse City also has an accessory dwelling unit (ADU) policy, which governs the rental of so-called “granny flats” or ancillary dwellings like garage, basement or attic units. While city officials are still tweaking ADU rules – the city commission will revisit the issue again at their Monday meeting – the policy was explicitly written to prevent short-term vacation rentals by only allowing longer ADU stays, or minimum three-month rentals.

While tourist home and ADU rules have both been revisited in recent months by city commissioners, the hot-button topic of lifting the city’s short-term rental ban – and allowing Airbnb or other vacation rentals in residential neighborhoods – has yet to come forward as a formal agenda item. However, data shared by Airbnb makes it clear such rentals are happening in the city, even if they remain illegal.

According to the company, Traverse City had 29,300 Airbnb guests in 2017, making it the second-most popular destination in Michigan (Detroit was number one). That usage was nearly double the volume from the previous year’s numbers. Traverse City hosts earned a total of $4.38 million in income through Airbnb in 2017. (In a new agreement signed with Michigan last summer, Airbnb started paying state taxes; the deal brought in $1 million in taxes within its first three months.)

“We can’t ignore it or pretend it’s not happening, or say ‘no, it’s not allowed,’ because we’ve done that and it still happens on the side,” says City Commissioner Tim Werner. “It’s not unique to Traverse City; this is happening across the country and around the world. People want to have an authentic experience that isn’t easily offered by traditional hotels. We can try to either eliminate it completely, or we can be a little more proactive and guide it to something that’s acceptable for the vast majority of our citizens.”

Werner says city commissioners have not yet heard an outpouring of resident support for lifting the vacation ban or an organized group coming forward to request such a discussion, which is why the city hasn’t taken up the issue. But he believes it should be put on the commission’s agenda should Durbin’s group or other residents come forward. “I think it needs to be discussed, but it’s not an easy topic,” he says.

Meanwhile, some city officials have advocated instead going the elimination route, banning short-term rentals not only in residential neighborhoods but in commercial districts as well. In areas like downtown, Midtown, and sections of Eighth and State streets, rental units that could be offered for long-term inhabitants are instead marketed for vacationers, officials argue.

“All evidence that I have seen both in terms of my own personal experience regarding TC as well as any literature I have reviewed indicates that short term rentals (STR's) have a tendency to replace long-term rentals (LTR's), especially in tourist areas such as ours,” Planning Commissioner Mike Grant wrote in an email last summer to city officials. “I would be supportive of the planning commission recommending a temporary zoning moratorium to the city commission on the creation of any new short-term rentals in commercial areas until the effect of short-term rentals on long-term rentals can be further ascertained.”

Durbin acknowledges these and other concerns raised, including outside developers gobbling up houses to use as vacation units and rowdy visitors disrupting peaceful neighborhoods. Durbin wants to add a mandatory caveat to a proposed short-term rental policy that stipulates such units must be the primary residence of/occupied by the owner, preventing speculators from opening multiple investment properties. “I work hard to be a good and considerate neighbor, I upkeep my home,” he says. “The people I’ve talked to who want to host are the same kind of people.”

Durbin also says he’s open to discussing rules regarding taxes – a competitive disadvantage often cited by hotels – and permitting and other short-term rental regulations. But with Airbnb and similar sites becoming a dominant force in the tourism accommodation landscape, a conversation on the issue is overdue, he says. “If the city in interested in both its economy and its residents, they wouldn’t shut this down,” he says. “They’d find a fair and equitable way forward that benefits those who want to participate and has a minimum impact on those who don’t want to participate."

Pictured: A legal weekly vacation rental property on Eighth Street, which falls within the city's commerical zoning district


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