Short-term rental crackdown

Houses line Washington Street east of Boardman Avenue in Traverse City.

TRAVERSE CITY — Dave Weston, the city zoning administrator, receives calls daily from out-of-towners who want to know if they can buy a home in the city’s residential neighborhoods and rent it to vacationers.

They can’t, but the prohibition doesn’t stop everyone.

Weston recently sent violation notices to a half-dozen property owners who listed their homes for rent by the week on a vacation rental website. The city only allows weekly rentals in commercial districts or at the Grand Traverse Commons. But city officials acknowledge enforcement is difficult and they don’t generally search websites, instead opting to respond to specific complaints.

“They are really hard to track down, they are very secretive about their actual location,” said Russ Soyring, director of planning and zoning for the city. “If it’s creating problems those are the ones we go after because the neighbors help identify the locations.”

But Weston took a broader look after some residents complained weekly vacation rentals and people renting out rooms, often referred to as an air b & b, were commercializing neighborhoods. The extra investigation added another 30 or so violation letters.

“I usually get a few complaints every year but now with the popularity of Traverse City and the Internet it’s getting more apparent,” Weston said.

Renting rooms in an owner-occupied home has been legal in the city since 1999. The city charges a $100 fee for a license that includes a fire inspection and notification of neighbors for what it calls a tourist home. It limits the number of rental rooms to three bedrooms that must be connected to the common areas of the home and can’t be within a 1,000 feet of an existing tourist home. At the start of the year the city had issued nine tourist home permits.

The geographic distance from another tourist home is the most difficult issue.

“Not all are going to be able to get (the license),” Weston said. “Some of them that are operating may get bumped out.”

The Record-Eagle contacted several unlicensed tourist homes and vacation rentals and the owners and their rental agents either declined to comment or did not respond.

City commissioners Gary Howe and Ross Richardson, who both sit on the planning commission, said they are open to reviewing the tourist home ordinance but are opposed to lifting any restrictions on short-term vacation rentals in residential zones, in part because the city does allow them in commercial districts.

Both alleged short-term rentals reduce the available housing stock for year-round residents driving up prices and would commercialize residential neighborhoods.

“I think residents are pretty clear about not liking vacation rentals, it’s not a residential use,” Richardson said. “People are on vacation, people are partying, and I’m not saying it’s everyone but some are.

“And the potential is you turn all of our residential neighborhoods into a hotel zone and in the process you make housing even less affordable because people buy the cheaper houses to make money on them,” he said.

Richardson also maintains there are more than just six residential homes acting as vacation rentals in the city.

“I know there are a number of people from downstate who have invested in houses up here and use them as vacation rentals,” he said.

The dislike for vacation rentals recently stopped planning commissioners from lifting the limit of 10 accessory dwelling units allowed per year in the city. Accessory dwelling units, or ADUs, are small separate apartments attached to a home or its garage and have been promoted as a form of affordable living.

At least three residents in the Boardman Neighborhood advertise what would qualify as an ADU for short-term vacation rental.

“That’s always been my concern over ADUs,” Richardson said. “When we made them available first in Traverse Heights two years went by and not one person applied for one. Now allow them ... close to the bay and downtown, and everybody wants them because they can rent them out as vacation rentals. That’s the most return on your buck.”

Richardson said he recognizes the difficulty and time commitment it takes city staff to track down vacation rentals so he doesn’t want to make it easier for people to build them.

Weston doesn’t doubt there are more than six illegal vacation rentals in the city. He looked at just one website and because property owners rarely give an accurate description of the location, it takes time to identify the actual house.

Neither Howe nor Richardson asked for more enforcement beyond what city staff already does.

“They are notoriously hard to enforce,” Howe said.

Weston said he has given the addresses for the six vacation homes to the city’s code enforcement officer who can monitor them during the summer. If there is a different car at the home each week they will follow up. But tickets, which start at $50 per day for a violation, and can jump to $250 per day for a third violation, are rare. Neither Soyring or Weston could remember the last time the city issued a ticket.

“Our goal is compliance,” Soyring said.

Follow-ups on air B&Bs is more difficult because the visitors could be normal guests, Weston said. Plus he can’t recall a complaint about a specific tourist home causing a problem.

Howe would prefer the city amend its ordinance, which he called outdated and out of step with the current culture of tourist homes.

Howe said he has reserved rooms through the Airbnb website when he travels and enjoys the experience. He said opening it up by removing the 1,000-foot limitation would help the city’s tourism industry as well as allow residents to gain extra income and make homes in Traverse City more affordable.

“I just think its part of the culture now and how people travel,” he said. “I don’t think its competing really (with hotels), I just think its supplemental and fills a need for the way some people travel.”

Both the extra income and the Airbnb experience prompted Hans and Maureen Voss to obtain a tourist home license for their Boardman Neighborhood home.

“We travel a lot as a family so we have done (Airbnb) and for us it’s a way to have a more personal experience,” Hans Voss said. “We just got this started but basically it’s just another way to leverage revenue into the family ... and we enjoy the spirit of hosting travelers. Just the notion of having visitors feels good to us.”

But the Voss family also will receive a call from Weston, because how they present their home on rental websites violates their tourist home license. They list four bedrooms for rent and Voss initially said they sometimes plan to rent the whole house when they are away.

“If we are out of line we will address it,” Voss said. “So many people are renting their homes and there is some confusion. We want to make sure we are in compliance.”

Homeowners such as Voss who have a homestead property tax exemption face more than a fine or warning letter for non compliance. The city assessors office also keeps track of vacation rentals.

According to the city assessor’s office renting rooms that share a common part of the home does not impact the homestead exemption. Renting space separate from the home, such as a garage apartment, eliminates the exemption for that percentage of the property. But anyone renting out the entire home for more than 14 days is not entitled to a property tax exemption.

For the Voss family loss of their 18-mill property tax exemption would have cost them about $2,300 a year.

Plus state officials generally want the local assessor to charge back taxes for an additional three years.

Two of the six vacation rental homes Weston flagged this summer have homestead exemptions, and one owner listed rental history since 2014.

The assessor’s office was notified.

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