ANN ARBOR, MI — Ann Arbor officials are considering a ban on short-term rentals of residences that aren’t owner-occupied, which could mean the end of dedicated Airbnb houses.
That was the direction City Council gave city staff in a 9-2 vote Monday night, Dec. 6.
Council is asking staff to draft regulations and bring them back to council for consideration by the end of July.
Council Members Kathy Griswold, D-2nd Ward, and Jeff Hayner, D-1st Ward, were opposed.
Short-term rentals have become more prevalent in recent years with the advent of online platforms like Airbnb that make it easier for people to list their homes or apartments — or individual rooms — for rent for short durations, giving visitors an alternative to hotels.
In Ann Arbor, that can mean residences being rented out for University of Michigan football and graduation weekends, and during Art Fair and other big events that draw tourists to town.
City officials are leaning toward allowing short-term rentals to continue in homes that are owner-occupied most of the year, but cracking down on investors turning homes in residential neighborhoods into what some view as year-round, hotel-like operations.
“People move into a residential neighborhood with the expectation that they will be surrounded by residents,” Mayor Christopher Taylor said, arguing short-term visitors are not residents.
The acquisition and dedication of properties for short-term rentals is reducing the city’s housing supply with potential negative impacts on affordability, city officials argue.
Council Member Julie Grand, D-3rd Ward, suggested families being able to live in homes in the city outweighs other benefits of year-round, short-term rentals.
Right now the city’s ordinances don’t specifically address short-term rentals.
Consultants from Carlisle Wortman Associates Inc. were hired last year to help the city explore regulatory options.
They estimate about 1,400 properties in Ann Arbor were used for short-term rentals during a one-year period concluding last July, with 131 rented out for at least 150 days out of the year.
Those were mostly in the downtown and surrounding neighborhoods like the Old West Side, Old Fourth Ward and Burns Park.
Opinions on the issue vary, with some residents and landlords lobbying for allowing short-term rentals to continue, either as they do now or with some added regulations.
Some neighbors complain they’ve created nuisance issues, in some cases party houses, and they need strong regulations.
In an eight-page report to council on Dec. 20, the city’s consultants presented three regulatory framework options.
City staff recommended Option 3, the most comprehensive, which council initially supported Monday night.
In addition to banning short-term rentals of non-owner-occupied homes, that could mean new regulations, including inspections and permit fees, for short-term rentals in owner-occupied homes, regardless of whether owners remain present during guest visits.
There also could be a limit on number of days a resident could rent out their residence if not present during guest visits, increased enforcement of nuisance issues and occupancy requirements, limits on advertising and a requirement to have a local contact person.
City staff suggests giving further consideration to a ban on whole-house rentals of primary residences.
There’s still room for flexibility as the city goes through the process of finalizing the regulations, council members noted.
“Even though I don’t support Option 3, I think it’s important to move forward on this and start the work and we can make changes as we go,” said Council Member Chip Smith, D-5th Ward.
Some council members said they’ve stayed in short-term rentals while traveling.
“While we all understand the benefits to travelers, we may not fully appreciate the potential negative consequences, including increased nuisances, altering the character of neighborhoods and reducing the supply of permanent housing,” said Jane Lumm, I-2nd Ward.
Griswold suggested the idea of grandfathering in existing short-term rentals, but city officials acknowledge that could be difficult since the city isn’t closely tracking them.
Some are already registered with the city as rental properties and go through inspections, but the city doesn’t classify whether rental properties are used for short-term or long-term rentals.
Ann Arbor resident Noah Hoffman said he’s been a short-term rental host for about two years and follows all existing laws.
He argues the proposed regulations could cause “severe economic distress” to hosts, guests and a broad network of cleaners and handymen, restaurants and others.
He supports Option 1 in the consultant’s report, which would require registration and licensing for short-term rentals, among other regulations, but otherwise not further restrict them based on type.
Hayner said he’s had conversations with neighbors who operate short-term rentals, and he does maintenance on short-term rentals.
His neighbors switched from doing long-term rentals to short-term rentals because they’d find their places “destroyed” by long-term renters, he said.
By being able to go into units between every short-term tenant, he said, “those places have never been better maintained.”
The regulatory framework council supported Monday night is too draconian, Hayner argued.
He also suggested homeowners who want to occasionally rent out their houses shouldn’t have to go through rigorous rental inspections.
“I think this is kind of a gross overreach and I think it’s a solution in search of a problem,” he said.
Short-term rentals are creating an opportunity for tourists to be in residential neighborhoods near downtown, said Council Member Elizabeth Nelson, D-4th Ward.
“And it strikes me that, as a community, we can make a choice to regulate at this point and try to protect our near-downtown neighborhoods for residents who want access on a day-to-day basis to walking to stores and walking to their workplace and walking to the bus stop,” Nelson said.
Over the last 10 years, 1,026 hotel rooms have been approved for development in Ann Arbor, and 757 of those have been built, while 269 are in the permitting/construction phases, and another 577 are under review, according to the city.
Read more Ann Arbor City Council stories.
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